Understanding French income tax

French income taxes can be more complex than you might expect. Since it is income tax season in France – returns need to be submitted between 10 April and late May – we provide a short breakdown of what you need to know about personal income tax, the parts system, French social charges and tax on investment income.

Spring is a lovely time of year in France and the perfect time to enjoy the wonderful outdoor life France offers. On the downside it’s also tax return season, with the deadline falling around the end of May depending on which département you live in.

The online portal for income tax declarations opens on 10 April. You are required to submit your return online, unless this is your first French tax return or you have a valid reason for filing a paper return. We are waiting for official confirmation of the deadline dates, but they have been reported in the press as follows:

20 May – all postal returns

22 May – départements 1-19, and non-residents declaring French source income

28 May – départements 20-54

5 June – départements 55-101

Avoid leaving your tax declarations to the last minute. It gets complicated if you earn income from various sources and/or abroad, and penalties can be imposed for late filing. You may have a number of supplementary forms to fill in, depending on where your income is generated. This includes listing all your non-French bank accounts, life insurance policies, etc on CERFA 3916, even if you did not earn income or gains from them. If your property wealth exceeds the €1,300,000 threshold, you also need to complete a real estate wealth tax return.

All income and gains must be declared in Euros, even if you received them in another currency. When converting your regular Sterling 2024 income (such as pensions) to Euros for your tax return, you can use exchange rate £1 = €1.18.

Income tax, but not as we know it

With the deadlines on the way, this is an appropriate time to look at how French income tax works. France may be ‘next door’ to the UK, but its tax regime can feel rather foreign. There are significant differences from the UK system, even with something as basic as income tax.

If you feel you are paying too much tax this year, now is the time to review your tax planning arrangements and how you hold your assets to establish how you can improve your tax position going forward, particularly on savings, investments and pensions.

The household/parts system

In France, income tax is levied on the total income of the household (including minors), rather than on individuals or spouses. This can prove very beneficial for families where one member earns a high income (within limits).

The family (or household) is divided into a number of parts familiales. The total income is then divided by the number of parts and the income tax rates applied to this lower figure. The computed income tax due is then multiplied by the parts to provide a larger number – a system which helps you avoid the higher rates of tax.

The total number of parts depends on the family circumstances and the number of dependent children. For example, a married couple’s income would be divided into two parts, with an additional half part for each of the first two children and a whole part for the third and subsequent children.

Income tax rates

The income tax rate bands and scale rates for this year’s tax return (so for income earned in 2024) are:

The additional tax on ‘high income’ continues to apply. A single person pays 3% or 4% for income over €250,000 and €500,000 respectively, while couples pay 3% or 4% for income over €500,000 and €1,000,000.

The 2025 budget extended this additional charge, for this year at least, so that households subject to it must pay a minimum liability of 20%. Taper relief is available where the taxable income is below €330,000 for a single taxpayer or €660,000 for a couple.

There are some income tax allowances, particularly if you are over 65 years of age, hold an invalidity card or receive a military pension. Additionally, while retirement and disability pensions, child support and alimony are taxed the same as salaries, the taxable base benefits from a 10% deduction each year, up to a limit.

Various tax credits are also available, which are deductible against the actual tax payable (and not against the income). The rules are complicated, so ask your tax accountant to determine which credits are available for your circumstances.

Social charges

Social charges (or contributions) – prélèvement social – are a second form of tax on income in France and levied in addition to the scale rates listed above. The funds collected from these charges is used to finance the French social security (hence the name) – but they do not provide health benefits and are separate from social security contributions (also payable on employment income).

They are made up of six elements, which amount to the following charges:

• Earned income (salaries, unemployment benefits) – 9.7%
• Pensions (retirement or disability) – 9.1% (or 7.4% for those on low incomes). Only payable if you are subject to the French health care system. UK retirees with Form S1 therefore escape this charge.
• Unearned/investment income (interest, capital gains, annuities, rental income etc) – 17.2%. This is reduced to 7.5% if you are covered under the health system of another EU/EEA country. This includes UK nationals with Form S1 who were resident before Brexit.

Your social charges are usually calculated based on the income declared in your income tax return. The French authorities notify you of the amount payable in the autumn along with your income tax liability demand. With some types of income/gain (assurance-vie under special rates, real estate capital gains, dividend/interest advance payment etc.), the charges are paid by the 15^th of the following month.

Tax on investment income

Investment income, such as interest, dividends, capital gains and gains from life insurance policies/non-French assurance-vie, is currently taxed at a fixed rate of 30% rather than the scale rates of income tax.

Called the Prélèvement Forfaitaire Unique (PFU), it importantly includes both tax and social charges, so is beneficial for those with higher investment income. If you are covered by Form S1 as mentioned above, your PFU rate reduces to 20.3%.

Households in low-income brackets can opt for the progressive income tax rates, with social charges paid separately.

Unless you are a low-income household, you need to declare interest payments or dividends received from abroad within 15 days of the month end and pay the 30% tax.

UK income

French tax residents are liable to local tax on worldwide income and gains, so you need to declare all earnings outside France. If you have assets in the UK, the France/UK double taxation treaty determines where you pay tax.

UK government service pension and rental income are only taxable in the UK. That said, you must still declare it on your French tax return (you’ll receive a credit equal to the French income tax and social charges). Real estate gains are liable to tax in both countries, with a credit in France for UK tax paid. Gains made on the disposal of capital investments are generally taxed in your country of residence.

Tax planning

France may only be a short hop away from the UK, but its taxation system can feel a world apart. The tax planning arrangements you had in the UK are unlikely to be effective in France, so you’ll need to start afresh here. There are some tax-efficient investment arrangements available in France that can provide benefits both for yourself today and your heirs in the future.

This article is a summary covering the basic elements of income tax in France. It is important to seek personalised, professional advice.

For questions about completing your tax return, speak to your local tax accountant.

If you have any general questions about taxation in France and how you may be able to lower your tax liabilities, please do not hesitate to contact Blevins Franks. Our advisers are cross-border tax and wealth management specialists with in-depth knowledge of the French tax regime and the compliant tax planning opportunities available here.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

Contact us today.