2015-16 French tax returns- the Tax Office has released the filing dates.

The Tax Office has just release the filing deadlines for the income tax returns for the tax year 2015 (Déclaration des Revenus), as follows. For further details on our services for the preparation and filing of the returns, please visit our website .

The online filing service will open on 13th April. The online filing deadlines are a little tighter this year and are as follows:

Non-residents:   7th June 2016

Residents

Départments 01-19:  24th May 2016

Départments 20-49:  31st May 2016

Départments 50-974: 7th June 2016

The filing deadline for the manual returns for residents and non-residents is 18th May 2016, which as in previous years does not allow much time for preparation, given that the forms are not released until late April/ early May!  We would therefore urge all new clients who are filing their first tax return in France, and therefore need to file manually, to contact us as soon as possible so we can schedule the preparation of your returns in time.

For further information and assistance, please visit our website.

2015-16 French tax return release dates- update

Here´s an update direct from the French goevernment public information website https://www.service-public.fr/particuliers/vosdroits/F359 :

The online filing system will open “during April”, without being specific on the exact date.

The manual returns will be released at the end of April / beginning of May. This is particularly inconvenient for non-resident owners of French property declaring for the first time, for whom the filing deadline is 19th May ! It doesn´t give them much time at all. The good news is that, at least up until now, there have been no penalties payable for returns filed a little late.

Please visit our website for further information and assistance.

French tax- the forms explained

Here´s a brief overview of the various tax forms in France. For further information and assistance with the preparation and filing of French tax returns, please visit our website.

If you are non-resident, with a property in France from which you receive rental income, you are obliged to submit annual French tax returns, regardless of whether you make a profit or loss on the rentals. The general returns to submit are 2042 and 2044. For special tax regimes, such as MicroBIC which can save you tax if you rent out furnished holiday accommodation and your expenditure is less than 50% of the income that you receive, an additional Form, 2042C, must be submitted.

If you have registered your property rental activity formally then you will need to submit Forms 2031 and 2033. If this is through a French property holding company, SCI, then the additional return to complete is Form 2072. If it is through a non-French company then you should use Form 2065. Note that the Tax Office has introduced obligatory online filing and, in general, 2016 is the last year when the forms can be filed manually before penalties are introduced for non-compliance.

If you are resident in France, the forms to submit are 2042 and 2042C.  If you receive income from any sources outside France, you should also file Form 2047.  In addition, there is a disclosure for bank accounts outside France in Form 3916.

If you live in France but work in Switzerland, i.e. a frontalier worker then there is an additional Form, 2047 Suisse, which is used to calculate where and how your income should be disclosed in the main tax return.

For further information and assistance with the preparation and filing of French tax returns, please visit our website.

The Empire Strikes Back- Social Charges to be reintroduced for non-residents !

This is not going to be welcome news for non-resident owners of French property who have rental income, or more specifically those who make a profit.  Social Charges,  which are known as Contributions Sociales or Prélèvements Sociaux, are to be reintroduced for the tax year 2015 onwards.

Social Charges, which currently amount to 15,5% of taxable income, were introduced for rental income by non-residents from the tax year 2012 onwards. After a ruling by the European Court of Justice in February 2015 that these charges were illegal because they were Social Security contributions applied to people who would be gaining no benefit from the French Social Security system, the French goverment was  passed a law in July 2015 withdrawing these charges for non-residents and accepting applications for the amounts paid for the years 2012 and 2013 to be refunded.

However, in the Finance Law passed on 1st January 2016, Social Charges are being introduced, supposedly “in agreement with the European Commission” . The French government is claiming that this is legal because the contributions will go towards the general government budget and not specifically towards Social Security. Here is an excerpt from some recent communication that we have had from the Tax Office:

“A noter que l’application des prélèvements sociaux sur les revenus 2015 pour les non résidents est reconduite. Conformément à la loi de finance du 01/01/2016 et en accord avec la commission européenne, l’application des prélèvements sociaux est maintenue pour les non résidents mais financera le budget global de l’État et non la sécurité sociale. “

Whether this will be challenged again in the European Court of Justice waits to be seen, but whatever happens it will be a long process. In the meantime, those renting out their property in France will be faced again with a total tax payable of 35.5% of any profits they make.

Not happy reading.

Frontalier tax returns

If you live in France but work across the border in Switzerland  then you are, as you are probably aware, know as a travailleur frontalierand a special set of tax rules apply.

Depending on in which canton you work, Swiss income tax may or may not be withheld from your salary and this will affect how you need to declare your income in France.

1. Salaries not subject to income tax in Switzerland

If you work in one of the following cantons, then no Swiss income tax should be withheld from your salary and you should declare your salary for normal taxation in France.  If Swiss Social Security is deducted, then it is the net amount received (net imposable) that is taxable in France.

VAUD, VALAIS, BÂLE-VILLE, BÂLE-CAMPAGNE, BERNE, JURA, NEUCHATEL, SOLEURE

You will need to complete Declarations 2047 (Suisse), 2047 and 2042.

2. Salaries subject to income tax in Switzerland

If you are employed in any other Canton, for instance Geneva, then your employer has the right to withhold Swiss income tax from your salary.

In this case, you have the right to claim a credit in your French tax return. This credit is equal to the French tax payable on the income. What this means is that there will be no further tax payable in France.

If Swiss Social Security is deducted, then it is the net amount received (net imposable) that is taxable in France.

The forms to complete are 2047 (Suisse), 2047 and 2042.

For further information and assistance, please visit our website at www.franceaccountants.com

Non-residents with French rental income- which tax returns to file ?

For further help and advice, please visit our website www.franceaccountants.com .

The time for filing the 2014 annual French tax returns (i.e. for the year 2013) is approaching !

Here’s a guide which should help you decide which tax regime you should use to declare your rental income and which forms need to be completed.

Firstly, the French tax system distinguishes between furnished and unfurnished property.

In general, the system allows for higher deductibility of expenditure on furnished property; this follows the line of thinking that property rented out unfurnished is normally a long-term rental where most costs are covered by the tenant.

Let’s look at furnished property first.  Around 75% of our non-resident clients come under this category, with property in France that they let out for holiday rentals as well as for their own personal use.   If your property produces rental income of less than 32,900 Euros in a year, then you can opt to declare under a special tax regime called Micro-BIC. Under this regime, you need only declare the gross rental income in Declaration 2042C, and the Tax Office gives you a 50% allowance for expenditure.

So, for instance, if the rental income from your French property in 2013, before any expenditure, was 20,000 Euros, then:

Your taxable income is 10,000 Euros. This is subject to income tax at 20% and Contributions Sociales at 15.5%. The total tax payable is therefore 3,550 Euros.

Of course, the Micro-BIC regime is optional and if your actual expenditure is higher than 50% of your rental income, then you will save tax by declaring your actual expenditure under the regular tax regime, for which you should complete Declaration 2044. Pleasesee the section below on unfurnished property income for further details.

Note that if your property is run as full-time accommodation such as a gîte ruralmeublé de tourisme or chambres d’hôtes then the tax treatment under the Micro-BIC regime is even more favourable, with a deduction of 71% for expenditure and a maximum allowable income of 82,200 Euros per year.  Note that in order to be eligible for this, it is necessary to register your rental business formally at the nearest Chamber of Commerce and pay the corresponding local taxes due.

Now onto unfurnished property.  If you rent out your property unfurnished and you have annual rental income of less than 15,000 Euros, then you can opt to declare your gross income under the Micro-foncier tax regime, in Declaration 2042. This gives you a 30% allowance for expenditure.

So, for instance, if the rental income from your French property in 2013, before any expenditure, was 20,000 Euros, then:

Your taxable income is 14,000 Euros. This is subject to income tax at 20% and Contributions Sociales at 15.5%. The total tax payable is therefore 4,970 Euros Euros.

This regime is optional and if your actual allowable expenditure is greater than 30% of your income, then you will save tax by declaring under the normal tax regime. As with furnished lettings, the additional form to complete is Declaration 2044 and the following expenditure is allowable:

  • Management and agency costs;
  • Accountancy charges;
  • A fixed allowance of 20 Euros per property;
  • Maintenance, repairs and improvement costs;
  • Property tax paid;
  • Insurance costs;
  • Mortgage interest paid. Mortgages with foreign banks are also eligible.

Note that certain tax regimes cannot be changed within a fixed period, so it is important to plan ahead.  For further help and advice, please visit our website www.franceaccountants.com .