Taxation of income received abroad

Subject to international tax treaties, persons who are resident of France for tax purposes (Article 4 B of the General Tax Code) are liable for income tax on all their income in France. Those who are not resident of France for tax purposes owe this tax only on their French-source income.

If you are resident of France and have received income outside France, you must fill out return no. 2047.

Income received abroad covers all income, profits and capital gains of any nature received outside mainland France and the overseas départements (or received directly from a territory or country other than mainland France and the overseas départements), irrespective of the location where the capital is invested, the location of the assets or where the activity from which they originate is carried on.

You must declare income received abroad by all members of your tax household when this income is taxable in France. You must also file return no. 2047 when you receive income, other than salaries and pensions, which are tax-exempt in France but used to calculate the taux effectif.

In boxes 1 to 6 of return no. 2047, you must mention the income that is taxable in France and report it in the relevant sections of return no. 2042, adding it, where applicable, to your income of the same nature received in France. You must also fill out section 6 or 7 of return no. 2047, depending on whether the treaty executed between France and the country where the income was received provides for the elimination of double taxation by a tax credit equal to the French tax or one equal to the foreign tax.

In box 8, you must mention the income that is tax-exempt in France but which is used to calculate the taux effectif and report it on line 8TI of return no. 2042 when it is income other than salaries or pensions. If you receive exempt salaries or pensions that are used for calculation of the taux effectif, you do not have to declare them on return no. 2047. Simply mention them on lines 1AC and thereafter of return no. 2042C without reporting them on line 8TI of return no. 2042 (even if you receive other foreign-source income that you declare on line 8TI).

When income has been received in the currency of a non-Euro area country, it must be converted into euros at the exchange rate on the receipt date.

To avoid double taxation, when this income has been taxed under the terms of a treaty in the country or territory from which it originates, the tax paid outside France is not deductible from income but provides entitlement to a tax credit that may be deducted from French tax.

Two scenarios are possible:

• The amount of the tax credit reflects the foreign tax. The amount of income before deduction of the tax paid abroad must be declared on return no. 2047 and reported in the relevant section of return no. 2042. In addition, the tax credit must be mentioned on line 8TA of return no. 2042.

• The tax credit is equal to the amount of French tax corresponding to the foreign-source income. The amount of income before deduction of the tax paid abroad must be declared on return no. 2047 and reported in the relevant sections of the income tax return depending on the type of income. The total amount of income must also be mentioned on line 8TK of return no. 2042.

Special provisions for cross-border workers:

The special provisions applying to persons with cross-border worker status within the meaning of tax treaties or agreements executed with Germany, Belgium, Spain, Italy and eight cantons of the Swiss Confederation stipulate that their salaries are taxable in their country of residence. Although it borders France, the canton of Geneva has not signed the agreement. The compensation received by workers who live in this canton in Switzerland and who work in France, or are residents of France and work in this canton, is taxed in the country where they work.

If you have property income, provide the addresses of your properties located outside France in return no. 2047. Next, declare the income from these properties in return no. 2044, in the same way as for income received in France. Report the income in paragraph 4 of return no. 2042.

In this section, you must mention any income from securities and investments from French or foreign sources received abroad, and distinguish this income according to the relevant categories of the return. However, you must report income from foreign securities received in France, through the French credit institutions holding your securities, directly in return no. 2042 and not use return no. 2047.

For further information, consult our website's "International" section.