Changes to French Tax from Jan 2019

Overview of tax changes in France starting January 2019.

PAYE (Pay As You Earn) for French-Based Income

If you receive a French-based regular income, such as a salary or pension, a PAYE (pay as you earn) system will be introduced. The tax authorities will inform your employer or pension payer of the nominal income tax to apply, and the tax will be deducted at source.

Overseas incomes are not subject to PAYE. These must still be declared on your tax return.

Changes to Tax Stage Payments

Tax stage payments will change from twice a year to monthly. The last page of this year’s tax advice (for 2017 incomes) shows the calculation and the amount of monthly tax to be paid from January 2019.

It will still be necessary to submit a 2018 “Declaration de Revenus” in 2019, as this tax return will regularize the tax due and account for any tax made by stage payments or deducted at source on French-based incomes.

The tax authorities are asking you to register your bank account details so your monthly stage payments can be deducted by direct debit.

French Property Income

Tax will not be deducted at source on French property income. This must be declared on your 2018 Declaration de Revenus.

Taxation of Savings and Investments

From January 2019, income from savings such as interest and dividends will be taxed at a flat rate of 30%. This consists of:

12.8% income tax
17.2% social tax

French banks will deduct this at source. However, in certain circumstances, it is possible to opt out of the income tax deduction (but not the social tax) by contacting your bank.

If you haven’t heard from your bank yet, reach out to them.
Note that interest from overseas bank accounts and savings (such as a UK ISA) must be declared on your French tax return.

Tax-Free Savings and Investment Options

As an alternative, there are tax-free savings accounts available through French banks, such as the Livret A, and tax-efficient investment vehicles like the Assurance Vie.

If you would like more information on Assurance Vie, contact one of our advisers.

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