Taxation

Other taxes

Taxe sur la valeur Ajoutée (TVA – equivalent to VAT)

The TVA (Taxe sur la Valeur Ajoutée) is an expenditure tax imposed on consumers of goods and services. It is payable on almost all commercial goods and services, with few exceptions.

The main rates of the TVA are:

Income tax and company tax

Broadly speaking, how you are taxed depends on the legal structure of the business and your level of turnover.

Based on this, a business may be taxed either under the personal income tax system (Impôts sur le Revenu), or under the company tax (Impôts sur les Societés).

Then, once you have determined under which system you are taxed, you will have to choose the tax status, i.e. to be taxed either as a micro-entreprise or through the rules of the régime reel.

Taxes related to real estate

Here are the taxes related to real assets as when you are buying a property in France.

When you are purchasing a property in France, the Notaire's fees, disbursements and stamp duties amount to approximately 6.5% - 7% of the purchase price (if the property is more than five years old).

French capital gain tax

Capital gains tax in France (namely impôt sur les plus values) is a tax payable on the sale of fixed assets (land or buildings) as well as on other movable assets (such as shares).

The tax is applied on the gain made by selling the property, i.e. the difference between the purchase price and the selling price. The tax is calculated at the time of the sale by the French Notaire and deducted from the proceeds of the sale.

The applicable tax rate depends on your country of residence, i.e.:

Rental income tax

If you intend to rent your French  property out, it is important to be aware of the tax implications.

First of all please note that whether you are resident in France or not, you are liable to French income tax on French rental earnings. As such, you will need to submit a tax return to the French authorities of your rental income in France (together with any other French sourced income), even though you are not a French resident.

Wealth tax

French residents are liable to wealth tax (namely Impôts Solidarité sur la Fortune) on their worldwide assets, based on the value of the assets as at 1 January each year. The tax is based on the wealth of the household, including spouse and infant children. Unmarried couples living together are treated as one household for wealth tax purposes.

Non-residents are liable to wealth tax on their French assets.

French resident

You will be considered a French resident if:

Income tax

In France, almost any activity other than unfurnished lettings constitutes a business. As such, as an individual, even if you are not running a business, you may be subject to business tax.

Furthermore, the tax base calculation depends on whether you are French resident or not.

If you are a French resident, income tax (called Impôt sur le Revenu des Personnes Physiques - IRPP) applies to your worldwide income (salaries, pensions, trading income, investment income, rental income, etc.). If you are not a French resident, it applies only to your French-source income.