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Income tax on rental earnings in France
A guide to income tax and social charges on rental income in Meribel - France
Income tax
For non-residents, retrospectively on income earned in 2018, there is now a progressive rate of minimum income tax according to the amount of net taxable income (before the residents’ progressive rate is applied) and in 2020 the tax band thresholds increased slightly:
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for income earned up to the limit of the second band of the residents’ progressive scale (currently set at 27,794 Euros per household share), the minimum rate of income tax is 20% of "Profit"
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where income exceeds the upper limit of this second band (in excess of 27,794 Euros):
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the minimum rate of income tax is 20% for the first amount up to this figure,
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and taxable income in excess of 27,794 Euros is taxed at 30% of “profit” and thereafter the general progressive scale applies, if relevant.
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Taxable income up to and including 27,794 Euros = min 20% income tax
Taxable income in excess of 27,794 Euros = min 30% income tax
Social taxes
Currently, the total amount of social taxes applied to asset income is 17.2%. The new French
Finance Law has modified how this is broken down and now 7.5% of this is classed as a solidarity taxation affected entirely to the French state (and therefore not to the healthcare system); the remaining 9.7% is broken down into 9.2% general social contribution and 0,5% contribution to the French national debt. These are the main points to remember:
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Where non-residents reside in the EU, EEA (Iceland, Norway, Liechtenstein), or Switzerland, they will only have to pay 7.5% social taxes on their asset income; for property rental income this will apply retrospectively to income earned in 2018! For income related to capital investment, this reduction applies from January 2019.
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Where non-residents reside in any other country outside of the EU, EEA or Switzerland, the full 17.2% will apply to all asset income.
As in every jurisdiction tax is complicated, please do not hesitate to contact us if you would like to speak to a professional accountant based in Meribel.
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