NEWS ON REVENUE STATEMENTS FOR 2019 YEAR
The tax returns must be subscribed as every year by internet on the website impots.gouv.fr at the latest between June 4th and 11th depending on the administrative department of residence.
The deadline for filing returns is June 4th for non-residents.
The main news concerning the declarations 2042, 2042 C PRO and 2044 are shown below. You can at the same time refer to the two articles, still relevant today, published in previous years on our website entitled:
- MAIN CATEGORIES OF REVENUES TO BE DECLARED ON ANNUAL FORMS N ° 2042 C, 2042 RICI AND 2042 C-PRO;
- LIST OF PRINCIPAL FORMS FOR INCOME TAX DECLARATION IN FRANCE FOR THE YEAR 2017.
I - NEWS CONCERNING ALL INCOME STATEMENTS
Automatic declaration: An automatic declaration is implemented from this year. This automatic declaration exempts identified taxpayers from filing the 2019 income tax return when the pre-filled information is accurate and complete. Thus, the absence of filing of declaration of income, by a household eligible for automatic declaration, is now worth declaration.
Online declaration: Provided that his main residence is equipped with internet access, the taxpayer must file his tax return online on the site impots.gouv.fr. Taxpayers can, however, waive this online reporting obligation if they are unable to do so or if they reside in an area where no mobile service is available.
Any new declarant arriving on French territory can declare online: if he does not already have a tax number in France, he can request one from his personal tax department, upon presentation of an identity document. After obtaining his tax number, he can create his space on impots.gouv.fr and declare online.
Online correction: The electronic declaration can be corrected as many times as desired before the deadline for filing the declaration.
In addition, if they find, after receiving their tax notice, an error on this notice, people who declared online can access an online correction service "Correct my online declaration for 2020", from their space "Individual".
Electronic payment: Since January 1st 2019, the mandatory payment threshold for tax by direct debit at maturity or by online payment (on impots.gouv.fr or by smartphone) is set at € 300.
II - 2042 AND 2042 C FORM
Exemption from overtime: since January 1st 2019, the remuneration received corresponding to overtime is exempt from income tax within the annual limit of € 5,000.
Exemption from the exceptional purchasing power premium: when it is paid between December 11th 2018 and March 31st 2019, it is exempt from income tax up to a limit of € 1,000. The exemption is reserved for employees bound by an employment contract as of December 31st 2018 and whose 2018 remuneration is less than 3 times the annual minimum wage.
Relaxation of the tax regime for impatriates: for people whose taking up office in France takes place from November 16th 2018, persons called by a foreign company to a company established in France can, optionally, assess their premium impatriation, exempt from income tax, at 30% of their total taxable net remuneration even when the amount of this bonus is specified in their employment contract.
- Incomes from securities and movable capital
These revenues received since January 1st 2018 are automatically subject to the single flat rate levy (PFU) of 12.8%. By way of derogation from the PFU, at the express and irrevocable option of the taxpayer, this income may be subject to the progressive scale of income tax. The taxpayer who intends to exercise this option must tick box 2 OP of declaration no. 2042, at the latest before the expiry of the declaration deadline. This global option concerns all income from movable capital as well as capital gains in 2019.
The Mandatory flat-rate direct debit (PFO) operated at source by the paying institution is deducted, in the form of a tax credit, from the amount of tax established on the basis of the overall income statement. Its amount is in principle pre-filled in box 2 CK of the 2042 declaration. The PFO constitutes a payment of withholding tax, except option for the progressive scale.
The option for the progressive scale has the following effects on this category of income:
- The 40% reduction is applied to the distributed income eligible for this reduction;
- Deductible costs paid in the year and deficits from previous years are allowed as a deduction;
- A fraction of the CSG relating to income from movable capital is deductible from the total income for the year of its payment.
After noting that errors were often made by taxpayers, the oups.gouv.fr website will add communications from the DGFiP in order to encourage users who may have there interest, to use the option for the scale.
- Deductible expenses
Pension saving: due to the implementation of the withholding tax and the cancellation of the tax relating to 2018 income, the contributions declared in boxes 6 RS, 6 RT, 6 RU will be retained when the tax is settled in the limit of the average contributions paid in 2018 and 2019 when the amount paid in 2018 is less than the amount paid in 2017 and the amount paid in 2019.
Deductible CSG: the deductible CSG (6.8%) relating to certain gains is deducted from the total income up to the ratio between the amount of the gain subject to income tax and the amount subject to the CSG. This limitation concerns:
- capital gains from the sale of SME securities acquired before 2018;
- the gains from the acquisition of free shares in certain cases.
- Tax reductions and credits
Donations for the restoration of Notre Dame de Paris: donations made from April 16th 2019 to December 31st 2019 for the conservation and restoration of the Cathedral of Notre Dame de Paris are eligible for a 75% tax reduction.
Energy transition tax credit: expenses incurred in the main housing completed for more than two years in favor of the energy transition and paid in 2019 give entitlement to the tax credit (CITE). The CITE is extended until December 31st 2019 and is subject to adjustments. Expenses are declared, according to their nature, on form 2042-RIC. You can also refer to one of our previous articles entitled "FINANCE ACT FOR 2019 MAIN PROVISIONS CONCERNING PERSONAL TAXATION".
Additional CIMR for executives on complaints: for executives receiving remuneration from companies over which they have control, with members of their family group (spouse, ascendants, descendants or brothers and sisters), were considered exceptional and not entitling 2018 remuneration to the CIMR, the net taxable amount of which exceeded that of the highest remuneration in 2015, 2016 or 2017.
In certain cases, the taxpayer can request, by means of a contentious claim, the restitution of the fraction of CIMR which would have been granted to him in the absence of a ceiling. The “Dirigeants” section of form 2042 C must be completed.
Additional CIMR (automatic or on request) for individual operators: for these operators also, the assessment of the non-exceptional character of the profits, for the calculation of the CIMR, rests both on the nature of the revenues as well as on a multi-annual mechanism of evaluation of the profits, consisting in comparing the profits made at title of the year 2018 to those made for the years 2015, 2016 and 2017, then, if applicable, 2019.
In some cases the taxpayer can automatically obtain an additional CIMR chargeable in 2020. In other cases, he can also, by way of complaint to the tax administration, benefit from an additional CIMR equal to the fraction of the credit of tax which he could not benefit from under the capping rule.
We do not discuss these additional CIMR issues in detail here, but you can contact us for more information on its mechanism.
III - 2042 C PRO FORM
- Net result from the sale and concession of industrial property rights
For financially years beginning on or after January 1st 2019, companies reporting to the income tax may, optionally, subject the net result to a reduced tax rate of 10% relating to this category of income. The declaration therefore includes new sections dedicated to the reporting of these elements.
- Distinction between professional and non-professional rental companies
The direct or indirect rental of furnished accommodation premises is carried out on a professional basis when the following conditions are met:
- the annual income including tax withdrawn from this activity by all members of the tax household exceeds € 23,000 for the calendar year;
- the revenue from the rental of furnished accommodation exceeds the other income from activity subject to the IR of the tax household.
The condition of registration of at least one of the members of the tax household in the Trade and Companies Register as a professional furnished rental company has been removed. Consequently, this condition is no longer required for the recording of such rental income from furnished accommodation in the corresponding box.
- Agricultural benefits, option for split payment in the event of transition to corporate tax
Farmers subject to income tax can benefit from an optional mechanism for spreading the tax relating to certain income which becomes taxable by virtue of the cessation of activity, when this cessation results from transition to corporate tax. The option is irrevocable during the entire period extending over the year of cessation of activity and the following 4 years. To this end, the 2042 C Pro declaration includes a new section dedicated to the reporting of these elements.
IV - 2044 FORM - PROPERTIES INCOMES
- Properties charges: for the calculation of the income tax for 2019, the following are deductible from the land income received in 2019:
- the debts relating to non-recurring property charges paid in 2019 (regardless of the due date);
- the debts relating to recurring charges (listed in the table below) paid in 2019 and due in 2019 or later.
These recurring charges are as follows: administration and management fees, insurance premiums, taxes and levies, provisions for co-ownership charges, loan interests.
- Works costs: these so-called “pilotable” costs, that is to say those for which the owner controls the planning, are deductible in 2019 up to the average of the costs paid in 2018 and 2019, provided that the property is rented in 2019. This average rule is assessed separately for each rental property of the same taxpayer.
However, the following expenses are fully deductible from 2019 property income, if paid in 2019:
- emergency work carried out in 2019 and made necessary by force majeure or decided automatically by the co-ownership trustee;
- work carried out on a building acquired in 2019;
- work carried out on buildings classified or registered in 2019 as historic monuments.
We hope to have explained to you as clearly as possible all the latest news related to the 2019 tax return, and as always we remain at your disposal if you have any questions on certain unaddressed points.