Income Tax Brackets In France: Explained
Ah, the City of Light, the land of fine wine, and—let’s not forget—the maze of French income taxes.
But fear not, brave expat!
Whether you’re sipping Bordeaux in Bordeaux or enjoying a café au lait in Paris, this quick guide will demystify France’s income tax brackets faster than you can say ‘baguette.
What Are The Tax Brackets In France?
The income tax is calculated at the “tax household” level. It should be noted that a single person can constitute a tax household.
The tax is levied directly by the French government and applies to all income from the tax household member or members.
To be liable for income tax, it is necessary to be tax domiciled in France. Persons who are tax domiciled abroad may be subject to income tax in France if they receive income from French sources.
The minimum tax threshold and applicable tax brackets for the 2022 income tax in France are set out in Article 197 of the French General Tax Code. The income tax schedule for 2022 is as follows:
| Tax brackets | Rates |
| Up to €10,225 | 0% |
| From €10,225 to €26,070 | 11% |
| From €26,070 to €74,545 | 30% |
| From €74 545 to €160,336 | 41% |
| Over €160,336 | 45% |
The tax calculation method, however, is not simply limited to net taxable income in euros. Below are a few steps to help you understand the procedure.
How To Know Your Tax Bracket In France?
Divide the net taxable income by the number of “family quotient” shares. In France, the family situation is considered when calculating the tax.
Is the taxpayer single, in a civil union, with children, or caring for dependent parents at home? The number of people present in the tax household determines the family quotient.
- Whether divorced or widowed, a single person counts for only one part of the family quotient.
- Each member of a married or “pacsed” (civil union) Couple counts for “one share.” The family quotient is now equal to two shares.
- If the Couple has children, the first two dependent children each receive half a share, and the third child receives a full share.
Minor children are automatically considered, as are disabled children. Children over 18 can be included in the family quotient (under certain conditions) until they reach the age of 25.
Income Tax In France
The income tax rates in France vary depending on whether you are married or single, whether you’re self-employed, and whether you have any offspring or children (and, if so, how many).
Personal Income Tax Rates For Residents
Official residents must pay French taxes on all worldwide income, including earnings from employment, pensions, investments, dividends, bank interest, and real estate.
What’s The Tax Scale On Income?
The tax scale shared below is used to calculate French income tax. It has several slices according to family quotients.
The French income tax rates in 2021 and 2022 for comparison are as follows:
2021
| French income tax bands | French tax rate |
| Up to €10,084 | 0% |
| €10,085–€25,710 | 11% |
| €25,711–€73,516 | 30% |
| €73,517–€158,222 | 41% |
| €158,222 and above | 45% |
2022
| French income tax bands | French tax rate |
| Up to €10,225 | 0% |
| €10,226–€26,070 | 11% |
| €26,071–€74,545 | 30% |
| €74,546–€160,366 | 41% |
| €160,367 and above | 45% |
Examples to Help You Understand And Calculate Income Tax
Example 1 – Single Unit Household
For a single (single-person household) with taxable net income of €30,000 and no reductions or deductions.
It has a €30,000 family quotient.
To calculate his tax:
- Up to €10,225: 0
- From €10,226 to €26,070 is (€26,070 – €10,225) 11% = €15,845 × 11% = €1,742.95
- Between €26,071 and €30,000 is (€30,000 – €26,070) x 30% = €3,930 30% = €1,179
Because of the family quotient, this single person’s marginal tax rate (MTR) comes out to be 30%. However, not all income is taxed at 30%.
It has a total tax of €0 + €1,742.95 + €1,179 = €2,921.95.
This tax is then multiplied by the number of shareholders in the tax household. Because this is single, it will be multiplied by 1.
As a result, its gross tax will be €2,921.95.
Because of its family quotient, this taxpayer has a marginal tax rate (MTR) of 30%. However, not all income is taxed at 30%.
Example 2 – Married Or Married Couple Without Children
For a married or married couple without children with a taxable net income of €60,000.
Its family quotient is €60,000 divided by two equals €30,000.
To calculate his tax:
- Up to €10,225 is 0
- From €10,226 to €26,070 is (€26,070 – €10,225) 11% = €15,845 × 11% = €1,742.95
- From €26,071 to €30,000 is (€30,000 – €26,070) x 30% = €3,930 × 30% = €1,179
The total gross tax for the Couple is €0 + €1,742.95 + €1,179 = €2,921.95.
This tax is then multiplied by the number of shareholders in the tax household. Because this is a married or married couple, it will be multiplied by two.
As a result, the Couple will have to pay €2,921.95 or €5,843.90.
This Couple’s marginal tax rate (MTR) is 30% because their family quotient places them in this bracket. However, not all income is taxed at 30%.
Example 3 – Married Or Married Couple With Two Children
Let’s look at an example of a married or married couple with two children (3 units, 1 for each parent and 1 for each child) and a taxable net income of €60,000.
Its family quotient is €60,000 (three times €20,000).
To calculate his tax:
- Up to €10,225 is 0
- From €10,226 to €20,000 is (€20,000 – €10,225) x 11% = €9,775× 11% = €1,075.25
This tax is then multiplied by the number of shareholders in the tax household. Because this is a married or married couple with two children, it will be multiplied by three.
The gross family tax is €1,075.25 multiplied by three, or €3,225.75.
This family’s marginal tax rate (MTR) is 11% because its family quotient places it in this bracket. However, not all income is taxed at 11%.
Example 4 – Single Isolated Parent With 2 Children
With a taxable net income of €30,000, one isolated parent with two children (2.5 units, one-half share for each child, one share for the parent, and one additional half share as a single parent).
Its family quotient is €12 000 via €30,000 : 2.5
- Up to €10,225 is 0
- From €10,226 to €12 000 is (€12 000 – €10,225) x 11% = €1,775 x 11% = €195.25
This tax is then multiplied by the number of shareholders in the tax household. Because this is an isolated parent with two children, it will be multiplied by 2.5.
The gross family tax is €195.25 multiplied by 2.5 equals €488.12.
This family’s marginal tax rate (MTR) is 11% because its family quotient places it in this bracket. However, not all income is taxed at 11%.
In the case of alternate residence, the tax benefit is divided into two.
The scale is one of the many elements of the income tax calculation so you can estimate your tax liability.
You can use an online calculator to calculate your income tax online.
What are the Reasons For A Change In Tax Class?
Your income tax bracket in France changes when your family circumstances change fundamentally. The following are reasons for your Income Tax Bracket to change in France.
- Marriage
- Separation/divorce
- Birth of a child or you will have sole custody
- Death of a spouse
What are the Personal Income Tax Rates For Non-Residents?
Non-residents typically pay tax on French-sourced income at a specific and minimum French tax rate of 20% for income up to €27,519.
It is 30% for non-resident income above this threshold.
How To File Your French Income Tax Return?
Your return must be filed online here. If you cannot file an online return, send your 2042 income tax paper form to the Service des impôts des particuliers non-résidents (SIPNR) only if you continue to receive income in France and are taxed in France.
Because of the PAYE system, you will pay your income tax on the spot for each monthly salary you receive.
In the PAYE system, investment income includes gains from life insurance policies and capital gains from financial investments and real estate.
Non-French income is generally exempt from the PAYE system.
Filing General Tax Returns
If you have to submit a tax return and have already submitted one, you will most likely be sent a completed form to check, amend as needed, and return.
If you don’t have one, or if this is the first time, you can get one from the centre des impôts (local tax office) or mairie, or you can get one online through this link: France’s Ministry of Economy and Finance.
Even if you believe you will fall below the designated income threshold to pay French tax, it is your duty to complete and submit the French tax return.
Deadlines
The following are the French tax return deadlines for 2022:
- The deadline for postal returns is May 19th.
- The online deadline for départements 1-19 and all those living outside of France is May 25.
- The online deadline for départements 20-54 is May 31.
- 7 June is the online deadline for départements 50-101 and Overseas French residents.
If you fail to follow the deadline, you will be fined 10% of your tax bill.
What is the Income Tax For Self-Employed In France?
Living in France, if you are self-employed and the sole employee (for example, a freelancer), you are classified as a micro-entrepreneur and are eligible for a tax status that greatly simplifies your tax and accounting obligations.
This means you’ll file your income taxes using the standard personal progressive rates.
Suppose you own a larger business that does not qualify for micro-entrepreneur status.
In that case, you must file taxes under the normal régime réel, where your social security and income tax contributions are based on profits, and appropriate business costs are deducted.
Filing US Taxes From France
Every Green Card holder and US citizen is required to file a tax return from the IRS. Despite this requirement, many expatriates fail to do so.
Many people need to be made aware of their obligations, believing that as an expat, they do not have to file or pay tax returns in the United States. You certainly do!
Do You Have To Declare Income If You Are A Non-Resident?
You will be taxed on your income from French sources as a non-resident. This will be subject to the tax treaty between France and your country of residence.
Examples of income from French sources are:
- Property income
- Income from non-salaried or salaried professional activities performed in France
- Pensions when the pension fund and capital gains are based in France.
For non-residents, this income may be subject to withholding at source, which is deducted by your employer (for salaried employees) or the pension fund.
However, the income must still be reported on your tax return yearly.
When filing your income tax return, you can have your tax calculated via the average rate.
If you don’t do so, your income will be taxed at a minimum rate (20% up to €26,070) in 2021 and at a maximum rate of 30% above this threshold.
So, it would be great for you to choose average rate arrangements because they only apply if they are more beneficial to you.
Even if the income is taxed in France, you must get in touch with the tax authorities in your home country for information on your filing obligations.
This is because your country of residence may require you to file the annual tax return for all of your income, both French and foreign.
In this scenario, your country of residence will be responsible for avoiding double taxation in accordance with the tax treaty it has signed with France.
Financial Facts About France
According to the most recent National Institute of Statistics and Economic Studies figures, the average monthly net salary in France is €1,785.
This is the average take-home pay of full-time employees after social security contributions, and income tax are deducted from their gross salary.
In 2022, France’s salaire minimum de croissance (national minimum hourly wage) is €11.07. This is one of the highest in Europe.
The average full-time work week in France is 35 hours, so the minimum wage equates to a monthly gross salary of €1,678.95, or €20,147 before taxes.
Unlike most EU member states, French employers do not deduct income taxes from employees’ monthly salaries, though social security contributions are deducted on a monthly basis.
This means that individuals must file an annual tax return and then have enough money saved to pay the income taxes at the end of the year.
Tourism, metals, machinery, chemicals, automobiles, electronic equipment, textiles, and food are all important industries in France.
Tourism is the largest industry among these, with France being one of the most visited countries in the world. France has over 83 million visitors each year.
Paris has the largest urban economy in France and the third largest in the world.
France is home to over 30 Fortune Global 500 companies, including Total, AXA, BNP Paribas, GDF Suez, Carrefour, and Credit Agricole.
FAQ
Does France Have A High-Income Tax?
Rates range from 0% to 45%, with a 3% surtax on income exceeding 250,000 euros (EUR) for a single person and 500,000 EUR for a married couple, and a 4% surtax on income exceeding 500,000 EUR for a single person and 1 million EUR for a married couple.
Is France The Most Taxed Country?
France ranked 2nd out of 38 OECD countries in the context of the tax-to-GDP ratio in 2020. In 2020, France had a tax-to-GDP ratio of 45.4% compared with the OECD average of 33.5%.
In 2019, France was also ranked 2nd out of the 38 OECD countries in the context of the tax-to-GDP ratio.
Is France A Tax Haven?
Tax residence – domiciled fiscal is a tax liability criterion – a foyer, business activity, or centre of economic interest in France.
With some exceptions for foreign nationals, the devolution of a resident’s estate is strictly regulated by law.
What Is The Upper Class In France?
The Haute bourgeoisie: Affluent and well-educated, this social class wielded economic and political power and could afford leisure time.
This group included business owners, lawyers, bankers, notaries, politicians, prominent doctors, and pharmacists.
The petite bourgeoisie is a middle-class, educated or skilled person.
Are Taxes Higher In France Or Germany?
France has a higher effective corporate tax rate than Germany. Germany levies a 15% corporation tax, which is increased by a 5.5% solidarity surcharge and a 13.64% decentralised tax.
Conclusion
So there you have it, folks—a whirlwind tour through the ever-so-enchanting world of French income tax brackets.
Now that you’re armed with this knowledge, you can toast to smarter financial planning. After all, a savvy expat is a happy expat. À la vôtre!
Tax Win!
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