2024 Tax Declaration: The Final Stretch for Navigating French Tax Rates!
The 2024 tax season is upon us, and understanding French tax rates is crucial for accurately filing your 2023 income. To help you navigate this process smoothly, we’ve compiled essential tips to ensure you fulfill your tax obligations correctly and on time.
Adhere to the Deadlines to Avoid a 10% Penalty
Filing your taxes online through the “impots.gouv.fr” website is mandatory in most cases. The deadline for submitting your 2023 income declaration depends on the department where your residence was located as of January 1, 2023. For departments numbered 1 to 19, as well as for non-residents, the deadline is May 23, 2024, at midnight. For departments numbered 20 to 54, the deadline is May 30, 2024, at midnight. Lastly, for taxpayers residing in departments numbered 55 to 974/946, the deadline is June 6, 2024, at midnight.
Taxpayers without internet access or those unfamiliar with online tools can submit a paper declaration. The deadline for paper submissions is May 21, 2024, at midnight, with the postmark serving as proof of timely submission.
It is essential to thoroughly review the pre-filled information on your tax declaration and make necessary corrections or additions. Any errors or omissions are your responsibility. However, if you discover a mistake after receiving your 2024 tax notice, you can still make corrections without penalties using the online correction service available from mid-August to mid-December.
What’s New for 2024: Key Updates on French Tax Rates
Previously, only taxpayers eligible for the 2042 K automatic tacit declaration could access their pre-filled declaration on mobile devices after downloading a specific app from the DGFIP. Starting this year, this feature is available to more taxpayers, though it remains limited to simpler tax situations. If your situation is more complex, you will need to use the internet to file your declaration.
Lower Your Tax Bill by Understanding French Tax Rates
Filing your income declaration is the final opportunity to reduce your tax liability by making informed choices that take into account current French tax rates.
To optimize your tax situation, use a calculator or the tax authority’s online simulation tool to explore various scenarios. For instance, if you’re an employee considering opting out of the standard 10% deduction in favor of itemizing your actual expenses, be prepared to provide supporting documentation. Similarly, if you rent out property and choose to bypass the micro-foncier regime (automatic for rental income below €15,000) to benefit from the real regime, which allows for more deductions, ensure you have detailed records, particularly if you’ve undertaken renovations.
Another crucial decision involves taxpayers who have earned financial income or realized capital gains from the sale of securities. Generally, the flat tax (Prélèvement Forfaitaire Unique, PFU) of 30% applies, but you can opt out in favor of the progressive income tax scale by checking box 2OP. To determine whether this option is beneficial, detailed calculations are necessary. Keep in mind, this choice applies to all your gains and capital gains and is irreversible.
New for 2024: French Tax Rates for Cryptocurrency Gains
The option to choose the progressive tax scale is now available to taxpayers who have realized capital gains from cryptocurrency sales (box 2CN on the 2042 C form). This new option reflects the evolving landscape of French tax rates in 2024.
Another 2024 Update: Taxation of Furnished Rentals
If you rent out furnished property, recent changes to French tax rates could impact you. Due to an error by the French Treasury during the last budget law, the threshold for the micro-BIC regime for non-classified tourist furnished rentals was lowered to €15,000 (down from €77,700), and the flat-rate deduction was reduced to 30% (from 50%), effective from the 2023 income.
To mitigate the retroactive impact of this change on past transactions, the Treasury issued an administrative directive on February 14, allowing affected taxpayers to use the previous thresholds and deductions for their 2023 income. Although legally challenged, this directive remains valid for your 2023 tax declaration.
Don’t Forget the Supplemental Declarations: Mastering French Tax Rates
In certain situations, detailed supplemental declarations are required, often adding complexity to your tax filing process.
This applies if you received rental income subject to the real regime (Form 2044), realized capital gains on securities that your financial intermediary didn’t calculate (Form 2074), or engaged in digital asset sales (Form 2086). The same goes for furnished rentals, requiring completion of Form 2042 C PRO (micro-BIC) or 2031 (real regime). Additionally, holding accounts opened, held, or used abroad requires submitting a special declaration (Form 3916).
If the net taxable value of your real estate assets exceeded €1.3 million as of January 1, 2024, you must also file Form 2042 IFI. This process is more complex this year if you hold real estate through a company (e.g., via an SCI), as only the company’s debts related to taxable real estate assets can be considered when determining the value of your shares.
New for 2024: Simplifying the Real Estate Declaration Process
Following last year’s issues with the new real estate declaration through the “Gérer mes biens immobiliers” service, the Treasury has decided to ease the process by allowing taxpayers who are unable to file online to use a paper declaration. However, you only need to renew your declaration if there have been changes since last year (e.g., a move, property sale, tenant departure). The situation as of January 1, 2024, should be considered to determine if any changes occurred.
How ESCEC International Can Help You Navigate French Tax Rates
At ESCEC International, our Paris-based accounting firm is here to guide you through the complexities of French tax rates and ensure your 2024 tax declaration is accurate and optimized. We offer personalized support, helping you comply with all requirements while minimizing your tax liabilities. Whether you’re dealing with new regulations, optimizing deductions, or managing supplemental declarations, our team of experienced professionals is ready to assist you every step of the way. Let us take the stress out of tax season so you can focus on what matters most.
