Everyone that visits France for a holiday, dreams of moving to the country sometime in the near future. Why wouldn’t they? The country is full of excellent and quaint countrysides, glittering beaches, and engrossed in cultural and historical legacy.
No matter how old you are, or what kind of income you are generating, France has become a safe abode for millions looking at a better way and standard of life. If you are moving to France, one of the most important things you should pay attention to is the French tax structure.
Depending on who you are, how much you earn, where you generate your income from, and which is your place of residence- all this and more can affect the kind of taxes you end up paying. In this article, we speak with leading experts from myfrenchtaxes.com.
We request them to help us come up with an informative piece of content that can help our readers plan a serious move to France in the most tax-efficient manner. If you or someone you know is looking to relocate to France, this article might be something that should interest you.
The French Taxation Structure: What do you need to know?
The first thing you need to find out before moving to France is where exactly are you liable to pay taxes? It is going to be the home country, or is it is going to be France?
Let us try to understand this by offering a bit of clarity.
France works on a system of residency taxation. This means that the moment you decide to become a resident in France, you start paying taxes. This is also dictated by the time spent, which is 183 days, consequently, or in one calendar year (Jan 1st to Dec 31st).
You also need to understand that you are entitled to pay taxes and establish your residency even if your spouse is a resident. Additionally, if you already have a permanent dwelling home in France, you will be required to pay taxes to the country.
Different taxation structures exist in France. Let us try to look at and examine them in greater detail-
- If you have an annual income between 10,084 Euros and 158,121 Euros, you will be charged income tax at a rate of 11%.
- If your annual income exceeds 158,122 Euros, you will have to pay an income tax rate to the tune of 45%.
- Additionally, if you are a high net worth individual with annual earnings of more than 250,000 to 500,000 Euros, you will be taxed 3% and 4% respectively.
- Benefits on Investments are capped off at 30% and include both the brackets of income taxes as well as social changes.
Understanding Wealth and Succession Taxes in France
Understanding the French taxation structure is not easy. In fact, it is quite complicated. If you are a wealthy individual, you will have to also start paying attention to annual wealth taxes.
For example, you should be aware that recently, French President Emmanuel Macron has allowed for benefits and concessions to super high net worth individuals.
Earlier, wealth tax applied to the entire income a single household generated. However, post the change, it now stands exclusively in relation to real estate.
If you have property ownership in France which exceeds 1.3 Million Euros, you will be accorded a benefit of not paying wealth tax on the first 800,000 Euros. This means that you will be paying taxes on the differing amount.
French succession taxes, estate planning laws, and inheritance regulations are complex. Tax rates when it comes to successions are very high. How high- think 60% in some situations.
France has a succession policy where the children are considered as forced heirs. This means that properties do not automatically pass in-toto to the spouses. This can result in nearly 75% of your assets being passed on to your heirs whether you like it or not.
The Bottom Line
If you have expert advice and counsel, you do not need to be worried about having run-ins with the French taxation authorities. For someone that is looking to move to France, you need to get help from trained and seasoned professionals that can help you with everything from calculating to filing taxes. If you would like us to assist you in any which way, please let us know in the comments below.
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