Submitting your French tax return

The date for submitting your return on paper has passed, yesterday was the limit. It is mandatory for most people to submit a return via the internet, only certain households and older taxpayers are exempt from that.
The "fisc" has made some terminals available in their offices and  help may be available in certain local advice centres.
On-line submissions vary according to your place of residence: depts. 1-19 May 21st; depts. 20-49 May 28th; depts. 50-974 June 4th.
Readers in Aveyron need to get their skates on to meet May 21st, those of us in Tarn and T&G have until 4th June; Lot and L&G are reminded that May 28th is their deadline.

Tax relief on donations

Many readers will know that payments to registered charities can attract tax relief up to 66%, and as the many millions pledged for the reconstruction of Notre Dame are being made to an association "Friends of Notre Dame" they may be eligible for such relief.
So good you may think, but the effect is that it will be the state which finances most of the work. Of course there are caps on the relief but there have been inevitable claims that billionaire donors have been culpable of a publicity stunt in pledging millions which will attract tax reductions. Some have already said they will not claim the relief and probably much of the cash will be held in off shore tax havens, already sheltering much of the income or wealth from tax.
Most left wing parties have taken the opportunity to denounce tax avoidance and demand the reintroduction of the ISF (wealth tax). Right wing parties suggest that as the wealthy individuals and companies are major employment and wealth creators and their swift and generous donations should not be exploited for political gain.
You pays your money..

Tax returns on line now

Your Declaration de Revenus 2019 is now available on the government web site. The forms are filled with the details the "fisc" already knows and for those working people on the new pay as you earn scheme for France there is no need to enter 2018 wages, as 2019 will be taxed at source.
The forms call for "exceptional" items to be entered, including claims to relief.
The system is unlikely to affect the treatment of the overseas pensions many of us receive, but getting expert help may well be essential this year.

Visitor tax starting to bite

The growth of short term residential lettings, either a gite or Airbnb, is a concern apparently to the bigger organisations such as hotels. They claim that owners of such short term premises compete unfairly as they don't have the same standards to meet, do not pay business rates and often do not pay tax on their earnings.
Having the "stay" tax now charged by internet letting companies such as Homeaway or Airbnb means owners no longer need to account for it, but the bureaucracy of registering and making monthly reports for other sources remains. In Tarn and Garonne the nightly rate is fixed at 5% (not a straight percentage of the gross rental, there are "chargeable" and "exempt" guests) and other areas have other rates.
The rates charged include the tax which is paid by the guests, but remitted by the owner or manager. The amounts are supposed to fund the tourism infrastructure which will attract and improve the stay of visitors to the area. As a gite owner we can appreciate that big cities or resorts may see the competition as unfair, but given the absolute dearth of decent hotel accommodation in this part of the world we are actually only competing with other gite owners.
The stay tax is in addition to the tax fonciere and habitation and in most cases the income tax we pay on the letting income. Maintaining our properties is not cheap and wages for cleaners, gardeners and managers can be substantial. Mostly we are private owners wanting a bit of income from our property and not extra bureaucratic paper work (sorry, internet work).
Where is my gilet jaune!

What will change from 1st January?

A number of fiscal measures take effect from tomorrow. Most important for taxpayers is the introduction of payment at source of income tax, not unlike the UK PAYE system. For most of the readers living on pensions arising from overseas there will be no change. What may affect some readers is the reduction of social charges for pensioners having less than 2000 euros per month; if there is an amount taken into account for the monthly payments it will be reimbursed by July.
The minimum wage will rise to 10.03 euros per hour gross, giving 1204 euros net per month for a person working 35 hours per week. Workers earning up to 1.3 times the SMIC (minimum wage) will be paid a top up of 90 euros per month if they claim it from the CAF. Given that will concern an extra 1.2 million people prepare for delays at the CAF (our comment not the government's).
Overtime payments will be exempt from tax and social charges in a nod to the gilets jaunes, as with the suspension of the increase in fuel duties and gas prices reduced by 2%.
On the other hand the price of cigarettes will increase as will the price of stamps, a red stamp being 1.05 euros and a green stamp 88 centimes.
There is a heating allowance which will go up by 50 euros to an average of 200 euros. Details of the extra 2 million households affected will be published later.
The environmental measures include a 100 euro per window allowance for double glazing (ndlr watch out for more cold calls); up to 4000 euros for changing a car for a less polluting vehicle for less well off workers using a car for work; the ban on using pesticides by private individuals come into force.
Hearing aid prices will be limited to 1300 euros maximum, with minimum reimbursement up to 300 euros and the maximum charge will be reduced to 950 euros by 2021.

The French exchequer will also introduce special tax measures for the so-called GAFA companies (named for Google, Amazon, Facebook and Apple) which make profits from the internet in France whilst being based overseas. Since the EU has opposed a blanket measure it suggests that France has control of its money - something the Brexiteers say is not the case with the UK. Another lie? Sorry for the political point in making this report!

Taxation of income at source

A reader raised this matter below, and we said there was some doubt about its implementation. Now it seems the government has decided the scheme will go ahead from January 2019.
It appears that all regular income will be taxed at source, including salaries, pensions, rents, benefits and investments (bank interest is already taxed this way).
But the system is designed to keep payroll work for employers to a minimum, with few "codes" like the UK system, just a tax level chosen by the employee, from a "menu" of three choices based on the previous year's income. If you look at your 2017 "avis" issued recently you should see your taxation level, between 0 - 10% for most of us, then ask your employer(s) to apply that rate to 2019 income. There will presumably be flat rate deductions where no choice is made with year end adjustments in due course. It means in effect that the 2018 income will not be taken into account.
Quite how it will affect self employed or those of us with overseas only income remains to be seen; your accountant is the best port of call here.
I am off to check my "avis primitif" - which was wrong at first - to see what our level is for 2017 and how this can apply to 2019!
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Taxation at source

Hi 

I hope all is well with you both. 

Would you please ask any Tag readers if they understand what is happening in 2019 with the Taxe A L,Impot, as things are changing and Dhhhhh I dont seem to understand it !

Thank you 

Jo x

I think Jo means the proposed taxation of incomes at source. There seems to be some debate as to whether this will be postponed until 2020 or scrapped, or implemented as planned on 1st January 2019. As it will concern employees rather than self employed or pensioners we are not sure how it will affect us. Any ideas?
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Taxe d'habitation

One of candidate Macron's campaign promises was to abolish the "taxe d'habitation" for most households. Gerald Darmanin, the minister for public accounts suggested yesterday that this policy will be fully implemented by 2020, with reductions of one third from 2018.
To qualify a couple's revenue fiscale de reference (generally the sum liable to income tax) must be below 43000 euros, 27000 for single people. There are already exonerations for people aged over 75, whose income is generally below about 12000 euros and no news was given about this, though presumably no change will be envisaged.
Many of us "Brexpats" have seen significant reductions in our pensions as a result of the exchange rate of the pound v euro, so perhaps we will be able to benefit from this modest reduction; with your taxe d'habitation nearing 1000 euros it will be welcome in many households.
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Taxe d'habitation to be abolished?

President Macron has confirmed his plan to abolish the tax over the next three years for 80% of households. The tax is a major source of income for the communes, representing about 20% of their revenue. The government will "reimburse" the mairies "euro for euro", but most maires remain sceptical. No details of which homes will be exonerated have been announced.
The tax seems to vary widely from house to house, based on a notional letting value (hence the apparent reluctance to have more than one bathroom!) and there are exonerations for low income and elderly residents. Nor has anything been said about the TV licence (redevance audiovisuel) which is normally parcelled up with the taxe d'habitation.
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If only...

It was suggested on another Facebook page that the reason we English (obviously doesn't apply to other British subjects) can afford to support refugees was that we don't pay tax. Sadly that person has no idea about French taxation laws. M Guillotin and his colleagues are assiduous in collecting from us Impots sur Revenus, Charges Sociales, Taxe Fonciere, Taxe Habitation, duty on petrol, alcohol etc as well as the unavoidable TVA (VAT).
Those who are not resident in France will only pay most of those taxes, but we residents pay as required. So it must be generosity that motivates us to pay more to help others. Bear in mind that French taxpayers may claim tax relief of up to 66% on contributions to recognised charities so we can afford to be more generous with payments to the various French charities supported by Taglines, or indeed others (a recent small sum we sent to MSF was recognised almost immediately with an attestation for next year's tax return).
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Change of employees' tax regime from 2018

People who are employed pay income tax in instalments (monthly if they choose) on the basis of the previous year's income. From 2018 it will change to a "current year" basis, deducted at source by the employer. A system of codes similar to UK PAYE (pay as you earn) will be brought into use, based on 2017 income, meaning for the first time that at the end of the tax year no adjustment will be needed (all things being equal!!). Also civil partners and married couples whose tax is calculated jointly may opt for separate codes to reflect the relative income of each partner - otherwise one partner could end up with a very high tax level and the other a lower rate.
Those of us familiar with PAYE know that it is not without problems, especially in these times of frequent job changes and that employers resent the extra work involved. It may be some time until this settles down.
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Do the rich pay any tax?

With so many arguments about tax avoidance and off-shore accounts you might be forgiven for thinking that the more fortunate make little contribution to the exchequer. In France there is a "wealth tax" - ISF. Last year about 300000 people whose wealth is worth more than 1.3 million euros paid 5224 million euros in tax (average about 15000 euros each) and their income tax is capped to ensure the overall limit is not too punitive (though many, including the Constitutional Council, think it is still too high).
Many Brits avoid becoming resident because of the threat of ISF, mainly because the value of their UK properties can easily top the 1.3 million euro limit, and spend their years travelling back and forth to ensure they keep under the 180 days rule.
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A little bonus at 70

We pay our home help by cheque emploi, a system which enables the domestic worker to gain social security and pension benefits by virtue of an "employer's contribution" to the exchequer. A small blow against the black economy which contributes in part to the high social charges levied on the rest of the working population. It used to be a bit bureaucratic, putting many people off, but with the fully on-line system it only takes a few minutes a month. The down side of course is that the employer's contribution is pretty hefty almost doubling, by a prelevement from our bank, the amount we pay for the help. At the end of the year we claim a tax credit for the amount paid which brings it back towards equilibrium.
We received a letter from URSSAF last week to say that as we are now over 70 (or soon will be) we are exempt from the contribution. So we can continue to ensure that our lovely Laetitia gets her wages and a pension contribution. If you want details look up CESU on line to see how to join and make declarations.
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Pound of flesh

Mikael Artamonoff,  a farmer near Marmande (Lot and Garonne), expressed his frustration with the tax demands he received recently for Income Tax, Taxe d'habitation and Taxe fonciere. Most readers will be familiar with these end of year adjustments (or full year bills if you dont pay by instalments) which seem to fall at the time when you most need extra cash. For Mikael his new business started in late 2013 but he received a demand for a full year's trading as well as the other taxes.

pic: Getty images

As he seemed unable to get a response to what was a mistake he went down to the tax office with a llama, a cow and two goats. He took a ticket and waited his turn, but was a bit put out when, after his animals had climbed the stairs, the director refused to see him.
Now unless some compromise is reached or Pere Noel is extra generous, Mikael will have to close his chicken and "pedagogique" farm by the end of the year.
It is a great disincentive to people setting up businesses to receive up-front  bills for tax and social security contributions just when they need their capital most. This explains partly the success of the "auto-entrepreneur" system, which will defer payments until some actual profits are made.
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Slight delay to pay

Taxe d'habitation should have been paid by 15th November, but if you have not yet been down to the tresor public you have been granted a delay until 23rd November. Payments on line will be in time if made by 21st. If you meet age and income criteria you may be exempt from the tax, but leave it a week or two before claiming to allow offices to get up to date.
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Tax and Social charge advice from BDO

Thanks to Di Hope for the info.

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Is your taxe d'habitation too high?

A measure introduced in 2008 (by Sarkozy's government) came into effect this year and has hit nearly a million pensioners and lone parents, raising their local taxes by up to 30%. When filling in your tax declaration if you are a widow/widower or single parent you would be entitled to a "half person" deduction and abolishing this increases your base income for tax which is also taken into account to calculate your taxe d'habitation. The current government has promised to reimburse those who have been overcharged as it thinks the measure was only intended to apply to income tax.
There are reductions to local taxes available to pensioners, but subject to income limits. Have a word with your advisor or the local tax office if you think you have been over-charged.
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Tax declaration on-line

Over 16 million French Income Tax payers make their declaration via the internet and from next year it may become mandatory. Incomes over 50k euros will need to make their returns on-line and as most such taxpayers either have regular internet access or routinely use financial advisers to complete their returns.
The scheme will be gradually extended to all levels of income and those who have no access to the internet will be asked to tick a box to say so and will be able to continue with paper returns. Failure to comply could mean a fine of 15 (yes, fifteen) euros.
Many of TAG readers who are resident in France will already make their declarations on line and find it reasonably simple, but it makes sense to use a professional if in doubt.
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French tax matters

Some readers may have been subjected to social charges on income on non-French investments. A ruling by the European Court of Justice that such charges may not be not due has been upheld by the Conseil d'Etat and must be adopted by the French revenue. You have until 31st December to claim a refund for 2013 charges.
Details can be read here : Social charge decision
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Capital Gains Tax on second properties

Dear Val,

Following a meeting I had recently with a Notaire, your readers really should read this! I’d be very grateful if you could post it. Thanks!

Capital Gains Tax (“Plus-Value”) in France

Following a recent meeting with a Notaire on behalf of one of our clients who is hoping to sell his property, there are some issues which any of you in a similar position need to know about. I know with 100% certainty it will affect many of you!

We all know that factures for works done on a property can be offset against Capital Gains Tax in the event of a sale. What many of you will not know, however, are the limitations and restrictions which apply to what you can offset. Here are a few very important notes.

Firstly, factures can ONLY be used to reduce Capital Gains if they are:

- From a French-registered company with a SIRET number

- Factured with not only the full name of the company, but also showing the SIRET and the Intra-Communautaire TVA number

- Factured ENTIRELY in French (this is a really important one – many enterprises here will produce it in English for their convenience and yours)

- (If your factures ARE in English, go back to the artisan and ask for it to be re-issued in French)

- Factured showing a full description of the work, the labour broken down, AND the materials purchased

This last one is also of great importance, as often the clients purchase the materials on behalf of the artisan. This has the advantage of keeping the artisan’s turnover lower, and you often get the stuff cheaper – but it renders not only the artisan’s facture worthless (in terms of Capital Gains usage) but also your one for the materials. NEITHER can thus be claimed.

Even if you have purchased a load of materials yourselves (sometimes running into tens of thousands of Euros) and done the works yourselves, these materials can no longer be claimed against Capital Gains. In 2004, the French Government realised that people were buying a host of materials and then claiming to be “Bon Bricoleurs” and doing the work themselves. They also realised that in fact a lot of the work was then being done “in the black” by artisans for cash. So they clamped down on this – you can no longer claim ANY of these materials costs against Capital Gains if you have bought them yourselves.

In essence, the only factures you can now claim for are complete ones billed to you from registered artisans – labour and materials. And only if they are all written in French.

In addition, you can only claim for factures for essentials (whether new construction or renovations, either is okay) as long as the work is deemed to be “essential” and not “for comfort.” Therefore renovating a roof, repointing walls, rebuilding walls, installing electricity/water for the first time – fine. Installing double glazing, a swimming pool, redecorating, even perhaps central heating – NOT fine, except in certain circumstances.

Whatever you DO claim, the Government can decide to investigate your ENTIRE claim at any point in the three years following a sale. If they decide to investigate one item, they will then investigate all of the items. With a fine tooth comb.

This list of items is far from exhaustive. If you are hoping to sell in the near future, and have been doing your Capital Gains calculations, it would be well worth a meeting with a Notaire first to find out what you can claim and what you can’t. You could be talking about a difference running into the high tens-of-thousands.

As a caveat to this, I would urge all of our English-Speaking artisans out there to produce your factures in French... this will be an enormous selling point for your business above your competitors!

Best Wishes,

Steve Trinder.
Val says  thanks to Steve Trinder  assistance@le-cloup.com   for this