What are all of those French Taxes?
Those Famous French taxes: de-coding common tax types in France
Do you know the difference between a social charge and an income tax? Between real estate taxes and the habitation tax? Tax rates in France are not always high – sometimes they are significantly lower than in other countries. But you won’t know how the French system will affect your finances unless you understand what these charges are and when they apply. So, we’ve put together a quick decoder for you below on the basic charges you might see as a resident in France.
Please note that this post is not an exhaustive list of all the taxes possible in France (that would be too long for a blog post). But those below are both the largest and most common taxes – the ones that a French resident is likely to come across on a regular basis.
Income tax
This is exactly what it sounds like. You have “active” income from wages or self-employment or “passive” income from investments or the sale of something you own. If it came in during last calendar year, you need to report all of it on your French tax Déclaration. If you are a US citizen or green card holder, you need to report everything in the US, too.
But reporting is not the same thing as paying, of course. Once you’ve given the French tax authorities the correct information, a tax agent will apply standard exemptions, deductions, exclusions and the terms of any tax treaty before using the French barème (tax brackets) to calculate the bill for you.
Social Charges: CSG-CRDS and PS
Like income taxes, social charges are paid by everyone who resides in France and has some sort of minimal income. The CSG and CRDS are the most common and most significant of the social charges. Those acronyms stand for “contribution sociale généralisée” and “contribution au remboursement de la dette sociale." These two charges go toward supporting France’s state social programs and the health care system, in particular.
A rate of 9.2% for the CSG and .5% for the CRDS is applied to wages, self-employment income and most investment income. But 6.8% of that CSG charge will be deducted from your income when calculating your income tax bill.
For retirement and pension income, the CRDS stays at .5%, but the CSG rates go down. For higher-income earners the CRDS is 8.3%, for median income-earners it goes to 6.6%, and low-income earners pay 3.8%. As above, you do get a tax deduction for most of the CRDS you pay.
And there is a particularly important aspect of the CSG-CRDS for immigrants in France. If you receive your health care from a different country or organization, whether directly because you are a seconded employee, or indirectly because you are an EU citizen, an NGO worker or a British citizen with an S1, you may not pay this social charge on some or all your income. US income is also often exempt from CSG-CRDS charges by virtue of the country’s treaty with France.
The PS (Prélèvement de solidarité) often does not receive the same treatment as the two social charges above when it comes to treaties and exemptions. And those exempt from the CSG-CRDS should be aware that the PS could still apply. At a rate of 7.5%, the PS is applied solely to forms of investment income (i.e., dividends, interest, capital gains, etc..). In addition to supporting public hospitals and clinics, it ensures basic support for retirees and French-resident families, providing housing assistance and much more.
Cotisations
This French term means “contributions,” and frequently gets used when talking about the social charges discussed above. But here we are referring to charges that apply specifically to wages and self-employment income, something more like payroll taxes.
The French government agency, URSSAF, collects all social charges and cotisations from employers and self-employed workers. You are likely to see very little of URSSAF if you are a salaried employee -- your employer is handling all of that. But if you are self-employed, you will have an URSSAF account, separate from your tax account, to track and pay what is owed.
Cotisations will include your personal pension contributions, your supplementary pension contributions, your disability contributions, etc… The majority of what is collected outside of the CSG-CRDS is specific to your account. In other words, the more you are contributing, the more you are entitled to later in the case of a temporary work stoppage, a disability, the birth of a child, etc... And, of course, these contributions will be used to calculate your pension benefit when you retire.
The exact rates and agencies involved in managing your cotisations depends on the nature of your work. France recognizes different health, disability, family care and retirement schemes depending on whether you are a public worker, a teacher, an agricultural worker, etc…
If you have been working in France, you can get an accounting of what you’ve paid into these programs through URSSAF or the relevant agency for your work field.
It’s worth noting that URSSAF will collect the CSG-CRDS charges on your income throughout the year, as well as cotisations. The final amount of CSG-CRDS and PS charges due for your household are calculated at the end year by the DGFIP, the French tax authority, and you will reconcile any differences directly with them. Your estimated income tax payments during the year go directly to DGFIP, rather than through URSSAF.
“Wealth tax”
The name of this tax can be a bit misleading. Many countries have annual taxes based on how much you own, rather than how much income you had during the year. Real estate taxes and ad valorem taxes on cars are good examples of this. Historically, they had a tax based on your total assets (the ISF). The ISF was replaced in 2018, however, with the IFI, (impôt sur la fortune immobilière).
The word immobilière refers to real estate and not surprisingly, the tax is calculated solely on your real estate assets. The tax always applies to French real estate. But for certain people (i.e. US citizens under the US treaty or as part of a seconded-employee arrangement), non-French property is exempt during the first five years of residency here. Other discounts and exemptions apply, depending on the use and type of property.
Even without the exemptions, most people find this tax is relatively small once abatements and exemptions have been added and the tax brackets applied.
Taxe foncière and TEOM
The Taxe foncière is your basic real estate tax. It gets charged on any and all forms of real estate according to values in the cadastral registry, and the bill comes every autumn. As a French resident, you will also likely come across the TEOM – the tax that pays for waste disposal. This one is sometimes passed on as a separate charge to renters.
Taxe d’habitation
The Taxe d’habitation now applies strictly to secondary and/or vacation homes. Primary residences are exempted by a legal change that took effect on 1 January 2023.
PUMa
Like the CSG-CRDS and PS, the PUMa tax is designed to support the French health care system. But it does not apply to many people. It comes into play when 1. You are not retired; 2. You are not earning more than the minimum in wages or self employment (about 10,000 EUR per year); 3. You have significant assets; and 4. You are not using another nation or NGO’s social welfare programs.
Find out more
We’ve posted articles with more details about many of these taxes and programs. And you can find out more (in English and in French) by using France’s Service Publique website (https://www.service-public.fr) and at the Service Publique citizen help centers throughout the country.