It’s a big question and not an easy one to answer, but let’s take a look at the key criteria and what are potentially the tax implications with relocating to France. Lets start with what will make you a tax resident in France because that is a core issue for moving to France taxes.
Will you be a Tax Resident in France?
If you plan to spend more than half the year living in France (183 days to be precise) you may be considered a tax resident, as France will be your “residence primaire”. In fact if you have used a removals company like Provence Movers deliver your household goods and personal effects to France, you would already have declared this on the French customs forms you would have completed (although most sources tell us that there’s no real cross referencing of data between the Customs and Tax departments).
However, we don’t want to over simplify this, because there are other factors to consider:
- If you work or run a business in France, even if you are in the country for less than 6 months of the year, the authorities may consider France to be your principal residence.
- If your spouse and kids live in France, and particularly if the kids are at school in France.
- If you own or have a financial interest in multiple properties, or assets in France.
It’s also important to note that your tax residency is determined on an individual basis, and it is possible to be considered tax resident in France even if your spouse is not. See the official rules for French tax residency here.
If you spend more than 183 days of the year, you are generally considered as a French tax resident, and therefore you must submit a French tax return every year, declaring all of your global income (even if you don’t have any income, you’re still required to submit a tax return). This includes your salary and business revenue, investments and savings interest, rental income, capital gains, inheritance, your overseas pension, and any other income. There is a specific tax return for non-residents with income from French sources (Cerfa form no. 2042).
Don’t panic because France does have double tax treaties in place with many countries including the UK.
Double Tax Treaties
France and the UK have a double tax treaty in place, therefore UK income is exempt from French tax by virtue of this tax treaty, however that income will be added to any income earned in France to determine (1) the French tax rate applicable to income taxable in France, and (2) to calculate gross French tax liability, from which tax paid abroad is deducted.
So once your tax residency is established in one single country, you will never be required to pay the same taxes twice in both countries. However, this doesn’t mean that you are free from ALL French taxes.
Other Taxes
Income Tax For Non-Residents: Even if you are not a tax resident, or if France is not your principal residence (183 days of the year), but you still earn money in France (rental income, a salary, etc), you are likely to be liable for French income tax.
Taxe d’Habitation: Is a property tax that is being phased out by the Macron Government, but will generalised still be imposed on second homes.
Wealth tax or Impôt sur la fortune immobilière (IFI): Is a tax levied on individuals owning high-value or high combined-value real estate in France. The IFI is a progressive tax payable by French residents (and sometimes non-residents too – more on that in a moment) with worldwide real estate assets valued over €1.3 million.
Inheritance Tax: Properties and real estate in France may be subject to French inheritance tax even if the deceased is a non-resident. Both the domicile of the deceased and the heir will be taken into account when calculating other inheritance tax liabilities, and it can be complicated.
Capital Gains Tax: Selling your second home in France can result in capital gains tax, and most taxation treaties dictate that this is paid in France regardless of whether you are a French resident.
The French government also publishes fact sheets detailing declarable income in France depending on your country of residence, which you can find here.
Provence Movers is an international moving company specialising on relocation services to France. We provide high quality door to door removal services at really attractive rates. So if you’re planning on moving to France, give us a shout and we’ll provide you with all the information that you need
