Entries by escec

Hiring a Foreign Employee in France: Understanding the Taxe Employeur for Passeport Talent

/in /by

Hiring international talent in France can bring valuable skills to your company—but it also comes with specific financial obligations. One of these is the taxe employeur, a tax owed by companies hiring foreign workers, including those under the Passeport Talent residence permit.

This guide explains how the taxe employeur for Passeport Talent holders works, what it costs, who is exempt, and how to handle the administrative process effectively.

What Is the Taxe Employeur for Passeport Talent?

The taxe employeur is a mandatory fee imposed on employers that hire non-EU foreign workers in France. It applies when the employee either:

  • Enters France for the first time, or
  • Is granted their first residence permit as a salaried worker (including under the Passeport Talent scheme)

The tax must be paid to the French Tax Authority (DGFiP) and is declared annually. Employers must also be able to provide a summary of all foreign hires upon request.

For an official overview of this obligation, you can refer to the Welcome to France government resource.

When Is the Taxe Employeur Due?

The timing of the tax depends on when the employment begins:

  • For hires made in 2023: Declaration and payment start in February 2024. Employers only needed to report in 2023 if they ceased operations that year.
  • For hires made in 2024: The tax is due at the end of the month when the foreign employee starts working.

Example: If the employee begins on November 11, the tax must be paid by November 30, regardless of the length of the contract.

This applies whether you’re hiring a Passeport Talent holder, a posted worker (salarié détaché), or another non-EU employee type.

Tax Amounts Based on Contract Type: Taxe Employeur Passeport Talent

The taxe employeur amount is calculated based on the nature and duration of the employment contract:

  • Contracts of 12 months or more:
    55% of the employee’s gross monthly salary, capped at 2.5x the French minimum wage (SMIC). As of November 2024, the cap is €4,504.50/month, with a maximum tax of €2,477.48 for the year.
  • Contracts between 3 and 12 months:
    Fixed between €50 and €300, depending on gross salary.
  • Seasonal workers:
    €50 per month, even for partial months.
  • Young professionals under bilateral agreements:
    Between €50 and €300, based on gross salary.

These rules apply whether the worker holds a regular permit or a Passeport Talent.

Who Is Exempt from the Taxe Employeur?

Several categories of employers and employees are exempt from this tax, including:

Exempt Organizations

  • Public research bodies and foundations recognized as being of public interest
  • Higher education institutions
  • Scientific cooperation establishments

Exempt Employee Profiles

  • Citizens of the EU, EEA, Switzerland, Monaco, Andorra, and Saint-Martin
  • Foreign nationals holding a residence permit such as:
    • Passeport Talent
    • Talent – EU Blue Card
    • Resident, Private and Family Life, ICT, Student, etc.
  • Employees working in France for less than 3 months
  • Workers employed for domestic or family tasks at a private residence, with no commercial purpose

If you are hiring under the Passeport Talent category, your company is generally exempt from paying the taxe employeur, making this residence permit not only attractive for talent—but also cost-effective for businesses.

How to Declare and Pay the Taxe Employeur

The tax must be declared through the company’s VAT declaration platform and paid at the same time as VAT and related taxes. The DGFiP provides a calculation sheet to help determine the amount to declare.

Based on Your VAT Status:

  • Simplified VAT regime (usually for businesses declaring under €15,000/year):
    Use Form 3517-S-SD via impots.gouv.fr
  • Standard VAT regime (for larger companies):
    Declare the tax using Form 3310-A-SD the month or quarter following the hire date
  • Non-VAT liable employers:
    Also use Form 3310-A-SD, declaring within the year following the foreign hire

Employers must track all relevant data and ensure compliance, especially when hiring multiple foreign nationals in a given year.

Why the Passeport Talent Route Is Strategic for Employers

The Passeport Talent residence permit offers numerous advantages for both foreign professionals and the businesses hiring them. In addition to streamlined administrative processes, hiring under this status often means exemption from the taxe employeur—a notable cost saving.

Understanding the interaction between residence status, employer obligations, and tax residency is crucial. Learn more about how a residence card can impact your certificate of tax domicile and long-term compliance in our full guide:
French Residence Card: Conditions, Eligibility, and How It Relates to Your Certificate of Tax Domicile

Need Support with Foreign Hiring Compliance?

At ESCEC International, we support employers hiring international talent in France. Whether you’re navigating the taxe employeur, payroll tax, residence permits, or eligibility for exemptions under the Passeport Talent scheme—we simplify the process for you.

Get in touch with our team for expert advice on hiring compliance, tax strategy, and immigration processes tailored to your business goals.

French Residence Card: Conditions, Eligibility, and How It Relates to Your Certificate of Tax Domicile

/in /by

Living in France on a temporary residence permit and ready to settle down permanently? The French residence card(carte de résident) allows non-EU citizens to live and work in France long-term—and can also play a role in securing your certificate of tax domicile, essential for tax residency recognition.

Whether you’re an entrepreneur, startup founder, investor, or employee, this guide will help you understand how the residence card works, who can apply, and how it supports your tax situation in France.

What Is the French Residence Card?

The carte de résident is a multi-year residence permit—typically valid for 10 years—that authorizes the holder to live and work in France, either as an employee or as a self-employed individual.

In many cases, obtaining a residence card is a key step toward being officially recognized as tax domiciled in France, which can influence your global tax obligations and eligibility for a certificate of tax domicile.

Note: Algerian citizens are subject to a specific bilateral agreement with France and may apply for a “10-year residence certificate” instead. For full details, visit the official French government guide.

Who Can Apply for a French Residence Card? Certificate of tax domicile

First-Time Applicants Upon Entry into France

A residence card may be granted from the first admission to France under specific conditions:

  • Married to a French citizen for at least 3 years (or 1 year for Tunisian nationals)
  • Non-EU children under 21 or dependent on a French citizen
  • Dependent parents of a French citizen or their spouse
  • Individuals entering France under family reunification, joining a resident card holder
  • Children born in France eligible for French nationality
  • Refugees, stateless persons, and their family members
  • Individuals receiving a French work accident or occupational illness pension
  • Retired individuals returning to France to live permanently
  • Former foreign soldiers and members of the French Foreign Legion

Applicants must demonstrate integration into French society, including language proficiency and knowledge of republican values.

After 3 Years of Residence in France: Certificate of tax domicile

You may qualify for a residence card after three years of continuous legal residence in France if:

  • You are a national of a country with a bilateral agreement with France (e.g., Morocco, Tunisia, Senegal, Mali, etc.)
  • You have held eligible types of residence permits (not including student or seasonal worker statuses)
  • You meet income and resource requirements
  • You fulfill French integration criteria (exceptions may apply to Moroccans and Tunisians)

Family Reunification Cases

You can apply for a residence card if:

  • You arrived in France via family reunification and joined a non-EU relative who already holds a residence card
  • You have lived in France for at least 3 years
  • You meet the integration condition

This path is often chosen by spouses, children, or dependent family members of long-term residents.

Parents of French Children

If you are the parent of a French citizen and have lived in France for at least 3 years under a temporary “private and family life” residence permit, you may request a residence card.

For nationals of many West and Central African countries, no minimum length of stay is required—only proof of integration.

After 5 Years: Long-Term EU Residence Card

Non-EU residents may apply for the EU long-term residence permit after five years of continuous legal residence if they meet the following criteria:

  • Reside in France under qualifying residence permits for at least 5 years
  • Hold valid health insurance
  • Earn income at least equal to the French minimum wage (SMIC), currently €21,621.60/year
  • Demonstrate successful integration

This card facilitates mobility within other EU countries and reinforces your tax residency status in France.

Why the Residence Card Matters for Your Certificate of Tax Domicile

Securing a French residence card is often a prerequisite for obtaining a certificate of tax domicile, a key document used to:

  • Prove tax residency to foreign tax authorities
  • Avoid double taxation under international tax treaties
  • Validate your eligibility for certain social security and tax benefits in France

As your tax situation becomes more complex—especially if you’re a business owner, investor, or cross-border professional—it becomes essential to align your immigration and fiscal status. Our guide on the French payroll tax calculator can also help you understand how contributions are calculated once you’re legally domiciled in France.

How ESCEC International Can Help

At ESCEC International, we guide entrepreneurs, international employees, and investors through the complexities of immigration, tax residency, and compliance in France.

We can help you:

  • Apply for your residence card or renew your current status
  • Understand the tax implications of French residency
  • Secure your certificate of tax domicile with the appropriate supporting documentation
  • Plan your payroll and social contributions efficiently

Ready to secure your long-term status in France?
Contact ESCEC International to get expert support for your residence card, tax residency, and certificate of tax domicile—so you can settle in France with confidence.

French Payroll Tax Calculator – Understand Your Salary & Contributions

/in /by

If you’re employed in France—or planning to recruit in the French market—understanding how salary, social contributions, and overall employment costs are calculated is essential. The French payroll tax calculator, provided by URSSAF, is a reliable tool that helps estimate gross salary, net income, and the full cost of employment.

What Is the French Payroll Tax Calculator?

The French payroll tax calculator is an online simulator developed by URSSAF, the French social security contributions authority. It offers a detailed breakdown of:

  • Gross monthly salary
  • Employee contributions
  • Employer contributions
  • Net salary before and after income tax
  • Total employer cost

This tool is particularly helpful for international employees, expats, and companies seeking clarity on payroll expenses in France.

To try the official simulator, you can visit the Contribution Simulator – Employees page on Welcome to France.

The Importance of Social Contributions in France

Social security contributions in France fund the national systems that provide:

  • Health coverage
  • Pension and retirement benefits
  • Family support
  • Unemployment insurance
  • Work injury compensation

Employers and employees both contribute to these charges. That’s why using a French payroll tax calculator is crucial to accurately forecast salary costs and net income.

Limitations of the URSSAF Simulator

While the calculator is an excellent reference point, it’s important to note:

  • It does not account for industry-specific agreements or collective bargaining terms
  • It excludes potential government hiring subsidies or financial aid
  • It provides estimates and not final, contractually binding figures

To explore support programs for hiring in France, consult the national portal: aides-entreprises.fr

For more insight into personal taxation and payroll withholding obligations, check our detailed guide:
👉 Withholding Tax in France: A Complete 2025 Guide by ESCEC International

How ESCEC International Can Help

At ESCEC International, we specialize in payroll and HR support for international professionals and businesses operating in France. Our firm can help you:

  • Accurately calculate payroll taxes and net salaries
  • Navigate French social contribution rules
  • Optimize employment contracts for compliance and tax efficiency
  • Understand how income tax is withheld and how to manage declarations

Whether you are setting up a business, hiring your first employee, or transitioning from freelance to salaried work in France, we provide clear, English-speaking support tailored to your needs.

Get Expert Support in French payroll tax calculator

The French payroll tax calculator is a great way to begin estimating salary costs—but for peace of mind and full compliance, expert advice is essential.

Visit www.escec-international.com to connect with our team and simplify your payroll and tax experience in France.

Withholding Tax in France: A Complete 2025 Guide by ESCEC International

/in /by

Since its implementation in 2019, the withholding tax system (Prélèvement à la source, or PAS) has reshaped how personal income tax is paid in France. Instead of paying tax the following year, taxpayers now contribute in real time, as they earn.

At www.escec-international.com, we assist international professionals, new residents, and self-employed individuals in understanding how withholding tax affects their financial obligations in France.

What Is Withholding Tax in France?

It allows the French government to collect income tax at the time income is received. For salaried individuals, the tax is deducted directly from each monthly paycheck by the employer, who applies a tax rate provided by the French tax authorities.

This system avoids year-end tax bills and ensures that taxes align with real-time income. The deducted amount is visible on your monthly payslip and automatically transferred to the tax authorities.

Who Is Subject to Withholding Tax?

Withholding tax applies only to individuals considered French tax residents. If you live in France, or your primary economic or family ties are located in France, you are likely subject to this tax system.

Non-residents are not subject to withholding tax unless otherwise specified in a tax treaty. Instead, they may be subject to deduction at source, a different mechanism with its own fixed tax rates for income earned in France.

ESCEC International helps you determine your residency status and understand whether withholding tax or another system applies to your situation.

How Is the Withholding Tax Rate Calculated?

The withholding tax rate applied to your income is based on your latest filed French income tax return. Couples can choose between:

  • A common rate based on joint household income
  • Separate individualized rates for each partner

You can request an update to your tax rate if your circumstances change significantly. Once approved by the tax authorities, your employer will apply the new rate within two months. Requests are made through the official French tax website: www.impots.gouv.fr.

New Residents in France and the Neutral Rate

New arrivals who have not yet filed a tax return in France are automatically assigned a non-personalized (neutral) tax rate. This rate:

  • Is based solely on your income bracket
  • Ignores your family situation, deductions, or dependents
  • Often results in a higher-than-necessary tax payment

To benefit from a personalized rate, newcomers may submit Form 2043 (paper only) to the French tax office. ESCEC International assists with this process to ensure your rate accurately reflects your profile from the start.

Withholding Tax for Self-Employed Individuals

Self-employed professionals, including freelancers and business owners, do not have salaries from which tax can be withheld. Instead, they make advance tax payments based on previous income, either monthly or quarterly.

When launching a new business in France, you can:

  • Start paying estimated advances immediately, or
  • Wait until September of the following year to begin

Our team at ESCEC International supports you in projecting earnings and managing these payments efficiently, avoiding under- or overpayment of taxes.

Withholding Tax in French Overseas Territories

For businesses operating in France’s overseas regions (such as Guadeloupe, Martinique, Mayotte, Réunion, and French Guiana), special tax advantages apply. These include:

  • Tax exemptions for company directors (30% or 40%, depending on location)
  • Increased tax credits for innovation and research
  • Social security contribution relief for eligible companies

We advise entrepreneurs and companies expanding into overseas territories on how to maximize these incentives while remaining compliant with withholding tax obligations.

Why Work with ESCEC International?

At www.escec-international.com, we provide expert, multilingual guidance to individuals and businesses dealing with France’s tax system. Whether you are:

  • New to France
  • A cross-border professional
  • Self-employed or launching a company
  • Managing employees in France

We help you understand and apply withholding tax rules correctly and efficiently. From registration and rate adjustments to payment planning and tax strategy, we make the process clear and manageable.

Get in touch with ESCEC International today to simplify your withholding tax obligations and ensure full compliance with French tax regulations.

Taxation Determination in France: How to Know If You’re a French Tax Resident

/in /by

Understanding your taxation determination in France is essential if you live, work, or earn income across borders. Whether you’re a foreign national, an expat entrepreneur, or someone relocating to France, knowing how your tax residency is determined will help you stay compliant and avoid double taxation.

At www.escec-international.com, we help international clients navigate this process with confidence.

Taxation Determination: When Are You a Tax Resident in France?

Your tax residency status isn’t a personal choice—it’s defined by legal rules and international tax treaties. According to French law, you’re considered a French tax resident if at least one of the following conditions applies:

  • Your permanent home is in France – this is where you or your immediate family (spouse and/or children) usually live.
  • You split your time between countries, but your main economic and personal ties are in France (i.e., your primary job, investments, or business activity are based in France).
  • You spend more than 183 days in France during the year – this automatically places your main stay in France, which is a strong indicator in taxation determination.
  • In more complex scenarios, your nationality may be used as a deciding factor. For example, if all other criteria are inconclusive and you hold French citizenship, France may consider you a tax resident.
  • If no clear determination can be made, the tax authorities in both countries involved can negotiate your residency status under applicable tax treaties.

Why Taxation Determination Matters

Correct taxation determination affects how your income is taxed:

  • As a French tax resident, you’re required to declare and pay taxes on your worldwide income, including earnings from abroad.
  • If you’re a non-resident, you’re only taxed on French-source income, such as property rentals, employment income, or dividends from French companies.

Understanding your status ensures you comply with the law and avoid unnecessary taxation or penalties.

Tax Treaties and Double Taxation Relief

France has signed numerous bilateral tax treaties to help resolve dual residency issues and prevent the same income from being taxed twice. These treaties are key in cross-border taxation determination and ensure fair treatment for individuals with international lives.

At ESCEC International, we review your personal situation and the applicable treaties to determine the right tax position and help you file accordingly.

Need Help with Your Tax Residency?

If you’re unsure whether you qualify as a French tax resident or how to apply international tax rules to your case, ESCEC International can help. Our experts specialize in taxation determination for individuals and businesses with international footprints.

📞 Contact us today for a private consultation and secure your compliance with French tax law.

How to Fill Out French Tax Forms: Your First Tax Return Made Easy

/in /by

Navigating French tax forms for the first time can be overwhelming—especially if you’ve just moved to France or receive income from French sources while living abroad. At www.escec-international.com, we specialize in simplifying the French tax system for international professionals, entrepreneurs, and individuals.

Whether you’re a resident or a non-resident, here’s everything you need to know about completing your first French income tax return.

For Non-Residents Earning Income in France

If your main residence is outside France, but you receive income from French sources (e.g., rental properties, dividends, or consulting services), you’re still required to declare this income using the Cerfa form 2042—the primary French tax form for income declaration.

Your completed tax form should be sent to the Non-Resident Personal Income Tax Office (Service des Impôts des Particuliers Non-Résidents).

Good to know: France has signed tax treaties with many countries to avoid double taxation. ESCEC International can help you determine how these agreements apply to your situation and ensure you’re not taxed twice.

For Individuals Who Became Residents of France

If you moved to France and meet any of the following criteria, you’re considered a tax resident and must declare your global income:

  • Your main home is now in France (you spend more than 183 days a year here)
  • Your primary professional activity is in France
  • Your main economic interests are in France

In your first year, you must submit your French income tax declaration on paper, using Cerfa 2042, the standard French tax form. Once registered with the French tax system, you’ll receive login details to file your future declarations online at www.impots.gouv.fr.

📌 Tip from ESCEC International: Submit your tax return as early as possible. We help new residents avoid mistakes that could delay registration or result in penalties.

If You Received French Income Before Moving

Did you earn income from French sources before officially moving to France? This must be declared separately using Cerfa form 2042-NR. After your arrival, all income—whether earned in France or abroad—should be declared using the general Cerfa 2042.

ESCEC International will ensure you file the right forms, in the right order, so your transition into the French tax system is smooth and fully compliant.

Which French Tax Forms Do You Need?

Here’s a quick overview of the main French tax forms:

  • Cerfa 2042: Main tax return for individuals residing in France
  • Cerfa 2042-NR: For non-residents or those who earned French income before moving
  • Additional annexes may be required depending on your income type (e.g., rental income, business income)

At www.escec-international.com, we guide you in selecting and completing the exact forms required for your unique profile, whether you’re a freelancer, investor, remote worker, or entrepreneur.

Where to Send Your Completed Tax Forms

Your first French tax return must be submitted to:

Service des Impôts des Particuliers Non-Résidents
10 rue du Centre
TSA 10010 (individuals) or TSA 20011 (professionals)
93160 NOISY-LE-GRAND – FRANCE

Need Help with French Tax Forms?

Filing your first tax return in France doesn’t have to be a headache. At www.escec-international.com, we provide expert tax advisory services for expats, international clients, and anyone navigating French tax forms for the first time.

📞 Contact us today.

How Can Non-Residents Set Up Their Personal Tax Account in France?

/in /by

Accessing Online Services with Your Tax Number in France

Your tax number in France is essential for accessing online tax services. Each member of your tax household can log in using their individual tax number to manage taxes, file income declarations, or review their personal tax situation, regardless of their tax liabilities.

How to Create a Personal Tax Account as a Non-Resident

If you are a non-resident and do not yet have an online tax account in France, you may be eligible to set one up depending on your tax status.

If You Have a Tax Number in France and Are Liable for Income Tax

You can create your account independently using the three key identifiers found on your tax documents:

  1. Tax Number in France – A 13-digit tax identification number located at the top of your latest income tax return or on official tax documents (such as income tax and local tax assessment notices).
  2. Online Access Number – Found on the first page of your most recent income tax return. This number changes yearly, so always use the one from your latest tax return.
  3. Reference Taxable Income – Available on the first page of your latest tax assessment notice in the “Vos références” (Your References) section. If not listed there, check the “Informations complémentaires” (Other Information) section, especially if you received a tax relief notice.

If You Do Not Have a Tax Number in France

You may still request to create an account if:

✔️ You have income subject to withholding at source in France.
✔️ You do not pay income tax but have a tax number in France due to local property taxes (e.g., residence tax on a second home or property tax).

To proceed, visit the impots.gouv.fr website and fill out the required online form.

You will need to provide:

  • Your personal details (marital status).
  • Your foreign postal address.
  • A copy of an official identification document.

Once your identity is verified, you will receive an email allowing you to create your account. Simply enter your tax number in France and date of birth on the login page.

To finalize the process, set up your login credentials:
✔️ Provide your email address.
✔️ Choose a secure password.
✔️ Click the confirmation link in the email (valid for 8 hours).

Important Notes for First-Time Income or Asset Declarations in France

🔹 If you are declaring income or assets in France for the first time, online account setup will not be available. Instead, you must submit a paper tax return by mail. The necessary forms can be downloaded from impots.gouv.fr by searching for the relevant document.

🔹 Once your account is created, your chosen password will be required for all future logins.

🔹 Lost your tax number in France or password? A recovery option via SMS is available if you register your mobile phone number in your personal account.

By setting up your personal tax account and ensuring you have your tax number in France, you can efficiently manage your tax obligations as a non-resident and gain secure access to online tax services.

Taxe Logement Vide: Understanding Vacant Housing Taxes (TLV & THLV) in France

/in /by

If you own a property in France that has been unoccupied for at least one year, you may be required to pay the taxe logement vide—either the Vacant Housing Tax (TLV) or the Vacant Housing Residence Tax (THLV). The application of these taxes depends on the municipality where your property is located. Unlike the abolished residence tax on primary residences, both TLV and THLV remain in effect.

What Is the Taxe Logement Vide?

The taxe logement vide is a tax applied to residential properties that remain vacant for an extended period. The two main forms of this tax are:

  • TLV (Vacant Housing Tax): Imposed in areas where housing demand significantly exceeds supply.
  • THLV (Vacant Housing Residence Tax): Applied in municipalities that are not subject to TLV but still choose to tax vacant properties.

Understanding whether your property is affected by taxe logement vide can help you prepare for potential tax obligations and avoid penalties.

Vacant Housing Tax (TLV)

The Vacant Housing Tax (TLV) is regulated under Article 232 of the General Tax Code. It applies to municipalities experiencing a housing shortage, where the demand for housing is significantly higher than the supply.

Which Areas Are Subject to TLV?

TLV applies to municipalities with:

  • High rental prices
  • High property acquisition costs
  • A large number of secondary residences
  • More housing demands than available rentals

The list of affected municipalities is defined by Decree No. 2023-822 of August 25, 2023, which modifies Decree No. 2013-392 of May 10, 2013.

To check if your property is located in a TLV zone, you can use the official simulator on Service-Public.fr.

Who Has to Pay TLV?

You must pay the taxe logement vide under TLV if:

  • You are the owner or usufructuary of a non-furnished residential property.
  • The property has been vacant for at least one year as of January 1st of the tax year.

For example, if your property was vacant on January 1, 2025, and had been unoccupied since at least January 1, 2024, it is subject to TLV for the 2025 tax year.

How Is TLV Calculated?

The tax is based on the rental value of the property, with the following tax rates:

  • 17% for the first year the property is taxable
  • 34% for subsequent years

Revenue from TLV is allocated to the National Housing Agency (Anah).

Vacant Housing Residence Tax (THLV)

If your property is not subject to TLV, your municipality may apply the Vacant Housing Residence Tax (THLV)instead.

Who Has to Pay THLV?

You are required to pay THLV if:

  • You are the owner or usufructuary of a non-furnished residential property.
  • The property has been vacant for more than two years as of January 1st of the tax year.

How Is THLV Calculated?

Like TLV, THLV is based on the rental value of the property. However, the tax rate varies by municipality and is equivalent to the residence tax rate for second homes.

Exemptions from the Taxe Logement Vide (TLV & THLV)

Certain properties are exempt from taxe logement vide, including:

✔️ Non-residential properties
✔️ Public housing (HLM) and properties within the public domain
✔️ Properties vacant due to circumstances beyond the owner’s control, such as:

  • Listed for rent or sale at market price but not finding tenants or buyers
  • Undergoing urban renewal, rehabilitation, or demolition projects
    ✔️ Properties occupied for at least 90 consecutive days (3 months) per year
    ✔️ Properties requiring significant renovations to be habitable (e.g., heating system replacement), with renovation costs exceeding 25% of the property’s value
    ✔️ Furnished secondary residences, which are already subject to the residence tax

Conclusion: How to Manage Your Taxe Logement Vide Obligations

If you own a vacant property in France, it’s important to check whether it falls under TLV or THLV to avoid unexpected tax liabilities. The taxe logement vide is designed to encourage property owners to either rent out or sellvacant housing to alleviate housing shortages.

To find out if your property is subject to taxe logement vide, visit Service-Public.fr and use the official simulator. If you are eligible for an exemption, ensure you gather the necessary documentation to justify your claim.

Would you like more insights on how to optimize your real estate investments and reduce your taxe logement vide obligations? Let me know!

Understanding France Tax Percentage: How Your Income is Taxed as a Non-Resident

/in /by

As a non-resident for tax purposes in France, your taxable income is subject to specific regulations based on tax treaties between France and your country of residence. France Tax percentage. The tax you owe is calculated using one of two methods:

  1. Application of the progressive income tax scale with a minimum tax rate
  2. Optional application of the average tax rate

Progressive Income Tax Scale and Minimum Tax Rate in France

The tax rate for non-residents follows the progressive income tax scale, but only applies to income taxable in France. In this case, a minimum tax rate applies:

  • 20% (or 14.4% for income earned in French overseas départements) on income below a specified threshold (€29,373 for 2024).
  • 30% (or 20% in overseas départements) for income exceeding this threshold.

If the tax calculated using the progressive scale results in a higher rate than the minimum, then the progressive rate is applied.

Understanding the Average Tax Rate in France

As a non-resident, you may opt for the average tax rate if it is more favorable. This requires reporting both your French and foreign income, with supporting documents.

The average rate is determined using the progressive tax scale, calculated on worldwide income. To establish the taxable income and applicable rate, deductions and allowances similar to those applied to residents are taken into account. These include:

  • A 10% automatic deduction on wages, salaries, and pensions
  • A 30% fixed deduction on rental income (if under the simplified tax regime “régime micro foncier”)
  • Actual expense deductions for rental income under the “régime réel foncier”

Only French-sourced income is taxed at the average rate, and this method eliminates the minimum tax rate if it is more advantageous.

Example Calculation of it for Non-Residents

A pensioner residing outside France receives:

  • €10,000 net property income from France
  • €10,000 net pension income (not taxable in France)

Step 1: Calculate Tax Using the Progressive Scale

Total worldwide income = €20,000 Total tax calculated using the progressive scale = €935.33

Step 2: Determine the Average Tax Rate

(935.33 / 20,000) × 100 = 4.67%

Step 3: Apply the Average Rate to French Income

€10,000 × 4.67% = €467

Step 4: Compare with Minimum Tax Rate

  • Minimum rate: 20% → €2,000
  • Average rate: 4.67% → €467 (More favorable, so it applies)

How to Choose the Average Tax Rate in France

If the average tax rate is beneficial, you should check the relevant box when filing your tax return online or submit form 2042-C (paper return) and provide supporting documents such as:

  • A copy of your foreign tax return
  • A certified copy of your tax assessment from your country of residence
  • If unavailable, form 2041-TM as a sworn declaration

If you missed selecting the average tax rate when filing, you can:

  • Use the online correction service (available from August to December)
  • Send a request via secure messaging on your tax account or by post to:
    Service des Impôts des Particuliers Non-Résidents
    10 rue du Centre, TSA 10010, 93465 Noisy-le-Grand Cedex, France

Final Thoughts on France Tax Percentage for Non-Residents

Understanding France’s tax percentage system is crucial for non-residents to optimize their tax liability. Opting for the average tax rate can significantly reduce your tax burden compared to the default 20% or 30% minimum rate. Always review your tax filing options carefully and ensure you provide the necessary documentation to benefit from the most favorable taxation method.

Leaving France: Are You Affected by the Exit Tax?

/in /by

If you transfer your tax residence outside of France, you may be subject to the Exit Tax under certain conditions. This tax applies to unrealized capital gains, receivables originating from an earn-out clause, and capital gains placed under a deferred tax regime.

1. Who Is Concerned?

You are subject to the Exit Tax if:

  • You have been a French tax resident for at least six years within the ten years preceding the transfer of your tax residence abroad.
  • You own shares, securities, or rights with a total value of at least €800,000 or representing at least 50% of a company’s profits.

However, under specific conditions, you may be eligible for a payment deferral, and a tax relief may apply in certain situations.

2. Changes to the Exit Tax Since 2019

For tax residence transfers occurring from January 1, 2019, modifications have been made to the Exit Tax regulations. These changes are not retroactive for taxpayers who moved their tax residence before this date.

3. Payment Deferral

Taxpayers transferring their tax residence outside of France can apply for a payment deferral for the taxes due. This deferral can be:

  • Automatic, depending on the destination country.
  • Granted upon request, requiring submission of Form 2074-ETD along with a proposed guarantee.

Since 2019, taxpayers moving to a non-cooperative state or territory (ETNC) or a non-EU country that does not have agreements with France for tax fraud prevention and recovery assistance can still apply for a deferral upon request. However, those transferring to other third-party countries outside the European Economic Area no longer qualify for this option.

For tax residence transfers made from November 22, 2019, the request must be submitted at least 90 days before the transfer, rather than 30 days prior as previously required.

If a taxpayer moves successively from one country that qualifies for an automatic deferral to another where only a deferral upon request is available, a new deferral application must be submitted at least 90 days before the second transfer.

4. Tax Relief Conditions

For transfers occurring after January 1, 2019, the tax relief period has been reduced. The taxpayer can obtain an Exit Tax exemption after:

  • Two years, if the total value of the securities subject to the Exit Tax is below €2,570,000.
  • Five years, if the value exceeds this threshold.

This rule now applies to shares in real estate-dominant companies subject to corporate tax at the time of the tax residence transfer.

For transfers made between March 3, 2011, and December 31, 2013, the tax relief period was eight years. However, as per the 2024 Finance Law (Article 11-II, Law No. 2023-1322 of December 29, 2023), social contributions that were still due can now be subject to a tax relief or reimbursement, provided that ownership of the securities is maintained until the eight-year period expires.

For transfers between 2014 and 2018, the Exit Tax and social contributions are relieved after 15 years.

5. Tax Reporting Obligations: exit tax

The Exit Tax framework requires two key tax declarations:

  • Form 2074-ETD, submitted when transferring tax residence outside of France, declaring unrealized capital gains, receivables from an earn-out clause, and deferred taxation capital gains.
  • Form 2074-ETS, submitted in subsequent years if a tax deferral was granted, ensuring continued monitoring of the tax obligations.

The 2074-ETS declaration has different versions depending on the year of tax residence transfer:

  • Form 2074-ETS1 for transfers in 2011 or 2012.
  • Form 2074-ETS2 for transfers in 2013.
  • Form 2074-ETS3 for transfers from January 1, 2014, onward.

These declarations must be submitted within the same deadline as the annual income tax return (i.e., in the year following the transfer for Form 2074-ETD).

If a full payment deferral is granted and no event has occurred to terminate the deferral or grant a tax relief, a simplified declaration (2074-ETSL) must be completed.

Additionally, the total amount of deferred tax must be reported in Box 8TN of the 2042C declaration (transferring information from Form 2074-ETS).

If a payment deferral is not granted, the follow-up declaration must only be submitted in case of an event leading to the refund of all or part of the initially paid Exit Tax.

If you later transfer your tax residence to another country, this move may affect your tax obligations. In such cases, you must notify the Non-Resident Tax Office (DINR) by sending a written notice within two months of the new transfer.