5th November 2021
By Thomas Marron, Partner
06 14 24 61 29
Autumn is the time of year when we find out what tax changes we will be faced with in France the following year.
The first draft for the 2022 French budget was published in late September. It is now being debated by parliament and will finalised at the end of the year. It is likely that amendments will be made during the process.
Unsurprisingly, this budget focused on the gradual normalisation of the public finances following the significant impact of the Covid-19 pandemic. Also unsurprisingly, with the Presidential election approaching, it does not include any major changes or increases to personal taxation.
The only modification that will directly affect most expatriates in France is the indexation to income tax rate bands.
Income tax rates 2022 (Income earned in 2021)
Net income subject to tax
Up to €10,225
€10,225 to €26,070
€26,070 to €74,545
€74,545 to €160,336
The fixed rate applicable on investment income, including both income tax and social charges, will remain at 30%.
There are no changes to social charges for 2021 income, so they remain:
- 9.7% for employment/self-employment income
- 9.1% for pension income
- 17.2% for investment income (including rental income)
The draft budget does not include any changes to the taxation of assurance-vie policies, so the current tax benefits should continue to apply for this attractive savings vehicle
Real estate wealth tax (IFI)
The €1,300,000 threshold for the property wealth tax Impôt sur la Fortune Immobilière stays in place for 2021 and there are no changes to the scale rates of wealth tax either. The 75% limitation also remains in place.
The reform to the taxe d’habitation property tax is to continue. 2022 will bring a further reduction of 65% for most households, following the reductions in previous years. It should be completely removed on main residences in 2023.
Although further changes may be introduced before the budget is finalised at the end of the year, it looks likely that the budget won’t include any major surprises or changes for expatriates in France. Depending on the outcome of the election, however, we may see tax reforms later next year.
Since the France tax regime is complicated and very different from the UK’s, you need specialist guidance to ensure you get it right. How you hold your assets in France can make a significant difference to how much tax you pay, as well as how you can pass them to your heirs. UK expatriates also have to consider which UK taxes continue to affect them and the interaction between the two regimes. A cross-border adviser like Blevins Franks is best placed to help you here, as well as to discuss effective, compliant tax planning strategies for your personal circumstances and objectives.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
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Blevins Franks accepts no liability for any loss resulting from any action or inaction or omission as a result of reading this article, which is general in nature and not specific to your circumstances.
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BLEVINS FRANKS BREXIT UPDATE
Now that the UK has fully left the EU, Blevins Franks’ latest Brexit video explores:
- The 90-day rule for visitors and holiday homeowners
- The new rules for UK nationals relocating to Europe, particularly retired people
- Some of the residency and freedom of movement permits available in Europe
- Form S1 route for subsidised healthcare coverage
It is important to seek personalised, professional advice on financial matters. For questions about completing your tax return, speak to a tax accountant. For advice on effective tax planning in France, to lower liabilities on savings, investments and pensions, speak to a cross-border tax and wealth management specialist like Blevins Franks. www.blevinsfranks.com