Understanding your tax notice
The minimum tax rate (Article 197 A of the French General Tax Code)
If your residence for tax purposes is outside of France, your income tax is calculated only on the basis of your French earnings taxable in France under international tax treaties, using the progressive income tax scale and with an income splitting cap (quotient familial) depending on family circumstances, similar to residents of France.
Nevertheless, there is a minimum tax rate :
- for income from French sources, not including the overseas départements (DOM), this minimum rate is set at 20% for net taxable income up to €28,797 for income received in 2023. Above this amount, the rate is 30%.
- for income deriving from the overseas départements, this minimum rate is 14.4% or 20% for more than €28,797 for income received in 2023.
Note that for the year of your departure abroad (Year Y), from 1 January to the date of your departure, you will be taxed as a resident, and from the date of your departure to 31 December of that year, you will be taxed as a non-resident.
The text “minimum 20% tax rate applied” (taxation of non-residents) will appear on your tax notice.
Benefit from an average tax rate that is less than the minimum rates subject to presenting supporting documentation (Article 197 A of the French General Tax Code)
This tax rate may be adjusted downward if you can prove that the French tax rate on all of your worldwide earnings (i.e. both French and non-French) is less than the rate originating from the combination of minimum rates.
Please note : Maintenance allowances may be deducted (only) to calculate the average rate on all worldwide earnings, provided the allowances paid are taxable in France for the beneficiary and have not given entitlement to a tax break for the taxpayer having paid them in his/her country of residence.
If completing your return online, you can opt for the average rate in step 3 (“Revenus et charges”) by selecting the box that says “Bénéficier du taux moyen d’imposition (s’il est plus favorable)” and, for each category of income, enter the amount of French-source and foreign-source income for your tax household.
If you are not able to file online, enter in box 8TM of paper form 2042-C the tax household’s total income arising in France and abroad, and detail the nature and amount of each category of income on form 2041 TM available on impots.gouv.fr. To access these forms, you can enter their number in the search banner of the impots.gouv.fr website, then download and print them.
In any case, it is in your interest to tick the box for the average tax rate when you file your income tax return, as the administration only applies this rate if it is more advantageous for you.
When you file your tax return online, your worldwide earnings are calculated automatically. Except in special cases, for information purposes, you are provided with an estimate of your tax liability using the average rate on your statement of income tax declaration (avis de situation déclarative à l'impôt sur le revenu).
You can also file a claim with the Individual Tax Department for Non-Residents (SIPNR) and provide any supporting documentation that shows the amount and type of your earnings in France and abroad. Nevertheless, due to a large number of claims, processing times can be longer.
For further details: What is the average tax rate? Eligibility
Share of earnings not liable for personal income tax (withholding at source – Article 197 B of the French General Tax Code)
Withholdings at source of wages, salaries, pensions and annuities deducted by your debtor (employer, pension fund, etc.) are calculated by income brackets at rates of 0%, 12% and 20% (0%, 8% and 14.4% for the overseas départements).
On your tax notice, the line “retenue à la source libératoire” (withholding in discharge of income tax) corresponds to the 0% and 12% brackets. This means that your net income, after deduction of a 10% allowance, is reduced by the amount subject to the withholding, within the limit of €44,172 for income received in 2022, resulting in the taxable amount.
For example, suppose you have a net income of €146,557 for 2023, after deduction of the 10% allowance. The tax you owe will be calculated on the basis of €100,000 (€146,557 minus €46,557).
The amount withheld at the 12% rate (or 8% for the overseas départements) will not appear on your income tax assessment notice.
Only amounts taxed at the 20% rate (or 14.4% for the overseas départements) may be directly deducted from your income tax contributions. Thus, the total amount withheld at source on your tax notice may be different from the amount you have declared.
You can request reimbursement of the excess withholding tax applied to your wages or pensions when the total amount of this withholding tax exceeds the amount of tax established by application of the average tax rate.
Plurality of debtors (employer, pension fund, etc.) : adjustment of withholding at source (Article 197 B of the French General Tax Code)
If your debtor is not withholding at source, or if you receive income from more than one debtor, an adjustment of the withholding at source at the 12% rate (or 8% for the overseas départements) appears in your tax notice, on the line labelled “Pluralité de débiteurs – régularisation de la retenue à la source” (Plurality of debtors – adjustment of withholding at source).
When you receive income from more than one employer or pension fund, each of them withholds tax at source. However, this withholding should be calculated by aggregating the total income of each member of the household. This is why the tax owing is adjusted to take account of this method of calculating the withholding at source.
For further details : Declaring withholdings at source by your employer or your pension fund
Actual expenses
If your wages or salary have/has been subject to withholding at source, only the portion taxed at 20% (or 14.4% for the overseas départements) is taken into account when calculating your taxable income. Consequently, the actual expenses that you have declared are deductible only in proportion to that part of your wages or salary subject to income tax.
Expenses, relief and tax credits
As a resident abroad, in theory, you cannot deduct expenses from income derived from French sources (French General Tax Code, Article 164 A). Tax reductions and tax credits are reserved for people having their tax residence in France or who are considered as "Schumacker non-residents".
However, you can benefit from certain tax reductions or credits.
If you comply with the relevant criteria, you may nevertheless be eligible for the tax credit for technological risk prevention work on rented residential properties or those destined to put up for rent.
You are entitled to a tax credit on any expenditure from 1 January 2010 to 31 December 2023 on alterations provided for by the Technological Risk Prevention Plan (PPRT) on a residential property that was completed before this plan was approved and that you rent out or that is destined to be put up for rent for use as main residence by a tenant for at least five years.
So-called "Pinel" and "Denormandie" investments made from 1 January 2019 onwards by taxpayers who have their tax residence in France at the time of the investment entitle them to continue to benefit from this tax reduction even if they subsequently become non-residents.
Since 1 January 2022, non-resident taxpayers have been entitled to the Loc’Avantages tax reduction (Article 199 tricies of the French General Tax Code) provided that the effective date of the agreement precedes the date of their move abroad.
Non-resident taxpayers who carry on a non-wage professional activity are also eligible for certain tax credits for companies.
For further details : Inclusion of expenses, relief and tax credits in tax calculations
Taxable income and reference taxable income
Your reference taxable income (only based on French earnings) is mentioned on the first page of your assessment notice. Your taxable income is also mentioned on your assessment notice in the detailed calculation of your income tax.
UPDATED DINR PART - APRIL 15, 2024