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France changes payslips to make tax declarations easier

The French Government has ordered the modification of payslips from January 1st to make it easier for people to fill out their annual tax declarations. Here's what the changes mean.

From January 1st 2022, French payslips have been simplified.
From January 1st 2022, French payslips have been simplified. Here is what you need to know. (Photo by DAMIEN MEYER / AFP)

Filing a tax return in France can be a complicated procedure – particularly when payslips are peppered with confusing acronyms like CSG, CRDS, APE and NAF. 

The French tax system is undergoing a change with the recent introduction of deduction at source (sometimes known as PAYE) for employees. 

However, for the moment most employees still have to file the annual tax declaration – even if all their taxes have already been deducted from their payslips and therefore their total tax bill is €0.

Now the French Government has passed a decree to simplify payslips and make it easier to work out how much of your income you need to declare. 

READ ALSO How to understand your French payslip

From January 1st, all French payslips must contain the following details in an easily identifiable section:

  • The amount deducted from the payment through prélèvement à la source (PAYE, or deduction at source);
  • The amount of overtime pay which is exempt from taxation; 
  • The amount of money you have earned which can still be taxed – or le montant du salaire net imposable

This last point is the most important because if you need to manually enter your earnings onto a tax return (which is the case for people declaring their earnings in France for the first time or filing their return in the post), this is the amount of taxable income you will have to declare.  

The new payslips will look something like this: 

This is the model for the new payslips introduced in France.

This is the model for the new payslips introduced in France. The impôt sur revenu box near the bottom describes how much of your work income can be taxed. Credit: legifrance.gouv.fr

When you file your tax return online, many of the fields are filled in automatically, but this new payslip makes it easier to check whether you have been taxed the right amount. 

Bear in mind that it is not just work income that is taxed in France. If you own a second home that you rent out in France, you will also need to declare these earnings.

If you live in a French property that you own, you will probably also need to pay the taxe foncière and the taxe d’habitation but these are declared separately from the annual income tax declaration. 

We have previously covered who needs to declare their income in France HERE

READ MORE

The online portal for declaring your 2021 income opens in April. 

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Americans in France: What you need to know about your pension

The food. The weather. The wine. The lifestyle. France has plenty to offer retirees - but ensuring you make the most of your hard-earned pension will make your new life in l’hexagone even better.

Americans in France: What you need to know about your pension

Lots of Americans retire to France, and there are generous bilateral agreements in place that make matters relatively straightforward.

First things first; US citizens can bring any type of US-based pension to France – although you’ll have to inform the US tax authorities that you’ll be paying French income tax on it.

You can move either before or after your pension starts to pay out and it doesn’t affect your payments.

US citizens coming to retire in France still have to file a US tax return every year, as well as a French one. Dual taxation agreements mean that you won’t pay tax twice on the same income, but you do have to complete two sets of tax declarations.

You can only forego US income tax responsibilities if you renounce your US citizenship – a process that is lengthy and expensive.

Tom Goold, founder of international financial advisers Valiant Wealth, said: “Generally, France is an attractive retirement destination for US expats with one of the best double taxation agreements and favourable views on US retirement accounts such as IRA 401(k)s and the like.

“If you pay state income tax in the US then this is eliminated in France. One negative could the higher estate taxes in France but there are certain structures that help navigate this issue.

“If this is a concern then you should work with an appropriately qualified advisor who has US experience and regulation.”

For further information, log on to the IRS website for advice and information on exclusions and deductions.

Tax matters

You should inform tax authorities in the USA that you’re moving to France. 

Pensioners are treated favourably here, with a 10 percent reduction factored in on income up to €36,600. You also pay tax as a household so you probably end up paying less tax than you might elsewhere.

If you own property in France expect to pay property taxes in addition to taxes on your income.

Once you have been living in France for three months you are entitled to register within the health system and if you become ill, incapacitated or need extra care as you get older, France has a generous social security system

Americans in France: What’s the deal with health insurance?

Currency matters

Be aware that currency fluctuations will mean that the amount that finally makes it into your bank account will change from month to month.

Other challenges

There’s a piece of US legislation known as FATCA that means all Americans in France, not just pensioners, may struggle to open a bank account – here’s some tips on how to get round this.

READ ALSO What are the biggest challenges for Americans in France?

In all cases, it is best to obtain independent advice that’s appropriate to your personal situation, from a financial expert.

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