YES! It’s that time of the year again when we start receiving the dreaded income tax form to fill in (from mid-April to Mid-May)! Some of you thought that the new changes with Monthly payments taken at source (prélèvement à la source) would stop that but no, you still have to fill in a form!!
As the forms were not available at the time of writing this article, I have decided to give you a prelude on French income tax. I will be explaining who must fill in a tax form, what revenue you have to declare, how the double taxation treaty works between France and UK and lots of other information.
Next month, when the new forms are available, I will explain to fill them in, in detail.
- Who has to fill in the tax form:
Basically, everybody who is a French resident (lives in France more than 6 month per year) whether you are employed, self-employed or retired and even if you are obliged to pay taxes in the UK!
Also, non-French residents who have rented property in France.
If it is your first time, you have to go to the Trésor public office (tax office) and ask for the forms, which are available from the first week of May. Or you can download them from the tax office web site.
The reason we still fill in a form is because of tax advantages such as children, employing a cleaner, etc. If you have children or a spouse earning much less than you it will lower your taxable income as you are taxed as a family not an individual. Adults count as 1 point, the first 2 children as ½ point each and the third child and so on as 1 point. You then divide the total revenue of the family by the number of points you have, to know what your taxable income is. Unmarried couples (and not pacsed) must fill in a tax form each!
You fill in a tax form one year after, meaning you declare your revenue of 2019 (Jan to Dec) in April-May 2020. So, if you have officially moved to France before July last year (2019), then you fill in your first French tax form in April-May 2020 on which you declare your revenue of 2019. If you moved to France after July, then you were not a French resident in 2019 (in France less than 6 month) and therefore, you will have to fill in your first French tax form in April-May 2021 for your revenue of 2020.
Since 01/01/2019, we are now taxed at source (Monthly amount taken from our current account or percentage of salary) and the amount was determined by the tax paid in 2018. The form we fill in this year will determine if we have paid the right tax in 2019 and the new amount which will be taken Monthly from 01/01/2021. If you paid too much, they will reimburse you or reduce your Monthly payments, if not enough they will increase the Monthly payments till the end of the year!
If you have moved to France in 2019, you will pay two year of tax: 2019 & 2020!! You will pay a bill for 2019 at the end of August in one go and have another bill for 2020 which will be taken Monthly from September to December (amount of 2019 tax bill divided by 4). Then from 2021, Monthly amount (2019 tax divided by 12). You can fill in a form now to start paying those amounts Monthly from now instead of September (form 2043) which you can download from the tax office web site. Only do it if you think you will pay tax. For your information, the tax threshold for 2018 for a couple was 28275 euro.
- What forms:
2047: This is the pink form on which you enter your revenue from abroad and you then transfer all those revenues on the blue form called 2042.
2042: The blue form that everyone has to fill in.
2042C Pro: The one to fill in if you are self-employed or if you rent a gîte or chambre d’hôte.
2042RICI: To declare tax credit like using a cleaner or gardener or doing ecological work on your main residence.
2044: If your rental income is more than to 15 000 euros per year, that is the form to fill in.
3916: To declare your bank account abroad. Failure to do so could carry a fine of 1500 euro per bank account not declared. All they want is the name and address of the bank and the account number.
The exchange rate for 2019 is 1.14 (that is the average of last year). Your local tax office will give you an exchange rate, but you don’t have to use it. Use it if it is lower than 1.14!!
If your pension has been directly transferred in euros to your French bank account, just add up all the figures.
- What income:
Pensions (even if they are taxed in the UK like army, police, civil servant), salary, interest on savings (even ISA, which are not tax free in France), rental income, dividends, bonds, etc. Basically, anything that has been earning money or making money for you.
- Double taxation:
There is a treaty between France and the UK meaning that you cannot be taxed twice.
To avoid being taxed twice, you must fill in this form: United Kingdom/France Double Taxation Convention (SI 2009 Number 226), which you can download from the internet.
However, you can only fill in this form once you have been taxed in France as you must put your French tax reference on the form. Indeed, once the form is filled in, you take it to the French tax office, they stamp it and either they send it to Paris, who send it to the UK or give it back to you to send yourself to HMRC (depends on the office). Then 6 months later, you get reimbursed the tax you paid in the UK since you arrived in France and stop being taxed at source in the UK.
Note that ex civil servants, police and military are taxed in the UK for their pension related to that government job! But when they fill in the French tax form, they fill in that pension revenue on a special section which gives them a tax credit equivalent to what the tax would have been on it in France.
- Avis d’imposition:
This is a very important document not to be lost! As it proves you are a French resident and it also proves your revenue. If you want to get some social help in France (CMU, CAF, RSA, etc), you must show them this document. Some ISA savings account (LEP) are only available if you can show this document to your bank as it is only available for people with low income. It is the bill of your income tax and you receive it in August.
This is the official web site of the French tax authorities. You can download tax forms, fill in your tax form online and also set up monthly direct debit for your taxe d’ habitation and taxe fonciere. You can also adjust your income tax Monthly payment from your personal account. Note that the Monthly amount is determined by your income without the tax deduction so some of you probably should not have paid. Note that you can go online and change it if you think you should not be paying as much or nothing at all. This is often the case for people who have rental from UK or Civil servant pensions.
Note that since 2019, everybody must fill in their income tax form online. You cannot do this if it is the first time you fill in a form.
I will be at the CLE tax seminar on the 29th of April, to book a place: www.cle-france.com
Free help for filling the tax form for all my customers will be on the 6th of May all day in Ruffec (not lunch hours!!) and on the 5th of May all day again in Chasseneuil sur Bonnieure.
It is an obligation! So, if you live in France, you must fill in a French tax form!
Next month, when the new forms are available, I will explain how to fill them in and give you dates and places where I will be available for free help so don’t panic yet!
And remember to check out our web site www.bh-assurances.fr/en for all my previous articles (“practical information” on the English site).
Finally, don’t hesitate to contact me for any other information or quote on subject such as Inheritance law, Funeral cover, French Tax, car, house, professional, travel and top up health insurance, etc…
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