INDIVIDUAL TAXATION

French taxation is ruled by the massive Code Général des Impots (CGI), which is available at Legifrance. A shorter write-up is available at Impots (Tax).

French residents are taxed on their global income. Married couples may be taxed jointly or separately.

INCOME TAX

Taxable income includes (1) employment income, (2) business income, (3) real estate income, (4) investment income, and (6) capital gains. Income is taxed at progressive rates. The tax bands are adjusted annually.

French residents are taxed on a household basis. The mode of calculation is somewhat strange, and emphasizes the familial nature of French society. The household's net taxable income is divided by the number of family members, calculated according to the so-called 'family coefficient rules' (e.g., a two parent family with two dependent children would result in the gross family income being divided by 3. The figure arrived at is taxed at the scale rates. Then the resulting amount is re-multiplied by whatever number was arrived at.

Wealth Tax

Wealth tax is an annual tax that applies on French assets. Wealth tax is levied at progressive rates. The tax bands are adjusted annually.

CAPITAL GAINS TAX

Capital gains are generally taxed at 19%. Taxable capital gains are calculated by deducting acquisition and improvement costs from the selling price or property value at the time of the sale.

The capital gains tax is levied at 33.33% for non-EU citizens, and 50% for residents of non-cooperating countries.

Capital gains tax is not levied on the taxpayer's principal residence. For investment properties, capital gains tax is not levied after 30 years of ownership.

PROPERTY TAX

Property Taxes

There are two types of property taxes in France, the taxe d'habitation and the taxe foncière. Whoever actually resides in a building is obliged to pay the tax d'habitation. Generally, rental leases also provide that the tenant will reimburse the landlord for the taxe foncière, which is otherwise payable by the owner of the property. The tax foncière is a combination of tax for the building (taxe foncière bâtie) and for the land (taxe foncière non bâtie).

CORPORATE TAXATION

INCOME TAX

Corporate tax applies automatically to sociétés anonymes, sociétés par action simplifiées, sociétés a responsabilité limitée, sociétés en commandite par actions, and some co-operatives. Corporation tax may also apply to other bodies, such as sociétés civiles, and even to sociétés de personnes (partnerships), according to the nature of their business.

The corporate tax rate is currently 33.33%. Income-generating expenses are deductible when calculating taxable income.

For small-to-medium enterprises (SME) with €7,630,000 turnover, at least 75% owned by individuals, and with profits of less that €38,120, the corporation tax on profits is 15%. The first €38,120 of taxable income is taxed at 15% and taxable income exceeding the threshold amount is taxed at 33.33%.

Surtax

A surcharge of 3.3% applies to the standard corporate income tax liability if the amount exceeds €7,630,000, which results in the overall effective corporate tax rate of 34.43%.