A Guide to French Income Taxes

A guide to French income taxes, including investment and earnings, by Rob Kay…

For UK nationals residing in France, and those planning to move there, understanding the French income tax system can really help towards your financial peace of mind. France’s tax structure may seem complicated, but with a clear grasp of its fundamental components, managing tax obligations can become a little more straightforward. French income tax is primarily divided into three categories, each with its own unique rates and applicable income types.

Firstly, general income, including earnings, pensions, and rental income, is subject to a progressive tax scale ranging up to 45%. Then, social charges -additional levies that vary based on the type of income can add up to 17.2% on applicable income. Finally, for investment income and gains, a flat tax rate is generally applied. Since its introduction in 2018 it has been set at 30% (comprising 12.8% income tax and 17.2% social charges).

As part of the 2025 budget approval debate, the Assemblée Nationale voted to increase the tax element to 15.8%, taking the total to 33%. However, this is not the final decision and at the time of going to print we await the final outcome.

This article breaks down each of these tax types in more detail, guiding you through the key aspects of French income tax and offering insights tailored for UK nationals adjusting to life under the French tax regime.

The first step is to determine your tax residency. This can often be ambiguous and has caught people out. You may believe you should be paying taxes in the UK, while in fact, you qualify as a tax resident in France, or vice versa.

In this modern age of global information exchange, there is a great deal of expectation for transparency, backed by technology that is designed to uncover any divergence from the rules. It is, therefore, vital that you clarify your tax status from the start. Resolving any discrepancies later can be time-consuming, stressful, and costly.

At the time of going to print, France’s 2025 budget was not yet finalised. The draft budget was presented by the French government in October 2024 and outlined France’s aim to reduce the public deficit to 5% of the GDP and included €60 billion of spending cuts and tax increases.

The adjustment to the tax bands and scale rates for income received in 2024 are as follows:

There is an additional charge of 3% for a single person who earns between €250,000 and €500,000-which increases to 4% if the income exceeds €500,000. For a couple, these incomes double to €500,000 and €1,000,000 for the 3% and 4% respectively. It should be noted that the draft budget for 2025 proposed an additional charge (contribution exceptionnelle differentielle) for households subject to the ‘additional tax on high income’ to ensure that they are taxed a minimum of 20%. It would only be applied if the income tax and existing additional charge combined still fell below 20%.

The proposal included a kind of ‘taper relief where the taxable income of the household is below €330,000 for a single person, or €660,000 for a couple. However, as the budget made its way through parliament, the Assemblée Nationale voted to remove some of the taper relief and make the contribution exceptionnelle differentielle permanent. This vote could be overruled or adjusted before the budget is approved, and the final decision is not known at the time of writing.

While this minimum 20% change is intended for higher earners, it may impact those taking large sum payments from their pensions. If you were planning to do this, take specialist advice first.

One of the most significant distinctions between UK and French income tax is the ‘parts’ system. In the UK and in many other countries – income tax is assessed on an individual basis. However, in France, it is calculated at the household level. This approach mitigates the impact of higher tax rates that can arise from a high income shared among multiple family members.

The family unit is divided into several ‘parts familiales, which correspond to the number of individuals in the household. The total income earned during the year is divided by the number of parts, and the applicable income tax rates are applied to this reduced figure. Once the tax amount is calculated, it is multiplied by the number of parts to arrive at the final tax due.

In addition to income tax, individuals in France are subject to social charges, which generates a considerable amount of revenue. While distinct from social security contributions, these charges play a vital role in funding France’s health and social care systems.

For employment income, the social charges amount to 9.7%.. Pension income incurs a charge of 9.1%, which is reduced to 7.4% for those with very low income. Notably, if you possess the S1 form, you are exempt from social charges on your UK pension income.

Investment income is subject to social charges. The standard rate is 17.2%, but if you hold an S1 form, or are covered by the healthcare system of another EU/EEA country, the rate applicable to your investment and property income decreases to 7.5%-specifically, the prélèvement de solidarité charge. This provision remains effective for UK nationals even post-Brexit.

Investment income -encompassing interest, dividends, capital gains, and returns from life insurance policies (including non-French assurance-vie) – is subject to a fixed tax rate of 30% in 2024, potentially increasing to 33% in 2025, which includes both income tax and social charges. Households with lower
will then be converted to a credit equivalent to the applicable French income tax and social charges.

Real estate gains are taxable in both France and the UK, but similar to the above, a credit will be granted for any UK taxes paid. Generally, the sale of capital investments will be taxable in France. As a tax resident of France, you must declare all foreign bank accounts and non-French life insurance policies along with your annual tax return (via a separate form) even if they are dormant or no longer generate income.

For non-residents of France, it is necessary to file a tax return that lists all income earned in France, such as rental income. To ensure compliance and optimise your tax position, seek personalised cross-border advice. Establishing your tax residence status accurately from the outset will ensure that all necessary declarations have been made. Your advisor can also assist you in identifying the most tax-efficient ways to hold your assets in France, so that you only pay what is required.

Rob Kay is the Regional Director at Blevins Franks

Tel: 020 7389 8133

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