Entries by escec

Automatic Income Tax Filing: Are You Eligible?

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Since 2020, income tax filing has been simplified through an automatic return system. This option allows eligible taxpayers to skip the formal submission process if the tax administration already holds complete and accurate information. Here’s what you need to know.

What’s New in 2025: Paper Returns No Longer Sent Automatically

As part of the continued shift toward online tax filing, a new rule applies in 2025:
If you filed your return online last year, you will not receive a paper version this year.
This also applies if you’ve opted for digital communications or if you’re a newly independent adult (PMR) who filed a tax return in your own name for the first time in 2024.

➡️ Learn more about paper return rules

What Is Automatic Tax Filing?

Automatic filing means certain households are exempt from actively submitting a tax return—provided the pre-filled information held by the tax authority is accurate and complete. All that’s required is a simple review of the return.

Who Qualifies in 2025?

You may be eligible if:

  • In 2024, you were taxed solely on pre-filled income (such as wages or pensions)

  • You did not report changes to your household or income type last year, such as:

    • A new address

    • Marital status changes (marriage, divorce, death)

    • A new income stream requiring advance payments (e.g., self-employment or rental income)

Automatic filing also includes:

  • Births or adoptions declared in 2024 via the “Manage my withholding” section online

  • The choice made in 2024 to tax investment income under the standard income scale (box 2OP)—this choice carries over unless manually changed

Not Eligible?

You must file a return if:

  • You claimed a tax credit for employing domestic help in 2024

  • You fall under special tax regimes (e.g., journalists, childminders, non-residents)

Non-eligible taxpayers will be notified:

  • By email, if you filed online or opted out of paper delivery

  • With a notice on your paper return, if applicable

How the Automatic Filing Process Works

Automatic filing applies to both online and paper formats.

  • If eligible and you’ve chosen digital delivery or filed online last year, you’ll receive an email letting you know your return is available in your private space on impots.gouv.fr.

  • If not, a paper return will arrive by mail in April, along with instructions.

Review = Submission

The pre-filled return includes:

  • Your family situation

  • Income (salaries, pensions, investment income)

  • Deductible CSG contributions

  • Withholding already paid

It also shows the calculated income tax and your new withholding rate, effective September 2025.

You must verify the information. To do this, log into your personal account on impots.gouv.fr and click “Verify my return data” on the homepage.

If Everything Is Correct

If no changes are needed, no action is required.
Your return is considered filed automatically, and your income tax will be calculated based on the confirmed data.

If You Need to Update Information

If any details are incorrect—such as address, household changes, income amounts, eligible deductions, or opting in/out of box 2OP—you must file a regular return:

  • Online: Click “File online” from your automatic return

  • Paper: Complete and return the form to your local tax office

➡️ Check our article for submission deadlines, which depend on your place of residence.

2025 Taxes: What’s New in the 2024 Income Tax Return

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The online income tax filing service for 2024 officially opened on Thursday, April 10, 2025. This year brings several changes to the tax process. Here’s an overview of the key updates for 2025.

Key Tax Filing Dates in 2025

  • April 10: Online filing opens on impots.gouv.fr

  • May 20: Deadline for paper tax returns

  • May 22 to June 5: Deadline for online submissions, varying by department

➡️ See the full tax calendar

What’s New for the 2024 Income Tax Return

Updated Income Tax Brackets

To offset the impact of inflation on household taxes, income tax brackets have been increased by 1.8% across all tiers.

➡️ Learn more about the updated tax brackets

Personalized Withholding Rates for Couples

Starting September 1, 2025, couples who are married or in a civil partnership will automatically have individualized withholding rates applied to each partner—unless they specifically choose a different arrangement.

This adjustment won’t change the total tax due but alters how it’s split between partners. Taxpayers who prefer a single household rate can select that option when filing.

➡️ More on individualized tax rates

New Rules for Paper Tax Returns

To support the transition to digital filing, new criteria determine who receives a paper return in 2025:

  • If you filed online last year

  • If you’ve chosen paperless communication

  • If you’re a newly independent adult filer (PMR) who submitted a return in your own name in 2024

In these cases, no paper form will be mailed this year.

➡️ More on paper return distribution

Changes to Automatic Tax Returns

Taxpayers who were eligible for automatic filing in 2024 but no longer qualify in 2025 (for example, those who hired domestic help) will be notified to manually submit a return this year.

  • Email notification (mid-April) for online filers or those who opted out of paper forms

  • Printed notice on the paper return for others

➡️ More on automatic tax filing

Obligation to Declare Property Occupancy

All property owners must report the occupancy status of their properties if:

  • They didn’t submit the information in 2024

  • The occupancy status has changed since the last declaration

This must be done in the “Manage My Real Estate” section of their online account by July 1, 2025.

Additionally, individuals who rent out or use a secondary residence they don’t own must include it in their online income tax return this year.

➡️ More on “Manage My Real Estate”

Two-Factor Authentication Coming Soon

To enhance account security on impots.gouv.fr, two-factor authentication will be implemented by summer 2025. After entering your tax ID and password, you’ll receive a verification code by email to confirm your identity.

How to Start a Business in France

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Starting a business as an individual entrepreneur in France involves several key steps. One of the first decisions you’ll face is whether to establish a brand-new business or take over an existing one. This choice influences the registration process, your tax and social security obligations, and the level of accounting required.

Step-by-Step Guide to Creating a Business

1. Select the Legal Structure

Choosing the right legal form depends on various factors such as the number of partners, required capital, and liability. Here are the main business structures available in France:

Legal Structure Key Features Eligible Professions
General Partnership (SNC) Requires at least 2 partners. Partners are jointly liable for business debts. No minimum capital. Craftspeople, traders, industrialists, liberal professionals (excluding legal, judicial, or most health professions, except pharmacists).
Public Limited Company (SA) Typically for larger enterprises. Requires at least 2 shareholders. Shareholder liability is limited to their contributions. Craftspeople, merchants, industrialists.
Limited Liability Company (SARL) Suitable for 2 to 100 partners. Liability is limited to the capital each contributes. No minimum capital. Craftspeople, traders, industrialists, liberal professionals (excluding legal, judicial, or most health professions, except pharmacists).
Single-Member LLC (EURL) SARL with a single partner. Limited liability. No minimum capital. Same as SARL.
Company for Liberal Professions (SEL) Tailored for regulated liberal professions. Regulated liberal professions only.
Simplified Joint-Stock Company (SAS) Flexible legal structure. At least 2 members. Operating rules are freely defined in the bylaws. No minimum capital. Craftspeople, traders, industrialists, and some liberal professionals (excluding legal, judicial, or most health professions).
Single-Person SAS (SASU) A one-person version of the SAS. Full flexibility. No minimum capital. Same as SAS.
Professional Civil Company (SCP) Allows several professionals to practice jointly. Partners are taxed individually on their share of profits. Regulated professions (excluding speech therapists, podiatrists, pharmacists, midwives, certain insurance agents, accountants, dietitians, psychologists).
Worker Cooperative (SCOP) Can take the form of an SA, SARL, or SAS. Employee-members must hold at least 51% of the share capital. Open to various professions, including liberal professions such as architects or surveyors.

2. Choose a Company Name

When registering your business, you’ll need to assign it a name—either a corporate name or a business name. This name serves as the business’s legal identity, distinct from its founder, and must be unique.

Often, the name reflects the nature of the business’s activity. Legal ownership of the name is secured at the time of registration.

3. Establish the Registered Office

The registered office serves as the legal address of the business, where all official documents and correspondence are sent. It must appear on all business documents such as quotes and invoices.

This address does not have to be the same as the place where business operations or production occur. It represents the administrative headquarters and is specified in the company’s bylaws upon formation.

The company cannot be registered without an official address. If the address changes later, it is considered a relocation of the registered office and must be declared to the appropriate business registration authority.

Everything You Need to Know About the Payroll Tax in France

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The payroll tax is a levy imposed on employers in France who hire staff but are not liable for value-added tax (VAT) on the majority of their revenue. Who is required to pay it? How is it calculated? Are there any exemptions? Here’s a comprehensive overview.

Who Is Subject to the Payroll Tax?

The payroll tax applies to employers who:

  • Hire salaried employees;

  • Are based or domiciled in France, regardless of where the employees reside or work;

  • Are not subject to VAT, or were subject to VAT on less than 90% of their turnover during the previous calendar year.

The tax typically concerns:

  • Certain self-employed professionals;

  • Public institutions (excluding intermunicipal entities);

  • Financial and insurance institutions, including some brokers and stock agents;

  • Non-profit and social organizations (e.g., associations);

  • Civil law companies (such as investment or property companies), excluding those in real estate construction or trading;

  • Property owners;

  • Agricultural cooperatives, mutuals, and professional bodies.

Which Employers Are Exempt?

The following employers are not subject to the payroll tax:

  • Employers whose revenue the previous year did not exceed the VAT exemption threshold (e.g., micro-entrepreneurs);

  • The State and local public authorities;

  • Private individuals employing a full-time domestic worker or nanny. Part-time hires do not qualify for the exemption;

  • Certain agricultural employers (e.g., crop and livestock farms, animal training facilities);

  • Higher education institutions issuing a recognized Bac +5 diploma (universities, business schools, grandes écoles);

  • Some public institutions;

  • Cultural public cooperation entities (EPCC);

  • Environmental public cooperation entities (EPCE) — exemption applies to wages paid as of 1 January 2024.

What Is the Taxable Base?

The tax base corresponds to that used for the Generalized Social Contribution (CSG) on employment income. This includes gross salaries, bonuses, allowances, and both in-kind and cash benefits.

What Are the Applicable Rates?

In Metropolitan France

The payroll tax is based on a progressive scale applied to each employee’s annual gross salary:

Rate Type Global Rate Marginal Rate Applied to Excess 2024 Annual Gross Salary 2024 Monthly Gross Salary
Normal Rate 4.25% 4.25% Up to €8,985 Up to €748
1st Increased Rate 8.50% 4.25% (8.50 – 4.25) €8,985–€17,936 €748–€1,494
2nd Increased Rate 13.60% 9.35% (13.60 – 4.25) Over €17,936 Over €1,494

Note: Both the taxable base and the final tax amount are rounded to the nearest euro.

In Overseas Departments (DOM)

Employers in the French overseas departments pay a flat rate:

Overseas Department Applicable Rate
Guadeloupe, Martinique, Réunion 2.95%
Guyana, Mayotte 2.55%

Important: These regions are not subject to the increased rates applied in mainland France. The tax is calculated by multiplying the base by the applicable single rate.

What Is the Degree of VAT Liability?

Employers who were liable for VAT on less than 10% of their turnover in the year preceding wage payments must calculate their VAT liability ratio.

This ratio = (Non-VAT-deductible income / Total income of the previous year)

The tax base is then determined by multiplying the total taxable wages by this ratio.

Tax Relief: Exemption and Discount Mechanism

  • No tax is due if the annual payroll tax amount is €1,200 or less.

  • If the tax due is between €1,200 and €2,040, a discount applies:
    The amount is reduced by 75% of the difference between €2,040 and the actual tax amount.

Example:
If the calculated tax is €1,400, the discount is ¾ of (€2,040 – €1,400) = €480
Final amount due = €1,400 – €480 = €920

How to Declare and Pay the Payroll Tax

The declaration and payment method depends on the amount due the previous year:

If Less Than €4,000

  • File form 2502-SD with payment by 15 January of the year following wage payment.

Between €4,000 and €10,000

  • Submit form 2501-SD with provisional payments before 15 April, 15 July, and 15 October.

  • A final payment and annual return (form 2502-SD) is due by 31 January of the next year.

Over €10,000

  • File form 2501-SD monthly, within 15 days after the end of each month.

  • December’s tax is paid with the final regularization and form 2502-SD submitted by 31 January of the following year.

Additional Notes:

  • If the business is sold or ceases operations, the return and payment must be filed within 60 days.

  • In case of the employer’s death, the tax return must be filed within six months.

Income Tax – What Are the Penalties for Late Filing?

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Failing to file your income tax return on time can lead to financial consequences, including increased tax liability, penalties, and interest on late payments.

How Can I File My Tax Return After the Deadline?

Even if you’ve missed the official deadline, it’s still possible to submit your tax return.

Online Filing Remains Accessible

You can still file your return online through your personal space.

If the Online Portal Is No Longer Available

In that case, you’ll need to use the paper format.

Who Should I Contact?

Reach out to your local tax department or treasury office for assistance.

What Penalties Apply for Late Filing?

Tax Increase

If you file your return late, the tax you owe may be subject to one of the following surcharges:

  • 10% increase if no formal notice has been issued

  • 20% increase if the return is submitted within 30 days after receiving a formal notice

  • 40% increase if the return is still not submitted within 30 days of receiving the notice

  • 80% surcharge if a hidden activity is uncovered—no prior notice is required in this case

Important: These penalties are calculated on the entire amount of tax owed, without deducting any amounts already paid via withholding or advance payments.

Late Payment Interest

In addition to penalties, interest on late payment is applied.

  • The rate is 0.20% per month of delay, equating to 2.4% annually.

  • This interest accrues until the end of the month in which the return is filed.

Note: The interest is calculated after deducting any taxes already paid, such as withholding.

Requesting a Tax Payment Extension in France

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If you’re facing financial hardship and are unable to pay your income tax or local taxes, you may be eligible to request extra time to settle your tax bill.

Income Tax

Who can request a payment extension?

You may apply for a deferred payment if you are experiencing financial difficulties, such as an unexpected tax balance or inability to pay on time. Each request is reviewed individually.

Common reasons include:

  • Sudden loss of income (e.g., job loss)

  • Exceptional circumstances (e.g., disability, death of a spouse)

  • Insufficient income compared to the tax due

Note: If you’re in a situation where paying your taxes is completely impossible, you can also request a full or partial cancellation (remise gracieuse) of your tax debt.

How to apply for a payment extension?

You can submit your request through one of the following:

Online
Log in to your Personal Tax Account (Espace Particulier) on the French tax website.

How is the request reviewed?

The tax office will assess your request based on your overall situation and whether you’ve generally complied with your tax obligations (filing and payment history).

They are required to respond within 2 months (up to 4 months for complex cases).

  • If approved, you’ll receive a payment schedule.

  • If there is no response within the timeframe, your request is considered denied.

Who Is Liable for Income Tax in France?

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Your income tax liability in France depends on two key factors: your tax residence and the make-up of your household. Whether you live in France or abroad, the applicable rules vary accordingly.

If You Live in France

If you are tax resident in France, you are required to report your worldwide income, whether it’s earned in France or from foreign sources. This includes income from all members of your tax household (such as your spouse and dependents), and a single tax return must be filed on behalf of the entire household.

However, tax treaties signed between France and other countries may affect how and where certain types of income are taxed, potentially avoiding double taxation.

Note:
If you were born between 2003 and 2005, you are generally expected to file your own tax return. That said, you may request to remain attached to your parents’ tax household if preferred.

If You Live Abroad

If you are not a French tax resident, you are only liable for tax in France on your French-source income. The same household rules apply: income earned by all members of your household is included in a single tax return—unless you’re part of a mixed couple (where only one partner is French tax resident), in which case different rules may apply.

Tax treaties may again influence your obligations and help determine which country has the right to tax specific income types.

Note:
Young adults born between 2003 and 2005 must submit their own tax return unless they opt to remain included in their parents’ household.

What is the French income tax scale?

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The income tax scale determines how much tax you owe in France. It’s progressive, meaning your taxable income is divided into brackets, each taxed at a different rate ranging from 0% to 45%.

When applying this tax scale to your taxable income, you must consider your family quotient—the number of parts (shares) assigned to your tax household. This depends on your marital status and the number of dependents.

Important note:

The income tax brackets are updated annually. For example, the 2025 tax scale applies to income earned in 2024, as defined in the Finance Law for 2025.

2025 Progressive Income Tax Brackets (for 2024 income):

Income Bracket Tax Rate
Up to €11,497 0%
€11,498 to €29,315 11%
€29,316 to €83,823 30%
€83,824 to €180,294 41%
Over €180,294 45%
  • The marginal tax rate is the rate applied to the highest portion of your income.

  • The average tax rate shows the effective rate applied across your total income and reflects the actual proportion of income paid as tax.

Note: The tax benefit for dependent children is subject to a ceiling, known as the quotient familial cap.

Example: Single person

Let’s say a single taxpayer (1 part) earns a net taxable income of €30,000, with no deductions or tax reductions.

Tax calculation:

  • First €11,497: 0% tax → €0

  • From €11,498 to €29,315: (€29,315 – €11,497) × 11% = €1,959.98

  • From €29,316 to €30,000: (€30,000 – €29,315) × 30% = €205.50

Total gross tax due: €0 + €1,959.98 + €205.50 = €2,165.48

Although the marginal rate for this taxpayer is 30%, not all their income is taxed at this rate—only the portion above €29,315.

A Guide to French Income Tax: What You Need to Know in 2025

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As the French income tax season begins, residents must prepare to submit their annual returns between April and early June. While springtime in France offers scenic beauty and outdoor enjoyment, it also brings the responsibility of tax reporting.

Key Dates for Filing

The online platform for income declarations opens on 10 April. Most taxpayers are required to file online unless it’s their first time or they have a valid reason for submitting a paper return. Anticipated deadlines are:

  • 20 May – Paper returns

  • 22 May – Départements 1–19 and non-residents with French income

  • 28 May – Départements 20–54

  • 5 June – Départements 55–101

Early preparation is advised, especially for those with multiple income sources, international earnings, or property holdings. Assets held abroad and foreign bank accounts must be disclosed, even if they generated no income. Individuals with net property wealth above €1.3 million must also file a real estate wealth tax return.

Understanding the French Tax System

Unlike individual taxation systems such as in the UK, France taxes income at the household level using the quotient familial or “parts” system. Total household income is divided by the number of fiscal parts (based on marital status and dependents), then taxed according to income brackets. The result is multiplied back to determine the final tax owed, often reducing the burden for families with children.

2024 Income Tax Bands (2025 Declaration)

Net Taxable Income Rate
Up to €11,497 0%
€11,498–€29,315 11%
€29,316–€83,823 30%
€83,824–€180,294 41%
Over €180,294 45%

An additional tax applies to high earners: 3% on income above €250,000 for singles and €500,000 for couples, and 4% beyond €500,000 or €1 million, respectively. In 2025, this surcharge has been reinforced to ensure a minimum effective tax rate of 20% for the highest earners.

Income Tax Allowances and Deductions

Certain deductions apply to pensioners, individuals with disabilities, and those receiving military pensions. Retirement and alimony income also benefit from a 10% deduction, subject to limits. Tax credits may be available depending on your situation but require careful evaluation due to their complexity.

Social Charges: A Parallel System

Separate from income tax, social contributions finance public welfare but not health coverage. These charges apply to:

  • Employment income: 9.7%

  • Pensions: 9.1% (or 7.4% for low-income retirees)

  • Investment income: 17.2% (reduced to 7.5% for those under a foreign health system)

Non-residents covered by an EU/EEA health agreement or holders of an S1 certificate may benefit from lower rates.

Social charges are usually calculated based on declared income, with amounts due later in the year.

Tax on Investment Income

Investment earnings (interest, dividends, capital gains) are generally taxed at a flat rate of 30%, known as the Prélèvement Forfaitaire Unique (PFU). This rate includes both income tax and social charges. Those covered by a foreign healthcare system may see a reduced rate of 20.3%.

Lower-income households can opt for progressive taxation instead, though social charges remain separate.

Declaring UK and Foreign Income

French residents are taxed on global income and must report all earnings, including those from the UK. However, tax treaties prevent double taxation. Some UK-sourced income, like government service pensions or rental income, remains taxable only in the UK, though it must still be declared in France for transparency.

Capital gains from UK real estate may be taxed in both countries, with a credit granted in France for tax already paid abroad.

Planning Ahead

France’s tax system differs significantly from others, and strategies that worked in the UK may not apply. Effective tax planning in France involves reevaluating how you manage savings, pensions, and investments within the local framework. Thoughtful structuring can help reduce liabilities and support long-term financial goals, including estate planning.

Note: Tax rules and thresholds are subject to change. This overview is intended for informational purposes. Always seek professional, personalised advice when managing your tax affairs.

For international professionals or students seeking advanced knowledge in international tax and wealth management, ESCEC International offers world-class programs that explore cross-border taxation and financial planning in depth.

What’s Changing for Individuals in the 2025 Budget

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The 2025 Finance Act has officially been adopted. Here’s an overview of the key measures that will impact individuals.

Taxes

Income Tax Brackets Adjusted for Inflation

To offset the effects of inflation, each income tax bracket has been increased by 1.8%. The new brackets for 2025 are as follows:

Taxable Income Bracket Tax Rate
Up to €11,497 0%
€11,498 to €29,315 11%
€29,316 to €83,823 30%
€83,824 to €180,294 41%
Over €180,294 45%

New Temporary Contribution for High Incomes

A new one-year measure introduces a “differential contribution” for top earners. Individuals earning over €250,000 per year (or €500,000 for couples) and currently taxed at a rate below 20% will now be taxed at a minimum of 20%.

Extended Tax Break for Charitable Donations

The so-called “Coluche” tax relief, offering a 75% deduction on donations to charities assisting vulnerable individuals, will continue. It has also been expanded to cover donations to organizations fighting domestic and gender-based violence.

Learn more about charitable donation deductions

Real Estate

Expanded Zero-Interest Loan (PTZ)

The zero-interest loan (PTZ), which supports homeownership under certain income conditions, is now available for all new housing across the country between April 1, 2025, and December 31, 2027.

More on PTZ eligibility

Tax Reform for Non-Professional Furnished Rentals

Capital gains tax for non-professional furnished rental properties (LMNP) has been revised. The amortization previously deducted from rental income will now be factored back into the calculation of capital gains at sale.

This change does not apply to student residences, senior homes, or housing for people with disabilities.

Property owners still benefit from capital gains tax exemptions:

  • After 22 years of ownership (income tax)

  • After 30 years (social contributions)

“Loc’Avantages” Scheme Extended

Initially scheduled to end in 2024, the “Loc’Avantages” program has been extended until 2027. Landlords renting below-market housing to modest-income tenants may qualify for a tax reduction if they sign a contract with the national housing agency (Anah).

More on Loc’Avantages

Property Transfer Tax Increase

Local authorities may now increase property transfer taxes by 0.5% starting April 1. These taxes, which vary based on the property’s value, are now capped at 5%. First-time buyers will be exempt from this increase.

Inheritance & Donations

Tax Exemption for Family Gifts Toward New Homes

Monetary gifts made within families (from parents, grandparents, etc.) will be exempt from transfer duties if used to buy a new home or one under construction, or for energy renovations—provided the property becomes the primary residence.

Exemption limits:

  • Up to €100,000 per donor

  • Up to €300,000 per recipient

  • Property must be held for at least 5 years

Energy

Changes to the Energy Check Program

Article 173 of the budget law outlines updates to the energy voucher system. Vouchers are distributed by the Agency for Services and Payments (ASP), based on data from tax records, electricity providers, and network managers.

The amount depends on household income and family size.

More on the energy check

End of Reduced VAT Rates on Gas Boilers

Reduced VAT rates (5.5% or 10%) for purchasing and installing gas boilers are abolished. From now on, a 20% VATapplies to align with EU regulations.

Maintenance and repair services for existing boilers remain eligible for reduced rates.

VAT Increase on Gas and Electricity Subscriptions

From summer 2025, VAT on gas and electricity subscriptions will increase to 20%, also in line with EU standards.

More on subscription changes

Transportation

Higher Penalties for Polluting Vehicles

The automotive CO₂ penalty (malus) is being raised gradually from 2025 to 2027.

  • In 2025, the penalty begins at 113g/km of CO₂ emissions with a fee of €50.

  • The penalty increases progressively up to €70,000 for emissions over 192g/km.

Year Trigger Threshold Max Penalty (CO₂)
2025 113g/km €70,000 (>192g/km)
2026 108g/km €80,000 (>191g/km)
2027 103g/km €90,000 (>190g/km)

Weight-based penalties will increase in 2026:

  • Starting at 1.5 tons: €10/kg for the first 100kg

  • Then €5/kg every 100kg

  • Capped at €30/kg for vehicles over 2 tons

Electric vehicles will lose full exemption from the weight tax starting July 1, 2026, but will benefit from a 600kg reduction.

Increased Air Travel Solidarity Tax

Effective March 1, 2025, the solidarity tax on airline tickets will increase. Rates depend on destination and class of travel:

Destination Economy Class Business Class Private Jets
France/EU €7.40 €30 €210–€420
Medium-haul €15 €80 €675–€1,015
Long-haul €40 €120 €1,025–€2,100