French Tax Guide 2026
Important: The information provided below is intended as a general overview of the French tax system for 2026. It should not be considered legal, tax, or financial advice. Individuals and businesses should seek professional guidance tailored to their specific circumstances.
Contents
- French tax residency rules
- Tax implications of French residency
- Personal income tax rates for 2025 income declared in 2026
- Available tax deductions and allowances
- Income tax filing deadlines
- Corporate income tax rates
- Value Added Tax (VAT) in France
- Capital gains tax on French real estate
- Local property taxes
- Real Estate Wealth Tax (IFI)
- Taxation of investment income
French Tax Residency Rules
An individual is generally regarded as a French tax resident when at least one of the following conditions applies:
- They spend more than 183 days per year in France.
- Their principal professional activity is carried out in France.
- Their primary home or habitual residence is located in France.
- France represents the center of their economic interests, such as where they hold their main investments, manage business activities, or earn most of their income.
When a person may be considered resident in more than one country, the applicable double taxation treaty between the countries concerned is used to determine their tax residence status.
Tax Consequences of French Residency
Individuals classified as French tax residents are generally subject to:
Worldwide Income Taxation
French residents must declare and pay tax on income and capital gains earned worldwide. If foreign taxes have already been paid on the same income, tax treaty provisions may help prevent double taxation.
Wealth Tax Exposure
French residents may be liable for Real Estate Wealth Tax (IFI) on qualifying real estate assets held both in France and abroad.
Inheritance and Gift Tax
Assets transferred through inheritance or gifts may be subject to French taxation. International agreements may provide relief where multiple jurisdictions have taxing rights.
Personal Income Tax Rates
The French income tax system is progressive. For income earned during 2025 and reported in 2026, the following tax bands apply:
| Taxable Income (€) | Tax Rate |
|---|---|
| Up to 11,600 | 0% |
| 11,600 – 29,579 | 11% |
| 29,579 – 84,577 | 30% |
| 84,577 – 181,917 | 41% |
| Above 181,917 | 45% |
Family Quotient System
France calculates income tax based on the household rather than the individual taxpayer. Household income is divided by a number of “parts” corresponding to family composition before applying the tax brackets.
After the tax is calculated on each part, the result is multiplied by the total number of parts to determine the household’s tax liability.
Children increase the number of tax parts allocated to the household. However, the tax benefit generated by each child is capped at €1,807.
Tax Deductions and Allowances
Employment Income Deduction
Employees benefit from a standard deduction equal to 10% of salary income, subject to a maximum deduction of €14,426.
Pension Contributions
Contributions made to approved retirement savings plans may be deductible. The deduction is generally limited to 10% of eligible earnings, based on the applicable annual ceiling, with a minimum deduction available under certain conditions.
Income Tax Filing Deadlines
The French tax year corresponds to the calendar year, running from 1 January to 31 December.
Annual tax returns are generally submitted during the spring following the tax year. Exact filing dates vary depending on the taxpayer’s department of residence and whether the return is filed electronically or on paper.
France also operates a withholding tax system known as Prélèvement à la Source, under which income tax is collected throughout the year based on information contained in the taxpayer’s most recent tax assessment notice.
Corporate Income Tax Rates
Standard Corporate Tax Rate
The standard French corporate income tax rate is 25%.
Reduced Rate for Eligible SMEs
Certain small and medium-sized enterprises may benefit from a reduced tax rate of 15% on the first €42,500 of taxable profits, with profits above that threshold taxed at 25%.
To qualify, companies generally must:
- Generate annual turnover below €10 million.
- Have fully paid-up share capital.
- Be at least 75% owned by individual shareholders.
Value Added Tax (VAT)
Standard VAT Rate
The standard VAT rate in France is 20% and applies to most goods and services.
Reduced VAT Rates
Lower VAT rates are available for specific sectors and activities:
5.5% or 10% rates may apply to:
- Certain food products
- Gas and electricity supplies
- Passenger transportation services
- Hotels and tourist accommodation
- Books, cinemas, theatres, and cultural activities
- Eligible energy-efficiency renovation works in a main residence
Super-Reduced VAT Rate
A special VAT rate of 2.1% applies to a limited range of products and services, including certain pharmaceutical products and television licence-related activities.
Capital Gains Tax on French Property
Main Residence Exemption
The sale of a taxpayer’s principal residence is generally exempt from capital gains tax.
Determining the Taxable Gain
The taxable gain is calculated by deducting eligible acquisition and improvement costs from the sale price.
Allowable costs may include:
- Purchase price
- Notary fees and acquisition expenses
- Agency fees
- Renovation and improvement works supported by invoices
Where actual acquisition costs are unavailable, a flat-rate allowance of 7.5% of the purchase price may be used. For properties owned for at least five years, a flat-rate allowance of 15% may be applied for qualifying improvement works if supporting invoices are unavailable.
Ownership Relief
Capital gains benefit from progressive reductions based on the length of ownership.
- Full exemption from income tax generally applies after 22 years of ownership.
- Social charges are fully eliminated after 30 years of ownership.
Additional Tax on Large Capital Gains
An additional surcharge may apply to taxable gains exceeding €50,000, with rates increasing according to the size of the gain.
Current Tax Rates
For both residents and non-residents, taxable property gains are generally subject to:
- 19% capital gains tax
- 17.2% social charges
Local Property Taxes
France imposes local taxes on real estate ownership and occupation.
Taxe Foncière
This annual tax is payable by the property owner.
Taxe d’Habitation
Where applicable, this tax is generally paid by the occupant of the property.
Individuals who both own and occupy a property may be responsible for both taxes depending on the circumstances.
Real Estate Wealth Tax (IFI)
The Impôt sur la Fortune Immobilière (IFI) applies to qualifying real estate assets owned on 1 January of the tax year.
IFI Rates
| Net Real Estate Wealth (€ million) | Rate |
|---|---|
| 0.8 – 1.30 | 0.50% |
| 1.30 – 2.57 | 0.70% |
| 2.57 – 5.00 | 1.00% |
| 5.00 – 10.00 | 1.25% |
| Above 10.00 | 1.50% |
A tax return is generally required only when net taxable real estate assets exceed €1.3 million.
A transitional reduction may be available where net taxable wealth falls between €1.3 million and €1.4 million.
Scope of Taxation
- French residents are taxed on worldwide real estate assets.
- Non-residents are taxed only on French real estate holdings.
IFI declarations are submitted together with the annual income tax return.
Taxation of Investment Income
Interest, Dividends and Investment Gains
Investment income is typically declared through the annual income tax return and may be taxed under the standard progressive income tax scale.
Dividend Taxation
Dividend income may be taxed under one of two methods:
- A flat income tax rate of 12.8%; or
- The progressive income tax scale after applying a 40% allowance designed to reflect corporate tax already paid by the distributing company.
Social Contributions
Investment income is generally subject to French social contributions, which currently amount to 18.6%.
Need Professional Assistance?
French taxation can be complex, particularly for expatriates, international investors, business owners, and individuals with assets in multiple countries. Obtaining specialist advice can help ensure compliance, optimise tax planning opportunities, and avoid costly reporting errors.
