Understanding Your French Tax Notice

Minimum Tax Rate for Non-Residents (Article 197 A, French Tax Code)

If you are not a tax resident in France, your income tax is calculated solely on income sourced from France, in accordance with international tax treaties. The tax is applied using France’s progressive income tax rates and incorporates the family quotient system, reflecting your household situation, similar to residents.

However, a minimum tax rate applies:

For income from mainland France (excluding overseas departments), the minimum rate is 20% on net taxable income up to €28,797 for income received in 2023, and 30% for income above that threshold.
For income from overseas departments, the minimum rate is 14.4% up to €28,797 and 20% beyond that amount.

If you relocate abroad during the year (year Y), you are taxed as a resident up to your departure date, and as a non-resident thereafter.

Your tax notice will indicate if the “minimum 20% tax rate” has been applied due to non-resident status.

Applying a Lower Average Tax Rate

You may be eligible to benefit from a reduced average tax rate if you can demonstrate that the overall French tax liability on your worldwide income is lower than the minimum rates applied.

Certain deductions, such as maintenance payments (alimony), can be considered in calculating this average rate, but only if they are taxable in France for the recipient and did not grant you a tax deduction in your country of residence.

When filing online, you can opt for this average rate in step 3 (“Income and Charges”) by selecting the option to benefit from the average tax rate if it is more favorable, and provide the breakdown of your French and foreign income.

For paper filers, enter the total income (French and foreign) in box 8TM of form 2042-C, and provide details on form 2041 TM available on the official tax website.

It is generally advantageous to select this option, as the tax administration applies the average rate only if it lowers your tax burden.

Online declarations automatically calculate your worldwide income and provide an estimate of your tax based on the average rate. You may also submit documentation to the Non-Residents Tax Office to support your claim, but expect longer processing times due to volume.

Income Not Subject to Personal Income Tax (Withholding Tax – Article 197 B)

Withholding tax applies to wages, pensions, and annuities at bracketed rates (0%, 12%, and 20%; or 0%, 8%, and 14.4% for overseas departments).

On your tax notice, the “retenue à la source libératoire” line corresponds to income taxed at 0% and 12%, representing a 10% allowance deduction on your net income, capped at €44,172 for 2022 income.

For example, if your net income after allowance is €146,557 for 2023, tax is calculated on €100,000 (€146,557 minus €46,557).

Only amounts withheld at the 20% bracket (14.4% overseas) may be credited directly against your income tax. Therefore, withholding amounts shown on your notice may differ from the amounts you declared.

You can request reimbursement of excess withholding if it exceeds your tax due calculated at the average rate.

Multiple Income Sources and Withholding Adjustment

If you receive income from multiple employers or pension funds, each withholds tax independently. Your tax notice will show an adjustment (“Plurality of debtors – adjustment of withholding”) to reconcile this with the total household income, ensuring correct overall taxation.

Deductibility of Actual Expenses

Only the portion of income subject to 20% withholding (14.4% overseas) is considered when deducting actual expenses. Consequently, deductible expenses are proportionate to the taxable portion of your wages or salaries.

Deductions, Credits, and Reductions for Non-Residents

Generally, non-residents cannot deduct expenses related to French-source income or claim most tax credits reserved for residents or “Schumacker non-residents.”

However, some exceptions apply:

Tax credits for eligible technological risk prevention work on rented residential properties.
“Pinel” and “Denormandie” investment tax reductions are preserved if you were resident in France at the time of investment, even after becoming non-resident.
Since 2022, non-residents may benefit from the “Loc’Avantages” tax credit under certain conditions.
Non-resident taxpayers engaged in non-wage professional activities may qualify for specific business tax credits.

Taxable Income and Reference Taxable Income

Your reference taxable income (based only on French income) and taxable income are indicated on your tax assessment notice’s first page and within the detailed tax calculation.