|Taxable Income () Euro||
|0 to 9,700||0%|
|9,700 to 26,791||14%|
|26,791 to 71,826||30%|
|71,826 to 152,108||41%|
|Taxable Income () Euro||
|0 to 800,000||0%|
|800,001 to 1,300,000||0.5%|
|1,300,001 to 2,570,000||0.7%|
|2,570,001 to 5,000,000||1%|
|5,000,000 to 10,000,000||1.25%|
There are no changes to wealth tax. Therefore, taxpayers with net assets of at least 1.3 million will continue to be subject to wealth tax on assets exceeding 800,000, as above
France Capital Gain Tax on Financial Assets
Gains arising from the disposal of financial assets continue to be added to other taxable income and then taxed in accordance with the progressive rates of tax outlined above.
However, the system of taper relief still applies for the capital gains tax (but not for social contributions), in recognition of the period of ownership of any company shares, as follows:
50% for a holding period from two years to less than eight years; and
65% for a holding period of at least eight years.
This relief also applies to gains arising from the
sale of shares in collective investments, for
example, investment funds and unit trusts, providing
that at least 75% of the fund is invested in shares
In order to encourage investment in new small and medium enterprises, the higher allowances against capital gains for investments in such companies are also still provided, as follows:
50% for a holding period from one year to less than four years;
65% for a holding period from four years to less than eight years; and
85% for a holding period of at least eight years.
The above provisions apply in 2016 in respect of the taxation of gains made in 2015.
France Capital Gains Tax on Property
Capital gains arising on the sale of a maison secondaire and on building land continue to be taxed at a fixed rate of 19%. However, a system of taper relief applies, as follows:
6% for each year of ownership from the sixth year to the twenty-first year, inclusive; and;
4% for the twenty-second year.
Thus, the gain will become free of capital gains tax
after twenty-two years of ownership.
However, for social contributions (which remain at 15.5%), a different scale of taper relief applies, as follows:
1.65% for each year of ownership from the sixth year to the twenty-first year, inclusive;
1.6% for the twenty-second year; and
9% for each year of ownership beyond the twenty-second year.
Thus, the gain will become free of social
contributions after thirty years of ownership.
An additional tax continues to apply for a maison secondaire (but not on building land), when the gain exceeds 50,000, as follows:
|Taxable Income Euro||
|50,001 to 100,000||2%|
|100,001 to 150,000||3%|
|150,001 to 200,000||4%|
|200,001 to 250,000||5%|
|250,001 and over||6%|
Where the gain is within the first 10,000 of the
lower level of the band, a smoothing mechanism
applies to reduce the amount of the tax liability.
The above taxes are also payable by non-residents selling a property or building land in France.
Exchange Information under Common Reporting
2016 brings a new era in global automatic exchange of information between tax authorities.
Close to 60 countries are early adopters of the OECDs Common Reporting Standard (CRS), including all EU States (except Austria) and the popular offshore jurisdictions of the Isle of Man, Guernsey, Jersey & Gibraltar. As such, these early adopters start collecting information from 1st January 2016 to share by the end of September 2017.
Other countries, including Austria, Switzerland, Monaco, Australia, New Zealand and Canada have committed to start sharing data in 2018.
In the EU, the CRS has been brought into effect through the EU Directive on Administrative Cooperation in the Field of Taxation, which was adopted in December 2014. The scope of information exchange is very broad, including investment income (e.g. bank interest and dividends), pensions, property rental income, capital gains from financial assets and real estate, life assurance products, employment income, directors fees, as well as account balances of financial assets.
No-one is exempt and therefore, it is essential that when French income tax returns are completed, taxpayers declare all income and gains even if this is taxable in another country by virtue of a Double Taxation Treaty with France.
It is also obligatory to declare the existence of bank accounts and life assurance policies held outside of France. The penalties for not doing so are 1,500 per account or contract, which increases to 10,000 if this is held in an uncooperative State that has not concluded an agreement with France to provide administrative assistance to exchange tax information. Furthermore, if the total value of the accounts and contracts not declared is at least 50,000, then the fine is increased to 5% of the value of the account/contract as at 31st December, if this is greater than 1,500 (10,000 if in an uncooperative State).
France Income Tax Rates 2014 and Deductions
France Income Tax Rate for Individual Tax Payers
Lowest Individual Tax Rate is 5.50% and Highest Rate is 45%
|Taxable Income () Euro||
|0 to 6,011||0%|
|6,012 to 11,991||5.50%|
|11,992 to 26,631||14%|
|26,632 to 71,397||14%|
|71,398 to 151,200||41%|
Corporate Tax Rates in France
The French corporate tax rate in 2014 is 33.33%. A 3.3% surtax is applied to big companies.
The surtax is computed when the tax liability exceeds EUR 763,000.
Starting 1.1.2014 there is a temporary surtax of 10.7% of the tax liability for companies with turnover exceeding EUR 250 million, resulting in an effective 38% tax rate for big companies.
Capital Gains Tax in France
Most of the capital gains are included in the taxable income.
There is an important exception since there is an exemption for gains derived from the disposal of shares held for at least 2 years. Resulting in a maximum 4.56% tax rate.
Dividends are taxable at about 1.9% only when the shareholding exceeds 5%.
Withholding Tax in France
Withholding taxes regarding outbound dividends are largely reduced by treaties signed by France.
In most instances, zero withholding tax is applied to dividends, interests, royalties paid to EU residents.
In general the tax withholding rates for other payments to
Other Tax Related Information in France
Losses may be carried forward indefinitely, subject to terms.
Each year up to a ceiling of EUR 1 million and 50% of the taxable income of a certain year.
There is a carry back of losses up to one year subject to terms.
Large tax deductions are granted such as depreciation, interests etc.
However intangible cannot be depreciated and thin capitalization rules are applied.
Important tax credits are granted for research and development.
Credits in excess may be reimbursed.
Parents and affiliates may be consolidated for tax purposes but foreign companies are excluded.
CFC rules are applied.
Foreign Companies France
Foreign companies pay taxes in France when they have permanent establishments in France.
Favorable regimes are applied to expatriates.