The residents or the non-residents are not subject to the same tax rules. Intended to attract foreign executives, the expatriate tax regime applies to employees and managers who did not have their tax residence in France during the five calendar years preceding their taking up position in a company established in France.
Determining your tax residence
It is not a question of choice but depends on the agreements and reciprocal treaties signed between France and your country or region of origin.
The French tax residents are imposed in France on their income all over the world, while the non-residents are not imposed in France that on the income received in France. Whatever your nationality, you will be considered tax resident of France (subject to global tax regulations) if you meet any of the criteria following:
- Residence or Principal residence in France. Generally, if you spend more than 183 days per year in France, you are a resident of France.
- Activité professionnelle in France, whether she is an employee or not, unless you can prove that this activity is carried out on an ancillary basis
- Center of economic interests or major investments in France
If you have any questions regarding your residence tax, contact an independent tax advisor or the tax office where you live.
Your taxable income of reference is the sum of the income below reduced by deductions to which you are entitled :
- salary (less the fixed compensation of 10%, capped at €12,502)
- industrial and commercial benefits
- non-commercial profits
- property income (less taxes, maintenance costs and mortgage interest)
- agricultural income
- income from mobile assets
Your tax rate dépend également du number of people in your hearth. Each adult represents one person (share), and each child a half-share or an additional share depending on your marital and family situation.
Since January 1, 2019, the French government has implemented a tax on the income “pay as you earn.” Now the system is similar to that of the United Kingdom: tax on your wages and treatments is collected directly on your salary by your employer according to your tax rate established by Tax Administration or, where applicable, established by default. Once you have completed your tax declaration for the previous year, all unpaid balance will be collected or refunded at the end of the exercise.
Personal real estate tax
Subject to international tax conventions, if you become French tax resident, you may be subject to tax on the real estate wealth (IFI) on the value of yours real estate assets, held directly or indirectly, whether located in France or outside France, if their total exceeds the tax threshold on January 1 (threshold of €1.3 million for 2019).
Individuals who have transferred their tax domicile to France after having been tax domiciled abroad during the previous five calendar years are not temporarily taxable for the IFI that on their French real estate heritage. This regime is applicable for each year during which the taxpayer maintains his tax domicile in France until December 31 of the fifth year of his establishment in France.
In case you keep your residence tax to abroad, you can be liable to IFI on the value of your real estate assets located in France, whether held directly or indirectly, subject to the international tax conventions. Your Principal residence is part of your taxable assets under the IFI. However, a 30% discount applies.