Understanding French Taxes

France is well known for the complexity of its tax and administration systems, however, don’t let that put you off of buying a property in France. The tax system is not as complicated as it may at first appear. Sextant Properties explains…

Taxe d’habitation
The taxe d’habitation or French residence tax is payable every year by the person (or persons) occupying the property on 1st January. Even if there is no one there on that date, if the tax authority deems that your property is ‘capable of being occupied’ you will be taxed. This means that regardless of how much (or how little) time you spend at your French home you will still have to pay the taxe d’habitation. Whether or not your property is furnished makes no difference. Your television license fee (or redevance audiovisuelle), which costs 116 € a year, is charged in the same way.

There are however certain circumstances under which you will not have to pay this tax. If you move into your property after 1st January you will not be liable for the taxe d’habitation payable that year (the previous tenant will be unless you have made a private agreement with them). Similarly you will not have to pay this tax if you let out your property as it will be paid by your tenants instead. You may also be exempt if you have tried without success to let your property (though you must have evidence to support your claim) or if your property is a holiday let – that is to say a chambre d’hote or a classified gîte (contact your local mairie for more information about this). Finally, if you are aged over 60, are a widower or are registered disabled (ie incapable of gainful employment) you will not be required to pay this tax.

The way in which this taxe d’habitation is calculated is rather complex but is essentially based on the notional rent a property might achieve (taking into account its condition, size and location) rather than the actual rent payable. As the formula applied to this notional rent varies according to how much income the local authority needs to raise, the amount you pay in tax will be different in different places although it will, generally speaking, be higher for a property in a town than for a comparable property in the countryside. You can find out the notional rental value of your French property by contacting the local Centre des Impôts Fonciers (Service de Cadastre).

Taxe foncière
The taxe fonciere or French wealth tax is payable by the owner of the property rather than the occupier. All types of property are subject to this tax (residential, commercial, professional and industrial property) as is land.

There are exemptions, however. The taxe d’habitation is not payable by those aged over 75, the disabled and recipients of the “minimum vieillesse” (a pension for elderly people with low incomes), with those aged between 60 and 75 benefitting from a reduction of €100 or more (these personal exemptions however are only granted if the property is your principal residence). Other exemptions include agricultural buildings, land with new woodland planting, properties built prior to 1989 where major energy conservation measures have been undertaken and residential properties which have been placed on the market but remain unsold (although, once again, the property owner must have evidence as to their efforts to sell). New builds, extensions and rural conversions are also subject to a two-year exemption.

The taxe fonciere is determined in much the same way as the taxe d’habitation (and again, is usually higher in towns). It is paid annually with tax invoices (Avis d’imposition taxe foncière) normally sent out during the third quarter of the year. Those buying/selling properties during the tax year will not however be left out of pocket with the parties involved usually agreeing to share the cost of this tax (if this is the case, ensure that it is mentioned in the relevant sale and purchase agreements).

The taxe fonciere is often accompanied by the taxe d’enlevement des ordures menageres, the rubbish collection tax (some local councils charge separately for this service whilst other fund rubbish collection from the general budget).

Tags: , ,

This entry was posted on Sunday, December 6th, 2009 at 8:11 pm and is filed under Finance, French Property, French taxes, Property Investment . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Understanding French Taxes”

  1. mike barke Says:

    In the above mentioned article Matthieu talks about a 100 euro (or more) reduction for owners aged 60 to 75 of Taxe fonciere and a complete exemption of Taxe D’habitation for owners over 60 years old.
    Are these figures true for all people of these ages or are they income related?
    It is very difficult for non (or little) French speakers to get accurate and up-to-date information regarding these taxes, and, having suffered a nearly four fold increase in these taxes in our first year in our property in Mayenne we are concerned that the taxes levied have been calculated correctly.
    Many thanks in anticipation of any information you might be able to supply or any name of someone we can contact for some help.


    Mike Barke

  2. Matthieu Cany Says:

    Dear Mr Barke,

    The reduction in taxe fonciere for those aged between 60 and 75 and the complete exemption for property owners aged over 60 is subject to a few conditions including income thresholds.

    As long as your French property is your main residence, one member of your household fits the exemption criteria and you earn below the applicable income threshold (see table below) you should not pay the taxe fonciere or the taxe d’habitation.

    Table: Income Thresholds

    Household Size Income Threshold
    1 €9,837
    1.5 €12,464
    2 €15,091
    2.5 €17,718
    3 €20,345

    Even if you earn more (up to €23,133 for one person, €32,791 for a couple, the figure increasing for additional family members) you may still receive some tax relief. However, if anyone in your household earns above the upper income threshold you will not be eligible.

    The reduction in taxe fonciere for those aged between 60 and 75 is also means-tested.

    If, after reading this information, you believe that your taxes are being calculated incorrectly/that you are entitled to tax relief that you are not receiving, you should visit your local Centre d’impôts and discuss your circumstances with them.

    You may wish to consider seeking financial advice from an English-speaking French accountant (expert comptable) or tax advisor (conseiller fiscal) or possibly an AMF-regulated company specialising in French taxation.

    (The AMF or Autorité des Marchés Financiers is the French equivalent of the FSA in the UK, to check if a company is registered with them visit http://www.amf-france.org/bio/rech_CIF.aspx and enter the company name in the box ‘Nom du CIF’).

    I hope this information is useful. For further advice please do not hesitate to contact us.

    Please note: any exhonoration or means-tested tax relief does not apply to that part of the tax fonciere related to the collection of rubbish – the taxe d’enlevement des ordures menageres – where this is charged at the same time.

Leave a Reply

Join our Newsletter!

For latest news and advice about buying property and living in France. Type in your email to subscribe.