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TAXES

Is France set to scrap the dreaded annual tax declaration?

With France having finally introduced a pay-as-you-earn income tax system earlier this year will it be getting rid of the annual tax declaration?

Is France set to scrap the dreaded annual tax declaration?
Photo: AFP

What has happened?

Since the start of January, French income tax has been automatically taken out of salaries, pensions and substitute income (for example maternity leave or job seekers' allowance) instead of being paid a year late as it was before.

This new system (called prélèvement à la source in French), aims to be more adaptable: taxpayers now automatically pay tax each month directly from their salaries as they earn it, and not a year later as they did before.
 
The shift to a pay-as-you-earn system was actually adopted by the Socialist government of Macron's predecessor Francois Hollande, but was only implemented in January this year, after some dithering by Macron on the issue.
 
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What did it mean for salaried workers in France?
 
It meant two things; Firstly monthly pay slips now contain less, as the tax has already been deducted as well as the social security contributions which had always been subtracted from pay directly.
 
Many French workers spoke of their shock in January when they opened their first ready-taxed pay packet but the reform passed smoothly and there was no widespread rebellion that some in the government had feared.
 
But workers still have to fill out the annual tax declaration in May in order to make sure they are paying the right amount of income tax. Some could be in for refunds while other workers might find they owe the tax man some money, once those declarations are made.
 
But the annual tax declaration – a form dreaded by many, may soon become a thing of the past, or at least that's according to France's Budget Minister Gerald Darmanin.
 
So the declaration's going?
 
Quite possibly.
 
Darmanin says income tax payers will have to complete one more déclaration d’impôt before it disappears from their lives forever (unless they are self-employed).
 
He told French newspaper La Tribune: “Next year I will without doubt announce the end of the tax return. You will not have to file your tax return.”
 
So the coming declaration in the spring will still have to be filled in. And we will wait and see whether Darmanin follows through on his word.
 
Who do I call if there is a problem?
 
The taxman (and not your employer) is the person to go to for any issues arising out if the new income-tax rules and calculations on your payslip. 
 
The government has set up a national helpline (in French) to answer any questions about the reform. The number is 0 809 401 401. So far, it has received over 1 million calls since the beginning of January.
 
There's also lots of information on this government website. Otherwise, if you have any questions you can also contact your local tax office directly.

 
 
 

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TAXES

What to do if you’re struggling to pay a French tax bill

Income tax bills come due in France from September 26th, while property owners will also be receiving property tax bills in the autumn – but if you’re worried about your ability to pay, options are available.

What to do if you’re struggling to pay a French tax bill

France is a highly taxed country, so if you live here you probably already accept the fact that you will be paying a lot of tax.

But if you’re struggling to pay the bills, you have options, and in most cases the initial advice is the same – contact your local tax office and ask for help.

Income tax

If you’re registered with the online tax portal and make your declarations online you will have already given your bank details to the tax office and they will take the money out of your account directly (after sending you a bill so you know how much will be going out).

If you owe more than €300, the money will be taken in four instalments – this year the payment dates are September 26th, October 25th, November 25th and December 27th.

Defer payment

If you’re concerned about your financial situation you may request a deferment (a délai de paiement) from tax authorities, giving you more time to pay what you owe. 

If you’re asking for a deferment, you can do so online:

  • Log on to your personal space at impots.gouv.fr, and access “messagerie sécurisée” (secure messaging);
  • Click on “écrire” (write);
  • select “j’ai un problème concernant le paiement de mes impôts” (I have a problem paying my taxes);
  • then “j’ai des difficultés pour payer” (I am having trouble paying);
  • Select the tax concerned and follow the instructions on the form.

If you prefer to deal with the matter face to face, you can visit your nearest tax office.

Whether you are asking online or in-person, you must provide a completed difficultés de paiment form – find that here – plus;

  • your tax demand;
  • a bank statement;
  • supporting documents showing your incomings and outgoings (such as pay slips, rent bills, utility bills, etc).

Be aware that deferment requests are handled on an individual basis.

Write off a bill

In certain cases – if you have recently been made redundant, for example – you may ask for tax relief (known as a remise gracieuse), in which part or all of your bill is written off.

Your request for a remise can be made online, using the secure messaging system mentioned earlier. Alternatively, you can go to your nearest tax office in person.

You should fill out a completed difficultés de paiement (payment difficulties) form, and attach or take along corresponding documents.

  • Tax authorities will take into account, in particular, an unforeseeable loss of income (unemployment, for example);
  • Other exceptional circumstances (such as the death of spouse, separation, disability) or abnormally high expenses (illness);
  • a disproportionate difference between the size of your tax bill and your level of income.

Ability to pay

When you apply for a deferment or relief, your ability to pay is analysed, taking into account, among other things:

  • your assets and the resources of people living with you, whether taxable or not (social benefits, municipal assistance, RSA, etc.);
  • essential household expenses (food, healthcare, insurance, housing, transport to and from work, etc.);
  • whether your expenses match your resources and the composition of your household.

Be aware that, if your expenses exceed your financial capacity solely because of your lifestyle choices, your application will be rejected.

Furthermore, depending on your situation, the granting of tax deferment or relief may be subject to :

  • prior payment of outstanding taxes;
  • the filing of a tax return, if you are not fully up to date with your tax obligations;
  • a waiver of any litigation relating to the taxes concerned by the application.

Usually, requests for deferred payment or tax relief are processed within two months. If you have not received a reply within this period, you should assume your request has been rejected. 

But this period may be extended to four months if your situation is complex. In this case, the administration must inform you of this extension before the initial two-month deadline expires.

Property tax

If you own property in France, autumn is also the time when you will be getting property tax bills (tenants no longer pay property taxes after the phasing out of the taxe d’habitation.

All property owners get a bill for taxe foncière while second-home owners will also get a bill for taxe d’habitation – find a full explanation of the system HERE.

Many people have noticed a steep rise in property tax bills in recent years, due to changes in the tax system. If you think your bill is incorrect, here’s how to challenge it.

If the bill is correct, but you are having difficulty paying you can contact your local tax office as described above to request a deferment of the bill. Property tax can also be paid in monthly instalments, rather than all at once.

There are also some groups who are exempt from paying, or entitled to a reduced rate.

It’s sometimes mentioned that older homeowners in France are exempt from taxe foncière (property owners’ tax). This is wrong, but depending on your situation, assistance in the form of a reduction or an exemption may be possible. 

If you are over 75 years old on January 1st of the tax year, you can benefit from an exemption from property tax for your main residence (not a second home). Two additional conditions must also be met.

Concerning the occupation of the accommodation:

  • you live alone or with your spouse or civil partnership partner;
  • you live with dependents for the calculation of income tax (children, dependent persons).

Concerning your financial resources: 

  • the amount of your reference tax income from the previous year must not exceed a certain ceiling specified by article 1417-I of the General Tax Code, which is set by a decree published each year;
  • The income limits not to be exceeded depend on the number of parts retained for the calculation of income tax;
  • Holders of the solidarity allowance for the elderly (ASPA) or the supplementary disability allowance (ASI) are exempt from the financial resources requirement.

If you are over 65 and under 75 on January 1st of the tax year, you can benefit from an automatic reduction of €100 on property tax on your main residence.

Two additional conditions must also be met:

  • you occupy your accommodation under the conditions listed in the exemption from property tax for persons aged over 75;
  • the amount of your reference tax income from the previous year does not exceed a certain ceiling specified by article 1417-I of the General Tax Code.

Neither of these exemptions can be used for second homes. Since the taxe d’habitation is now only paid by second-home owners the opportunities for a deferment or exemption are very limited, since the tax office assumes that second-home owners are financially stable.

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