Today's Date:

1. I retired in Canada and receive a pension taxable in France. When do I have to pay the French income tax ?

2. I am planning to move to France, which taxes will I have to pay ?

3. I am planning to move to France and work for a company in France. When do I pay the French income tax ?

4. What is the C.S.G. and the C.R.D.S. ?

5. What is the rule of the "taux effectif" ?

6. I am employed and paid by the French Government and working in Canada. Where do I pay income taxes?

7. Where can I get an income tax return ?

8. When and where do I have to deposit my income tax return (2042) ?

9. How to report an erroneous taxation ?

10. I have a house in France I keep for my personal use. Do I have to pay local real estate taxes ?

11. My French wages (or pension) are taxable in Canada. How do I convert its amount into Canadian dollars ?

12. Where can I get forms 5000A, 5001A, 5002A ?

13. I receive a low income from France. However, I am taxed at a 20% rate. Why ?

A - I have a house in France I keep for my personal use. Do I have to pay local real estate taxes ? How are these taxes assessed?

B - I am considering purchasing a property in France. How much would I have to pay in fees?

C - I wish to sell a real property I own in France? What are my reporting obligation? How is the capital gain tax computed?

I - I own a property and hold a bank account and a few investments in France. Am I liable to wealth Tax (ISF)?

II - On January 1st, 2006, the total value of my French assets was over € 750,000. How is the wealth tax (ISF) computed?

I have a house in France I keep for my personal use. Do I have to pay local real estate taxes ? How are these taxes assessed?

A - Two local taxes applied to real properties in France:

Residence tax: (taxe d’habitation) : this tax is due by any person who occupies a furnished property. If the property is not occupied or if the tenant did not pay the tax, the owner is liable for its payment. This tax is calculated by applying the rate set by local governments to the official Land Registry rental value. The residence tax is assessed on a yearly basis. The tax is due on January 1st of each year. No rebate is granted if the property is sold or if the occupant moves out during the year. Non-residents cannot benefit from any reduction or relief.

Real estate tax: (taxe foncière): This tax on lands and buildings is assessed on a yearly basis. Is is due by any person who own a property on January 1st of each relevant year. New constructions benefit from a two year temporary exemption. The real estate tax is also based on the official Lan Registry rental value.

I am considering purchasing a property in France. How much would I have to pay in fees?

B - Existing buildings: deed recording transfers of properties are subject to a single registration formality. They are subject to a 3.60% departmental registration tax, a 1.20% city tax and a 2.5% collection service fee computed on the departmental registration tax, , i.e. a total of 4.89 % based on the purchase price.

Lands approved for development and newly built properties: purchases of such properties are liable to a standard rated real property value-added tax (19.6%). Purchases of lands approved for development are totally exempt from registration fees. However, sales of buildings are liable to a reduced departmental duty of .60%.

I wish to sell a real property I own in France? What are my reporting obligation? How is the capital gain tax computed?

C - For all sales of real properties in France, please consult the following sites:

- http://alize.finances.gouv.fr/dgiboi/boi2005/8FIPUB/textes/8m105/8m105.htm (Please report to Fiche No 14 of the a document pertaining to taxation of non-residents).

- - file:///U:/Site Internet/PLUS-values immobilieres 8m-1-06.htm

I own a property and hold a bank account and a few investments in France. Am I liable to wealth Tax (ISF)?

I - Married or cohabiting couples and persons who have contracted a PAC (Civil Solidarity Pact) should file a joint tax return.

Non-residents are only liable to the ISF on the assets they have in France. Financial investments are expressly excluded from the basis of taxation. In order to promote financial investments made by non-residents in France, article 885L of the French tax code exempts those investments from ISF.

Are considered French assets:

• 1. Tangible assets physically based in France (car, boat, etc…)
• 2. Properties or shares in real properties directly or indirectly owned in France and in overseas departments, as well as shares in unlisted foreign companies preponderantly holding French real estate.
• 3. Debts, when the debtor is established in France and securities issued by the French Government or by any legal entity with a registered office in France, regardless of the composition of its assets.

The threshold of taxation is € 760,000. As a result, the ISF is not due when the value of the taxable assets is less than or equal to € 760,000 on January 1st 2007.

On January 1st, 2007, the total value of my French assets was over € 760,000. How is the wealth tax (ISF) computed?

II – Assets in excess of € 760,000 are taxed according to the following schedule:

 

	Fractions of taxable assets	Rate
Below	€ 760,000	0%
Between	€ 760,000 and € 1,220,000	0.55%
Between	€ 1,220,000 and € 2,420,000	.75%
Between	€ 2,420,000 and € 3,800,000	1%
Between	€ 3,800,000 and € 7,270,000	1.3 %
Between	€ 7,270,000 and € 15,810,000	1.65%
Above	€ 15,810,000	1.8 %

 

Note: Non-residents liable to the ISF, must file a tax return and pay the tax before July 16^th in they reside in Europe and before September 1^st if they reside elsewhere. Tax returns and checks should be sent to “recette des Impôts des Non-Résidents, 10 rue du Centre, TSA 10010 93465 NOISY LE GRAND, France

 

1 - I retired in Canada and receive a pension taxable in France. When do I have to pay the French income tax ?

A - When pensions paid by a French pension plan to a Canadian resident are taxable in France, the tax is withheld at the time of the payment of the pension. However in certain cases (multiple pensions or pension exceeding 38214 Euros in 2006 (see pensions), you must file an income tax return 2042 and the regularization of the payments is made by the Centre des Impôts des Non-Résidents. The tax return must include the details of the taxable pensions and of the withholdings.

2 - I am planning to move to France, which taxes will I have to pay?

A - The French tax system is based mainly around five types of taxes (for more details, got to :

                            http://www.impot.gouv.fr/portal/dgi/public/documentation?pageId=docu_impots&espId=-1&sfid=410


• income tax (I.R.; C.S.G; C.R.D.S)

• local taxes (real estate tax : taxes foncières, occupant tax : taxe d'habitation and professional tax);

• the value-added tax;

• the registration tax ;

• the wealth tax.

3 - I am planning to move to France and work for a company in France. When do I pay the French income tax?

A - For employed people, besides the C.S.G. and the C.R.D.S. which are withheld, the French tax is paid only the year following the perception of the income. Thus, income tax on 2005 wages is paid in 2006 in three installments (February 15; May 15, the balance is due during the last months of the year) or in monthly payments (from January to October with regularization at the end of the year) based on the tax paid for the previous year (2004). When there is no tax reference (new taxation or no taxation on the previous year), the tax is paid only at the time of the reception of the tax statement of the year following the perception of the income.

Thus, a taxpayer who settled in France in January 2005, will have to file his first income tax return in March 2006, and pay the corresponding tax at the reception of the tax statement which should reach him during the end of the year 2006.

4 - What is the C.S.G and the C.R.D.S?

To the personal income tax are added the "Contribution Sociale Généralisée" (7,5% of the income) and the "Contribution pour le Remboursement de la Dette Sociale" (0,5%). These two additional taxes, are usually withheld from the income received by individuals considered as domiciled in France for income tax purpose.

5 - What is the rule of the "taux effectif" ?

The French income tax is usually calculated by application of a progressive rate. For taxpayers domiciled or residing in France, this rate can be applied by taking into account, not only the income exclusively taxable in France, but also the exempt income or the income exclusively taxable in another country (articles 170, 197 C of the French Tax Code). This rule known as of the "taux effectif" applies for example :

• to the foreign employees of international organizations, who are not taxed in France on their compensation from the international organization; or

• to retirees receiving a pension in respect of past employment in Canada.

To avoid double taxation, a tax credit (attributable to the Canadian source income, which is not taxable in France) equal to the amount of the French taxes .

Such income, calculated with form 2047, must be reported on the 2042 income tax return.

The tax credit has to be reported in paragraph 8, line TA of the 2042 income tax return.

6 - I am employed and paid by the French Government and working in Canada. Where do I pay income taxes?

A - Article 19 of the French-Canadian income tax treaty provides that compensations (other then pensions) paid by a contracting State to an individual, who is a citizen of this Contracting State for services rendered to this State, are only taxable in this Contracting State.

Pursuant to these provisions, a French citizen working for the French Government in Canada, does not pay federal income tax in Canada on the public remuneration he receives from France.

A Canadian citizen working for the French Government in Canada, is taxable only in Canada on the public remuneration he receives from France.

A French citizen who is a Canadian resident for the purpose of the treaty, must report all his other French source income to Canada (real estate income, interest, dividends...)

7- Where can I get an income tax return?

A - If you were subject to income tax the previous year, you will automatically receive an income tax return (2042) in April. Otherwise, you can get this document and its attachments:

- by downloading the forms from the site of the French Tax Administration :


http://www.impots.gouv.fr

If you live in France and you are filing for the first time, you can get the tax return at the tax office (centre des impôts) near your domicile.

8- When and where do I have to deposit my income tax return (2042)?

A - For the taxpayers residing in Canada, the last day of filing is June 30 of the year following the perception of the income.

The tax returns must be mailed to the Centre des Impôts des Non-Résidents (CINR)
10 rue du Centre, TSA 10010, 93465 NOISY LE GRANDE, France

9- How to report an erroneous taxation?

A - If you notice a taxation error, you can address a complaint to the tax center which established the taxation (the address of this center is on the tax statement). The deadline to file a complaint is :

• for local taxes : December 31 of the year following the date of "mise en recouvrement" indicated on the assessment form ;

• for other tax matters: December 31 of the second year following the date of "mise en recouvrement" indicated on the assessment form.

10 - I have a house in France I keep for my personal use. Do I have to pay local real estate taxes?

A - The owners must pay the "taxe foncière" whatever the use of the property (personal use or rental).

- the "taxe d'habitation" is established in the name of the people who occupy or have the possession of a property. If he does not rent the premises, the owner must pay this tax even if he does not live regularly on the premises.

11 - My French wages (or pension ) are taxable in Canada . How do I convert its amount into Canadian dollars?

A - To convert a remuneration or a pension from French francs into dollars, you must use the conversion rate of the day of payment. The source of this conversion rate has to remain the same. You should be able to justified it with Canada Customs and Revenue Agency. You can use for example the rate of the Trésorerie of the French Embassy   )1 $ canadian = 4.78 FF in 2000 and 4.76 FF in 2001, 0,68 Euros in 2002, 0,63 Euros in 2003, 0,617, 1 euro = 1,617 Canadian dollars in 2004 and 1 euro = 1.515 Canadian dollars in 2005, 1 Canadian $ = 0.7023 € and 1 €  = 0.7023 $ canadian in 2006)

12 - Where can I get forms 5000A, 5001A, 5002A ?

A - These forms necessary to justify your residence abroad can be downloaded from this website. After having filled the form, you must have it certified by Canada Customs and Revenue Agency. Once certified, you will mail the form to the French paying establishment. :

                5000A                5001A            5002A

13 - I receive a low income from France. However, I am taxed at a 20% rate. Why ?

A - The income tax of individuals who are not dimiciled in France and are taxed in France on their sole French source income, is computed by application of the progressive rate and the "quotient familial" (number of people in the family).
However, this tax cannot be lower than 20% of the net income. (article 197A of the French tax Code).
This 20% minimum rate can be lowered if the individuals can justify that if their worldwide income would be taxable in France as a French resident, the average rate would be lower than 20%.
To benefit from this provision, you have to file your French income tax return in due time and enclose a request of decrease of the 20% rate pursuant to article 197A. You have to send along with the return, copy of your Canadian tax return and "avis de cotisation" in French.

Embassy of France in the US - April 15, 2007