Declaring Taxes in France as a Non-Resident
Tuesday, 12 March 2024
Finances, especially taxes, can be a maze, and managing them in a foreign country adds more complexity. When it comes to taxes, precision is paramount. A misstep in one direction, and you're out of pocket. Make a mistake in the other direction, and you could be dealing with the very serious consequences of falling short of tax laws. That's where France Tax Law comes in.
In this guide, we help you understand resident status, outline what income is taxable in France for non-residents, and guide you through filing a French tax return.
Who Is a French Non-resident (for tax purposes)?
French taxpayers are categorised as either residents or non-residents. In France, you are considered a resident for tax purposes if you meet any of the following criteria:
- Your primary residence is in France
- You conduct your primary professional activity (occupation) in France
- You spend 183 days or more in France in a year
- You earn more income from French sources than from foreign sources
What Taxes Do French Non-residents Pay in France?
Unlike French residents who pay taxes on global income, non-residents have a more focused tax obligation tied to their activities within France. French non-residents are liable for taxes solely on their France-sourced income. This encompasses earnings from employment, self-employment, property, dividends, capital gains, and pensions from France-based sources.
Income tax for French non-residents
French non-residents have lower tax rates than French residents. The PAYE system simplifies taxes and means most non-residents are not required to file French income tax returns. The withholding tax employs progressive rates, and if not applicable, non-residents pay a flat income tax rate on French-sourced income, with a higher rate for income surpassing a specific threshold. For accurate, up-to-date tax rates, speak to our French tax experts.
Withholding tax for French non-residents
French withholding tax for non-residents applies to wages and salaries earned through work conducted in France and pensions or annuities received from a debtor based in France. This tax is deducted at the source by either your employer or pension fund. The withholding tax for non-residents differs from withholding at source for French residents. Income that is subject to withholding at source must still be reported in your annual tax return.
Capital gains tax for French non-residents
French non-residents are liable for capital gains tax solely on French-sourced gains. These are taxed at the same progressive rates as residents. Rates vary depending on the nature of the gains, such as securities, sale of shares, or real estate transactions.
Inheritance and wealth tax for French non-residents
French non-residents pay wealth tax on properties in France. France also has inheritance and gift taxes. Inheritance tax rates depend on the residence status of both the deceased and the beneficiary.
Declaring Non-resident Taxes in France
As a French non-residents must declare income from French sources with the Tax department for non-residents (Service des impôts des particuliers non résidents).
Filing an income tax return in France
You can file a French tax return online. Returns are pre-filled with earnings data, such as wages, pensions, and investments. Simply review and make any necessary adjustments to your income or expenses. Any required appendices, like forms 2044 or 2047, can also be completed and submitted online.
Last date to declare taxes in France
In France, the tax year runs alongside the calendar year (from January 1st to December 31st). The official deadline for filing tax returns is typically the end of February after the calendar year. However, several possible extensions can move the deadline to as late as May. Keeping track of deadlines is essential for compliance and avoiding penalties. If you are unsure, seek expert advice.
Non-resident French Tax FAQs
Can French non-residents be taxed in the UK and France?
In order to avoid double taxation, tax deducted at source in France typically gives an equivalent tax credit in the UK for UK residents.
What are the tax residency criteria in France?
In France, you are considered a tax resident if you have a primary residence in France, conduct your primary professional activity in France, spend 183 days or more annually in France, or have a centre of economic activity in France.
How does French income tax differ for residents and non-residents?
French residents are taxed on worldwide income, while non-residents are taxed only on income sourced within France.
Can I file my French tax return online as a non-resident?
Yes, you can file your French tax return online as a non-resident. Online filing is easy, reliable, and secure.
What income types are taxable in France for non-residents?
Non-residents in France are taxed on their French-sourced income, including earnings from employment, self-employment, property, dividends, capital gains, and pensions from France-based debtors.
How are capital gains taxed for non-residents in France?
French non-residents pay capital gains tax exclusively on French-sourced gains, with rates mirroring the progressive rates applicable to residents. Rates vary based on the nature of the gains, such as securities, sale of shares, or real estate transactions.
How does the withholding tax system work for French non-residents?
The specific withholding tax for non-residents (RAS NR) in France applies to wages, salaries, pensions, and annuities sourced in France. It is withheld at source by employers or pension funds and is calculated using an annual scale and allowances.
When is the deadline for filing taxes in France as a non-resident?
The official deadline for filing taxes in France is typically the end of February following the calendar year.
What are the challenges of declaring French taxes for non-residents?
Potential challenges include language barriers, understanding complex tax laws, dealing with currency exchange for reporting foreign income, and effective communication with French tax authorities.
How do French and UK inheritance taxes differ?
In the UK, estate-wide tax applies to everyone at a fixed 40% rate with a £325,000 allowance. In France, beneficiaries pay individual taxes. Each beneficiary pays their due tax, with rates and allowances varying. Immediate family benefits more than distant or non-relatives. In the UK and France, spouses are typically exempt from inheritance tax.
Speak to French Tax Experts
At France Tax Law, we understand the challenges of managing taxes in France. Don't let the complexities overwhelm you. Our expert team is here to guide you through the process, ensuring accuracy and compliance every step of the way. Trust us to make declaring your French taxes as smooth as possible. Contact us today to secure your financial peace of mind!