Taxes in France for expats: What should you pay?

If you’re already living here or planning to move to the land of art and fashion, you need to know about taxes in France for expats. In this way, you’ll be complying with the country’s tax obligations, thus benefiting its financial system. France is a popular destination for different types of foreigners: Students, entrepreneurs, workers, digital nomads or pensioners. Each type of person has different tax rates, as well as different benefits for residing in this country.

Don’t miss this article where we‘ll explain in detail what taxes you have to pay in France as a foreigner and what tax advantages you can obtain. Get ready to live in France and enjoy the Louvre, the Eiffel Tower and Mont Saint-Michel. Oh là là!

Types of foreigners in France

Many foreigners decide to travel to this country to study, work, set up their own business or simply to enjoy their retirement. As you can see, these are different types of people and each has different needs and tax obligations. Let’s take a closer look at what each group consists of: In this way, we’ll be able to better understand what kind of taxes you have to pay in France as a foreigner.

People

A natural person, in the terms we are talking about in this article, is any individual who has tax rights and obligations in the country where he or she chooses to reside, without being represented by a company. In this way, we distinguish the taxation of these foreigners in France from that of legal persons. Which one do you fit in?

• International students: These are young students, some of them Erasmus students, who travel to the country to pursue higher education in French universities or schools. This group enjoys certain tax benefits such as reduced fees in the education sector and free access to student social security.
• Expatriate workers: These foreigners are professionals hired by French companies or who can work on-line, such as digital nomads digital nomads. Depending on their class, if they stay more than 183 days a year in France, they can be tax residents.
• Pensioners: This sector includes the elderly who choose France to enjoy their retirement. This country is increasingly a place of choice for these pensioners where they can enjoy an excellent health system, good climate, gastronomy and culture.
• Resettled families: These are people who come to the country for family reunification and wish to settle in the country permanently with their loved ones.
• Investors: Foreigners who are interested in buying real estate and thus investing their capital in the country or launching economic projects.
• Newlyweds: France is a popular wedding destination, but you need to spend at least a month here before filing your application for getting married in France, which leads to many couples spending extended time here.

Companies or properties

It isn’t only individuals who’re interested in choosing France as a destination to live, work or study. More and more multinational or start-up companies are deciding to try their luck in this country. The main reason for this is its strategic location in Europe and the easy connection to other countries. This makes France one of the busiest places for foreigners from all over the world. Here are the main groups in detail:

• Established foreign companies: These are multinationals that decide to expand their operations by opening branches or subsidiaries in France. In this way they benefit from the country’s strategic position in Europe and open up to the EU market thanks to the country’s extensive transport network. In addition, France encourages foreign investment with tax incentives and support programmes.
• Startups: France offers the French Tech Visa programme, which helps founders and employees to establish their company in the country. It’s the perfect place to innovate and develop new projects. Paris or Marseille are the birthplace of co working and support start-ups with great benefits in their early stages.
• Investment property: If you decide to buy a property in France as a foreigner, you can do so to establish your residence, enjoy a second home for holidays or generate passive income through renting. Some places such as Paris or the French Riviera have a luxury market, which attracts buyers with high purchasing power.
• Agricultural projects: Foreigners can invest in vineyards or farms and become part of the tradition of food and wine production. If you’re interested in this sector, you can benefit from subsidies that exist for rural development. Bordeaux, Burgundy and Provence are investment lands in the wine industry.

Taxes for foreign individuals in France

The taxes that foreigners have to pay in France depend on the income they generate, their tax residence, the real estate they have acquired and the nature of their assets in the country. We explain which are the most important:

• Income tax: If you’re a foreigner and reside in France for more than 183 days a year, you’re considered as a tax resident. Fees range from 11% to 45%, depending on your income level. By contrast, foreigners who aren’t tax residents are only liable to pay tax on the income they generate in the country, such as rent or local investments.
• Capital gains tax: If you sell a property in France, you’re taxed on the profit you make. Overall, the rate applied is 19 %, plus social contributions of 17.2 %, making a total of 36.2 %. There are some reductions that apply depending on the length of time you have owned the property and the use you have made of it.
• Real estate wealth tax (IFI): Non-resident foreigners only have to pay this tax on real estate located in France. If the net worth exceeds €1,300,000 ($1,412,339.50), you’ll need to pay between 0.5% and 1.5%, depending on the value of the assets.
• Social contributions: Some income, such as income from renting or selling a property, is subject to social contributions. The tax is 17.2%, although if you’re resident in an EU country, you can benefit from some exemptions.
• Other specific taxes: Some foreigners may be required to pay local taxes, such as tourist tax. This is the case for short term rentals or fees arising from some investments.

Tax or fiscal benefits for foreigners in France

Despite all the taxes mentioned above, the French government has designed a tax benefit scheme for foreigners. In this way, they ensure that they attract people from other countries who wish to invest their talent in France. The main benefits are:

• Tax regime for expatriates: Foreigners moving to France for work purposes can benefit from this regime. In this way, you can exclude part of your income from the tax calculation if it’s related to activities outside the country. The duration of this discount can be for a period of up to eight years, as a way of reducing the tax burden.
• Exemptions on foreign income: If you’re a tax resident in France and you have income abroad, you can obtain certain total or partial exemptions, depending on bilateral treaties, in order to avoid double taxation.
• Deductions for personal expenses: As a tax resident you can deduct some personal or family expenses from your taxes. The most common are those related to parenting, savings schemes or the integration of sustainable energy in housing.
• International tax treaties: France is one of the countries with the largest number of double taxation avoidance agreements. If your home country has such a treaty signed with the French government, you aren’t obliged to pay double tax on the same income,

Taxation of foreign properties or businesses in France

Taxes payable by foreigners in France for business and property are conditioned by a number of specific tax obligations that depend on the type of property or business activity you own. The most common are:

• Property tax (Taxe Foncière): If you own property abroad or in the country, you’ll have to pay this tax once a year. The amount will depend on the rateable value of the property and the locality where it’s located.
• Tax on rental income: If you have a rental property in France, the income you generate must be declared on your tax return. In addition, the country requires a 17.2% social contribution tax on the income generated.
• Corporate tax: As a foreign company active in France, it’s subject to corporate tax at a rate of 25%. Other reduced rates are available for small or start-up companies.
• Local business taxes: There is a local tax called Territorial Economic Contribution, which is levied on businesses. The fee required depends on the value of the business, the location and what it does.

Tax or fiscal benefits for foreigners in France

As we’ve seen above with individuals, the country has also created a number of tax benefits to try to reduce the cost of taxes that foreigners have to pay in France. In this way, they attract foreign talent and this contributes to the enrichment of the country.

• Research and development (R&D) tax credits: If you have a foreign company that invests in technological innovation, you can benefit from these tax credits. The deduction is up to 30 % of the expenses related to R&D projects.
• Initial tax exemptions: During the first two years, you can benefit from some tax exemptions to facilitate the start-up.
• Regional incentives: Some regions in France offer certain incentives for foreign companies to set up in their area and generate employment.
• Facilities for tech start-ups: The French Tech Visa also provides some tax advantages, as well as certain programmes that finance foreign tech start-ups.
• Tax relief for sustainable development: If your company invests in sustainable infrastructure or renewable energies you can access some tax deductions.

Taxes on foreign investments in the stock market in France

If you plan to invest in the French stock market, you should be aware that you’ll be obliged to pay a number of taxes as a foreigner on the profits you make. These are the main ones you need to know in order to avoid infringements of the French tax system.

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Frequently Asked Questions about taxes in France for expats

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