France is one of the most attractive countries in the world in summer, and a lot of foreigners start thinking about moving to this country.
Have you ever thought about taxes in France?
Personal Income Tax
With respect to individuals France has the progressive taxation scale of the personal income starting from 14% to 45% in comparison with fixed rate of 18% tax in Ukraine.
Consequently, income up to €9807 is tax exempt. Income starting in the value from €9807 to €27K is taxed at the rate of 14%, from €27K to €72,6K – the rate amounts to 30%, from €72,6K to €153,8K – the rate amounts to 41%, if the income is above €153,8K, it is taxed at the rate of 45%.
It is important to notice that France has diverse relief system, that allows to decrease personal income tax. They include the following: your marital status, parental status, whether you study additionally, whether you are the business founder, etc. In order to apply the appropriate tax abatements correctly, you undoubtedly will need tax consultant or financial consultant.
It is proposed in France in 2019 to introduce the PAYE (“Pay as You Earn”) that has been performing for many years in the UK. We are going to write about it later.
Business taxation
As to business, France is not among the most popular countries for private business. The surveys reveal that the youth aims to be hired by large companies rather than run its own business.
Obviously, the first thing will be to get consultations from tax consultant and accountant on the potential business activity. Additionally, it will be a significant step to assess insurance payment that should be paid annually in accordance to your business activity.
Usually the income of the French companies is taxed at a rate of 33% on the whole profit earned in the territory of France. In 2020, it is planned to reduce the rate to 28% for all companies. For the moment, rate of taxation depends on the ownership structure in the capital of a company. In view of this, limited liability companies that have sole individual as shareholder, can use the taxation system for individuals.
VAT
VAT performs at the rate of 20% but the reduced rate of 5,5% is used in the food sector, tourism and some local private services.
The company, that has exceeded the limit of €33,2K, becomes the taxpayer. That goes for the companies that provide services; and €82,8K for the commercial business activities.
Other taxes
CET tax (“Contribution Economique Territiriale”-fr.) is a local tax which funds the development of the local services and commercial chambers. Tax amount is calculated according to a complicated formula and ranges from several hundred to several thousand (but not exceeding €10K) annually depending on the company turnover.
The payment of the social contributions is mandatory for all in France, including individuals and legal entities, regardless of the chosen private or business tax system. The rate of contribution is 45% on the total income before the taxation but it is the costs for tax purposes, so, it reduces the income tax.
To sum up, France is very attractive due to its incredible beauty and charm but for the successful business activity or for relocation for full-time residence you need to get the tax and financial professional advice as to preplan your actions and tax liabilities towards the budget of France.
Author: Olena Bokan