Archives des Taxes for Individuals - FBA - French Business Advice

Withholding tax on certain services paid to foreign companies

FBA team — Sat, 31 May 2025 09:12:35 +0000

The withholding tax provided for in Article 182 B of the French General Tax Code (CGI) constitutes a specific tax mechanism applicable to certain non-salary income from French sources paid to companies domiciled or established outside France. This system aims to ensure taxation in France of income generated within the national territory, even when the recipient is a non-resident. This particularly concerns income derived from artistic or sporting activities, or certain commercial, industrial, or professional services. The withholding tax is made at the time the income is paid by the payer established in France.

We will examine its mechanism through the following points:

What are the conditions for applying withholding tax?
How to calculate it?
Payment of the withholding tax
Withholding tax on artists’ income

I – The conditions for applying withholding tax

Preliminary note: Withholding tax is applicable provided that the international agreement binding the two parties does not provide for an exemption from withholding tax. It is therefore important to check the content of this agreement before paying a service provider.

A withholding tax is applicable to services provided in France when the following three conditions are met simultaneously:

The individual or company liable for the amounts in question carries out an activity in France;
The amounts are paid to a beneficiary (individual or company) subject to income tax or corporate tax in another country and who does not have a permanent business establishment in France;
These are amounts falling into one of the following categories:
- Amounts paid as remuneration for an activity carried out in France in the exercise of one of the professions whose profits fall within the category of non-commercial profits (liberal professions, offices and charges or any lucrative operations falling within this category of profits);
- Products received by inventors or under copyright as well as all products derived from industrial or commercial property;
- Amounts paid in remuneration for services of any kind provided or used in France (only services corresponding to actual operations are concerned);
- Amounts, including salaries, corresponding to sporting services provided or used in France.
  Clarification: These benefits are subject to withholding tax on non-salary income even when they are salaries. In return, the withholding tax on salaries provided for in Article 182 A of the CGI does not apply to them.

Are short-term jobs that a foreign tradesperson carries out in France on behalf of a French company also subject to withholding tax?

This type of service falls within the scope of withholding tax provided for in Article 182 B of the French General Tax Code, unless an applicable tax treaty provides for an exemption or a reduced rate.

In principle, the withholding tax applies when the service is physically provided in France. However, services provided by non-resident operators that are not royalties are generally not taxable if they do not have a physical presence in France.

II – Withholding tax calculation

The taxable base

It’s made up of the total amount of sums or products paid, excluding turnover tax.

By way of exception, a representative reduction of charges equal to 10% of the sums paid applies when the beneficiary of the payments is a legal entity or an organization whose results are not subject to income tax in the hands of a partner and whose head office or permanent establishment is located in a Member State of the European Union, in Iceland, Liechtenstein or Norway.

Regarding sporting services, as we have specified above, they are subject to withholding tax on non-salary income even when they are salaries. For the withholding tax to be payable, the sporting service must be physically performed in France or actually used in France.

Withholding tax rate

For products referred to in Article 182 B (with the exception of sporting services), the withholding tax rate is aligned with the standard corporate tax rate, i.e. 25% for financial years beginning on or after January 1^st 2022.

On the other hand, this rate is set at 15% for remuneration paid to athletes who do not have a permanent professional establishment in France.

These rates are increased to 75% when the sums in question are paid to persons domiciled or established in a non-cooperative State or territory, unless the debtor provides proof that these sums correspond to actual transactions not having the principal effect of allowing their transfer to such a State or territory.

When the paying party takes charge of the withholding, it thus becomes equal to 25/75ths of the amount actually paid to the beneficiary for sums and products subject to the rate of 25%.

III – Payment of the withholding tax

Obligations of the debtor

He is required to withhold the amount paid and remit it to the tax department responsible for collection by the 15th of the month following the calendar quarter in which the payment was made.

The payment must be accompanied by a 2494-SD declaration, available online at www.impots.gouv.fr, showing:

the identity and address of the beneficiary’s tax domicile or registered office;
the gross amount of the amounts subject to withholding;
the rate and amount of the withholding.

This declaration includes all of the debtor’s beneficiaries and is accompanied by a single payment.

Payments subject to withholding tax on non-salary income must appear on the annual declaration of commissions, fees and royalties (DAS 2).

Withholding tax credit

Except when it is applied at the increased rate of 75% on amounts and products paid in non-cooperative states or territories, withholding tax does not discharge income tax (or corporate tax). The tax remains payable according to its own rules.

Withholding tax is credited against the amount of income tax assessed on the beneficiary’s net income from French sources.

When withholding tax is lower than the amount of tax payable, the beneficiary of the amounts is liable for additional tax.

Reimbursement of withholding tax

When it is charged on income tax (or corporate tax) and its amount is greater than the amount of this tax, the taxpayer can request reimbursement of the excess withholding tax.

IV – The particularities of withholding tax on artists’ income

Amounts paid, including salaries, in consideration for artistic services are subject to a specific withholding tax. It’s due when the services are provided or used in France and paid by a debtor who carries out an activity in France to individuals or companies that do not have a permanent business establishment in that country.

This withholding tax concerns sums paid to performing artists (film actors, lyric, dramatic and choreographic artists, variety artists, performing musicians, singers, supporting artists, conductors and, for the material execution of their artistic conception, directors), whether paid directly to the artist or to an agent.

The basis is the gross amount of the amounts paid, less a 10% allowance for professional expenses.

The withholding tax rate is set at 15%.

However, international double taxation treaties may provide for exemptions.

The obligations of the paying party and the corresponding sanctions are the same as for withholding tax on non-salary income (see above).

In conclusion, we remind you that before deducting tax from the foreign service provider’s invoice or paying the tax to the Treasury, it is essential to find out about the tax treaty that binds the countries of both parties to the transaction. If this treaty provides for an exemption from this withholding tax, there is obviously no amount to pay.

If you still have doubts about this subject, our entire team is here to help you, so don’t hesitate to contact us!

Why not sign up for our newsletter!

L’article Withholding tax on certain services paid to foreign companies est apparu en premier sur FBA - French Business Advice.

Finance act for 2025 – Main provisions concerning Personal taxation

FBA team — Mon, 31 Mar 2025 08:00:00 +0000

Following our article presenting the measures in the 2025 Finance Act concerning companies, we set out below the main measures impacting individuals.

The two main measures to note this year are the introduction of a differential contribution on high incomes and the exemption from registration fees for certain cash donations.

This presentation has three chapters:

Tax Calculation Measures
Measures concerning certain tax categories
Miscellaneous provisions

This law also includes a number of measures that do not seem sufficiently relevant to us to be explained here, but we are obviously at your disposal to provide you with more details on your request.

I – Tax calculation measures

1 – Indexation of the tax brackets

All income brackets in the income tax scale, as well as their associated thresholds and limits, are increased in the same proportion as the change in the consumer price index excluding tobacco (i.e., 1.8%).

2 – Differential contribution on high incomes (CDHR)

This contribution aims to ensure a minimum tax rate of 20% of the highest income.

Tax households concerned:
The contribution applies to taxpayers:
- domiciled in France
- whose tax household income exceeds €250,000 for single, widowed, separated, or divorced taxpayers and €500,000 for taxpayers subject to joint taxation.
Calculation of income:
The basis for calculating the contribution is the Reference Tax Income (RFR).
The RFR is reduced primarily by the following amounts:
- the amount of the €500,000 tax reduction on capital gains from the sale of securities upon retirement;
- dividends for which the option to apply the scale was exercised and benefit from the 40% tax reduction;
- the amount of capital gains subject to tax deferral;
- the amount of capital gains and distributions subject to the levy provided for in Article 244 bis B (capital gains realized by persons not domiciled in France);
- the amount of exempt profits pursuant to exemptions related to regional planning policy;
- income and revenues benefiting from the expatriate regime;
- net income from the granting of operating licenses, taxed at a rate of 10%;
- income received by inventors upon the assignment or granting of the invention, subject to a rate of 10%;
- capital gains from contributions to a company subject to corporate tax for which the tax deferral expires;
- income and revenues exempt under an international double taxation convention.
  
  Note: Exceptional income is only withheld for a quarter of its amount when, by its nature, it is not likely to be collected annually and the amount exceeds the average net income on which the taxpayer was subject to income tax for the last three years.
  Conversely, income tax relating to exceptional income is withheld for a quarter of its amount.
Calculation of the contribution:
It is equal to the difference between:
- the amount resulting from the application of a 20% rate to the income defined above;
- and the amount resulting from the sum of income tax plus the amount of tax reductions and credits, the exceptional contribution on high incomes, and withholding taxes.
  
  Taking into account family responsibilities and the marital status of taxpayers: To calculate the amount of CDHR due, the second part of the difference is increased by:
  - €1,500 per dependent;
  - €12,500 for taxpayers subject to joint taxation.

To mitigate the threshold effect, a tax allowance is applicable when the reference taxable income is between:

- - €250,000 and €330,000 for single, widowed, separated, or divorced taxpayers;
  - €500,000 and €660,000 for taxpayers subject to joint taxation.
    
    The tax allowance is equal to the difference, if positive, between the differential tax before the tax allowance and 82.5% of the difference between this income and €250,000 or €500,000, depending on the applicable threshold.
Application period:
The contribution is due for income tax purposes for the year 2025.
It gives rise to the payment of an advance payment between December 1^st 2025 and December 15^th 2025 equal to 95% of the amount of the contribution estimated by the taxpayer.

3 – Tax reductions

Various reduction schemes are extended:

loc’Avantages, extended until 2027;
income tax reduction for subscriptions to the capital of press companies, extended until 2027.

Other devices are created or modified:

Associations fighting domestic violence: Donations to these associations will qualify for a tax credit for donations to public interest organizations at an increased rate of 75%.
Effective date: February 15^th 2025;

Protection of religious heritage: Donations to finance conservation and restoration work on religious buildings in municipalities with fewer than 10,000 inhabitants in mainland France and fewer than 20,000 overseas benefit from a tax reduction rate increased from 66% to 75% for donations made between September 15^th 2023 and December 31^st 2025 to the Heritage Foundation;
Subscription to SME capital – The law introduced two changes:
- increase in the tax reduction rate for cash subscriptions to innovation mutual fund units. The rate has been raised from 18% to 25%;
- Removal of the income tax reduction for local investment funds (FIP) in mainland France. The system is still in force for contributions made to FIPs located in Corsica and overseas.

II – Measures concerning certain tax categories

1 – Income from movable capital

The tax regime for company founder share subscription warrants (BSPCE) is modified. We do not explain the complex principles of taxation here, but we are available to answer any questions you may have on this subject.

2 – Capital gains for individuals

The €500,000 deduction for retiring executives, which was due to expire on December 31^st 2024, has been extended until December 31^st 2031.

3 – Salaries and wages

Clarifications provided by case law on “Management packages”: From now on, the tax authorities will be able to reclassify earnings resulting from “management packages” purchased by executives as salaries and wages when the benefit is in return for the duties performed within the company.

This system is applicable to transfers made from February 15^th 2025.

III – Miscellaneous provisions

1 – Registration fees

Gifts of money: Gifts made in full ownership to a child, grandchild, great-grandchild, or, failing such descendants, a nephew or niece, are exempt from gift tax up to a maximum of €100,000 from the same donor to the same recipient and €300,000 per recipient if these sums are allocated by the latter (no later than the last day of the sixth month following the transfer):

To the acquisition or construction of their primary residence;
To work and expenses eligible for the energy renovation grant for the home they own and use as their primary residence.

In the case of rental, the lease contract cannot be concluded with a member of the donatory’s tax household.

Duration of application: This system applies to sums paid between February 15^th 2025 and December 31^st 2026.

2 – Accounts held abroad

Assets in an account held abroad or in a capitalization contract or similar investment taken out abroad, “as well as digital assets in a digital asset portfolio, within the meaning of Article 1649 bis C” (this reference has just been added to Article 755 of the General Tax Code), and whose origin and terms of acquisition have not been justified under the procedure provided for in Article L. 23 C of the Book of Tax Procedures, are deemed, until proven otherwise, to constitute assets acquired free of charge subject to free transfer tax at the highest rate provided for by law.

All the team of French Business Advice is at your disposal, so do not hesitate to contact us!

Why not sign up for our newsletter!

L’article Finance act for 2025 – Main provisions concerning Personal taxation est apparu en premier sur FBA - French Business Advice.

Main categories of revenues to be declared on annual forms

FBA team — Wed, 15 May 2024 15:59:55 +0000

Forms n° 2042 C, 2042 RICI and 2042 C-PRO

Article of 15/04/2019 updated on 15/05/2024

The reporting period for annual revenues begins and it seems useful to give a brief reminder of the various income and tax deductions that may be included in these returns.

The forms are three in number, they must be sent to the French administration by the website: impots.gouv.fr.

I. 2042-C Form

It must always be transmitted by all French taxpayers even if there is no income. It has the following topics:

1 – Taxpayer identification

This part is used to report changes of address and changes in the family situation (marriage, divorce, new child, attachment of a child to the tax home, disability, etc.).

The information provided here is very important because it will allow to calculate the amount of tax due.

Additional information must be provided by those who do not own a television set to allow them to not pay the audiovisual fee.

2 – Salary pensions and annuities

This category of income generally does not require any intervention on the part of the taxpayer. In fact, the employer or the body paying the pension have already declared the amount paid and it is pre-printed on the return, just check the accuracy. Details of the amounts on the return are shown at the bottom of the last page.

3 – Income from securities and movable assets

This part mainly concerns income from:

Dividends of society,
Various financial investments or life insurance,
Interests various.

Here too, the information has generally been transmitted to the tax authorities by the bank, the company or the financial institution.

However, the pre-printed amounts should be checked and modified if necessary. You must also add the amount of deductible expenses or tax credits that are not always automatically registered.

4 – Gains from the sale of securities

These are capital gains from the sale of company shares made during the year. When securities are managed by a financial institution, these gains are shown in the corresponding box.

When they come from the private sale of shares in companies, the capital gain must first be calculated on a printed form N ° 2074.

5 – Property incomes

This part relates to the income derived from the unfurnished rental of buildings, apartments or various premises:

Owners subject to the “micro-foncier” regime must indicate only the amount of rent collected during the year, a deduction for expenses will be automatically practiced.
Owners subject to the other property tax systems must first determine the net income on a printed form n° 2044 or 2044 SPE.

6 – Deductible expenses and tax reductions and credits

Charges that can be deducted from taxable income are shown here:

C.S.G. deductible paid the previous year
Various amounts of support paid and deductible
Savings for retirement under the “P.E.R.P.”

The tax credits concern donations made to organizations established in France as well as personal services and jobs at home.

7- Withholding tax and various

This framework concerns non-residents who have received income abroad, it allows to declare mainly:

The source levy already collected
Income from French and foreign sources determined on the declaration n ° 2041 TM. This amount will be used to calculate the taxpayer’s average tax rate.
Taxes already paid abroad
The amount of the revenue exonerated
The amount of capital gains on tax deferral
As well as other information on income earned abroad

II. 2042-RICI Form

This form allows you to obtain various tax reductions and, eventually, the refund of tax credits if their amount exceeds the amount of tax payable.

It includes the following paragraphs:

Personal services, home employment
Union contributions for employees and pensioners
Dependent children continuing their studies
Childcare costs for children under 6 years old
Premiums for survivor annuity and disability savings contracts
Hospitality expenses in an establishment for dependent people
Expenditure in favor of assistance to people carried out in the main residence
Compensatory benefits (for divorced people)
Miscellaneous donations

The statement then has several larger chapters regarding:

Rental housing at affordable rent with ANAH agreement
All rental investments concerned by tax reductions and credits
Investments for non-professional furnished rental (censi-bouvard)
Real estate restoration works (malraux device)
Other reductions and tax credits including in particular subscriptions to SME capital.

III. 2042-PRO Form

This document summarizes all income from self-employment activities. It includes the following chapters:

1 – Identification of the taxpayers concerned

These are the members of the tax household who have professional incomes.

2 – Income of micro entrepreneurs

These are micro entrepreneurs who opted for the payment of a flat tax on the amount of their turnover.

3 – Farm incomes

We declare in this chapter:

Incomes subject to the micro agricultural regime (micro B.A.)
Incomes subject to the real regime

4 – Industrial and commercial profits

This income category is divided into three parts:

Professional industrials and commercial incomes: there are incomes from activities in which the taxpayer participates personally
- “Micro-Bic” scheme: the gross turnover is declared and the administration will automatically deduct a standard abatement
- Real regime: we postpone the net profit determined on the form n° 2031 (balance sheet and appendices)

Non professional industrial and commercial incomes: there are activities in which the taxpayer don’t personally participate
- Micro regime
- Real regime

Revenue from non-professional furnished rentals: this classification depends on several criteria such as the amount of turnover, registration with the commercial court, etc.

You can contact us to know your classification if you are renting furnished:
- Micro regime
- Real regime

5 – Non-commercial incomes

Professional non-commercial incomes: this conceals the income from liberal activities in which the taxpayer participates personally:
- “Micro-BNC” scheme: the gross turnover is declared and the administration will automatically deduct a standard abatement
- Regime of the controlled return: we postpone the net profit determined on the form n° 2035.
Non-professional non-commercial incomes:
- Micro-BNC scheme
- Regime of the controlled return

6 – BA, BIC, BNC to be taxed to social taxes

It is appropriate to enter here the amount of profits from activities which have not been subject to social security contributions.

7 – Tax rebates and credits

These are various tax cuts or tax credits specific to professional activities such as:

Accounting fees
Research tax credit
“C.I.C.E.”
Learning
Organic farming

We can of course help you to complete these declarations to the best of our ability: contact us!

Why not sign up for our newsletter!

L’article Main categories of revenues to be declared on annual forms est apparu en premier sur FBA - French Business Advice.

News on revenue declarations for 2023

FBA team — Wed, 15 May 2024 10:13:31 +0000

The tax returns must be subscribed as every year, the deadlines for filing declarations with the tax department are as follows:

For “paper” deposits (only in certain exceptional cases):
- Tuesday May 21^st 2024 at midnight.
For taxpayers who submit their 2023 tax return in 2024 on the impots.gouv.fr website, the deadline is set depending on the department of residence:
- Thursday May 23^th 2024 for departments n° 01 to 19, as well as for non-residents;
- Thursday May 30th 2024 for departments n° 20 to 54;
- Thursday June 6^th 2023 for departments n° 55 to 974 / 976 as well as for declarations transmitted by EDI.

The main news concerning the declarations 2042, 2042 C PRO, 2042 RICI and 2044 are shown below.

You can, at the same time, refer to these four articles, published in previous years on our website:

I – News concerning all income statements

1 – Online declaration

Taxpayers must complete their tax return online on the website impots.gouv.fr (or in EDI-IR mode through a third party such as a chartered accountant), regardless of their reference tax income.

Taxpayers can, however, exempt themselves from this online declaration obligation if they are unable to do so or if they reside in an area in which no mobile service is available.

Clarification: From 2024, a new service allows you to subscribe to the tax declaration on the impots.gouv mobile application (click on the link to download the app). This declaration on smartphone or tablet is however limited to simple tax situations and, in particular, to taxpayers who have not experienced any change in their family or tax situation during the year.

2 – Pre-filled information on the online declaration

The 2023 income already known to the administration (salaries for example) appears on the declaration, other information is subject to automatic carryover from one year to the next (marital status of dependents, details actual costs, childcare costs for young children, certain information relating to property income, etc.).

The online declaration can be corrected as many times as necessary before the declaration filing deadline.

Furthermore, if after receiving their tax notice, an error is noticed by taxpayers, they can access an online correction service “Correct my online declaration for 2023”, from their “Individual space”.

Remarks:

Overtime hours and exempt monetized RTT days are also pre-filled in box 1 GH or 1 HH. On the other hand, the exempt value sharing premium is not pre-filled.
Information relating to the professional income of non-employees should also be pre-displayed, as part of the merger of the social and tax declarations of the self-employed.
The withholding tax deducted by the employer or pension fund is displayed on the online declaration (as well as on the pre-filled paper declaration). The amount of withholding tax can be modified when declaring online, at the level of each employer or pension fund. A missing employer or pension fund can also be added.

3 – Declaration of real estate

This is a simple reminder about a declaration different from those concerned by this article.

As we announced last year, all owners must indicate to the tax administration, before July 1^st in what capacity they occupy each of the premises they own (main or secondary residence) and, when they do not occupy it themselves, the identity of the occupants.

From 2024, the declaration must only be made (for occupancy on January 1^st 2024) in the event of a change since the previous declaration. The administration has set up a declaration interface in “Gérer mes biens immobiliers” on the impots.gouv.fr website.

II – Update concerning 2042 and 2042 C forms

1 – Wages (2042 form)

kilometer scale: the mileage scale applicable to the 2023 income declaration is unchanged compared to last year.
Volunteers from associations who have expressly waived the right to be reimbursed for vehicle costs can assess their costs at a flat rate according to the mileage scale, subject to providing proof, to the association, of the reality and number of kilometers traveled.
If the taxpayer opts for the actual costs but the standard deduction of 10% is more favorable to him, the latter will be automatically applied by the administration.

Exemption from tips: tips received in 2023 (and in 2024) by employees in contact with customers, and whose remuneration for the months concerned does not exceed 1.6 times the monthly minimum wage, are exempt from tax on Income.

Value sharing bonus (PPV): the exemption limit increases from €3,000 to €6,000 if the bonus is paid within the framework of an incentive agreement or a participation agreement when the participation is not obligatory. A check mark appears in the declaration for the case where the threshold for exemption from the value sharing premium is increased.

Adjustments to the transport cost exemption ceilings: exemption from the advantage resulting from the optional payment by the employer of fuel costs, similar costs and the price of public transport subscription tickets exceeding the mandatory support is extended until December 31^st 2024.

Allowances covering teleworking costs: the income tax exemption for allowances paid by the employer covering teleworking costs is maintained for 2023. These costs may take the form of allowances, lump sum reimbursements or reimbursements of real costs. They are exempt from income tax, up to €2.60 per day and €57.20 per month.
When employees choose to deduct actual costs from their salary, costs related to teleworking from home can be deducted at a flat rate as indicated above. Employees retain the possibility of deducting these expenses for their exact amount, particularly if this is more favorable to them, provided they can justify them.

2 – Income from securities and movable capital

PFU of 12.8% by default or option for progressive income tax scale:
[Reminder] Income from movable capital received is in principle automatically subject to the single flat-rate levy (PFU) of 12.8% (7.5% in certain cases). The deduction made at source by the paying institution as a deposit on the final tax is in principle pre-filled in box 2 CK of the 2042 declaration.
The taxpayer can irrevocably opt to submit this income to the progressive IR scale. The taxpayer who intends to exercise this option must check box 2 OP of the 2042 declaration.

Imputation of capital losses from “minibons”: the possibility of issuing “minibons” that can be exchanged on crowdfunding internet platforms has been removed for “minibons” subscribed after November 10^th 2023.

3 – Gains from the sale of transferable securities and corporate rights

Capital gains from the sale of digital assets: Gains from the sale of digital assets made by individuals domiciled for tax purposes in France, as part of the management of their private assets, are subject to taxation at 12.8% increased by social security contributions.
By way of derogation, gains made since January 1^st 2023 may be subject to the progressive IR scale, upon express and irrevocable option of the taxpayer. This global option must be exercised by checking box 3 CN.

4 – Income of the self-employed (BA, BNC, BIC) 2042C form

Profit increase, applied to companies that do not belong to an approved management organization (O.G.A.) or do not use the services of a professional accountant: this increase has now been removed. The income of self-employed people must now be declared in the dedicated sections, without distinction depending on their situation with regard to approved management organizations or their use of an approved visor.

Furnished rental of part of the main residence and guest rooms: the tax exemption measure, under certain conditions, for income from furnished rental or subletting of part of the main residence has been extended until December 31^st 2026.
For 2023, the average annual rent ceilings per square meter admitted by the tax administration is set at €199 in Île-de-France and €147 in other regions.

Furnished tourist rentals: the main tax developments concerning this category of income were presented in the article entitled Non-professional furnished rental since the Finance act for 2024 published on our website.
However, we provide the following clarifications:

- Concerning the furnished tourist accommodation regime, the finance law for 2024 limited the application of the micro-BIC regime to €15,000 in annual revenue with the application of a 30% reduction.
  However, the administration admits that taxpayers can continue to apply the previous rules to 2023 income. Thus, renters of unclassified furnished accommodation can continue to benefit from the limits of €77,700 and the 50% reduction for their income for the year 2023.

- Companies which fall under the micro-BIC regime also benefit from a new additional reduction of 21% on the turnover relating to their activity of renting premises classified as furnished tourist accommodation when the latter are not located in geographical areas characterized by a significant imbalance between supply and demand for housing (the zones targeted should be zones B2 or C as set by the decree of October 2^nd 2023 modifying the decree of August 1^st 2014).

Daily allowances paid to certain agricultural operators: daily allowances paid under a compulsory insurance scheme against work accidents and occupational diseases to agricultural operators subject to a real tax regime are exempt up to 50% of their amount.

Transactions for the purchase, sale and exchange of digital assets: following an update of the BOFiP database on June 28^th 2023, the tax administration confirms the application of the BIC regime to individuals exercising a profession consisting of the purchase and resale of digital assets.
Consequently, the BNC regime (which was planned to apply from January 1^st 2023 on this type of activity) only applies to exceptional cases involving the non-professional exercise of an activity in similar conditions to those of a professional.

III – Real estate income update – N° 2044 form

The only modification concerning the property income declaration for 2023 consists of the creation of an additional line of charges (line No. 224 bis).

This line concerns taxpayers who carry out energy renovation work allowing a home to move from an energy class E, F or G to an energy class A, B, C or D (within the meaning of article L. 173- 1-1 of the construction and housing code). This system concerns energy renovation expenses which were the subject of a quote accepted from November 5^th 2022 and which are paid between January 1^st 2023 and December 31^st 2025.

Entering the expenses indicated above in this line is optional; it has the effect of increasing the limit for deducting property deficits from overall income to €21,400 (instead of €10,700).

IV – News on tax reductions and credits -N°2042 RICI

Donations to organizations helping people in difficulty: as of the 2023 income tax, the tax reduction at the rate of 66% is extended to donations and payments made for the benefit of works or organizations of general interest contributing to equality between women and men.

Subscription to the capital of SME, FIP or FCPI: for payments made between January 1^st and March 11^th 2023, the rate of the IR reduction is 18% (report in box 7 CI of form 2042 RICI). For amounts paid from March 12^th to December 31^st 2023, the reduction rate is increased to 25% (report in box 7 CH of form 2042 RICI).

Payments made, in 2023, for the cash subscription to the capital of solidarity real estate companies carrying out an activity in the field of social or agricultural housing entitle you to the tax reduction at the rate of 25%, whatever the date of payment.

End of devices: the following devices no longer apply for the calculation of the 2023 income tax:
- old Besson device;
- tax credit for students to finance their higher education.

We can of course help you to complete these declarations to the best of our ability: contact us!

Why not sign up for our newsletter!

L’article News on revenue declarations for 2023 est apparu en premier sur FBA - French Business Advice.

Overview of the principal information to be indicated on the 2042-IFI print (tax on real estate fortune)

FBA team — Fri, 26 Apr 2024 17:38:47 +0000

Article written on 2020, updated on April 2024

The 2042-IFI declaration only concerns people who own real estate assets whose value is greater than €1,300,000. This declaration must be filed according to the same terms and within the same deadlines as the 2042 income declaration, of which it constitutes an annex.

The taxpayer benefits from the same reporting procedures as for his income. Online declaration is in principle compulsory for all taxpayers whose main residence is equipped with internet access. Taxpayers who indicate to the administration that they are unable to submit their income tax return and its annexes electronically can, however, use a paper declaration.

We are going to show you the main information that should be mentioned in the 2042-IFI form and its various appendices. We will not expose all the details and specific cases. For these, you can contact us for useful information.

I – 2042-IFI Form

It should first be specified that a single 2042-IFI declaration is filed when the person liable also subscribes an income declaration. The IFI taxpayer who does not file a tax return must file a 2042-IFI-COV identification declaration accompanied by a 2042-IFI-SK declaration, he must check box 9GN of the IFI declaration to indicate that he is not filing an income tax return in France.

1 – Page 1

Identification of the person liable:

Marital status and address: These elements are in principle already indicated, any errors must be corrected.

The partner linked by a PACS or the partner must also register his civil status. The debtor whose identity must appear in this frame is the deceased when the declaration is made by the estate.

In the event of cohabitation, the entire property portfolio of the two cohabiting partners must be declared on a 2042-IFI declaration to be filed with one or the other income declaration. The cohabitation situation must be indicated by checking box 9GL on page 1.

In case of marriage or PACS during the year, and option for a separate declaration of income in N+1 year, box 9 GM must be ticked.

Identification of minor children:

This section is reserved for the identity of minor children of the debtor or of his spouse, partner or cohabiting partner on January 1^st of the year the declaration his filed. These are the children whose declarant, his spouse, his notorious cohabiting partner has legal administration.

Signing of the declaration:

The declaration must contain a single signature if the person liable is single, divorced or separated from the body by virtue of a judicial decision.

For married persons not subject to separate taxation and for persons linked by a PACS the declaration must include the joint signature of both spouses or partners.

For people living in a well-known cohabitation, the signature of the one of the two cohabitees who is responsible for the declaration must be affixed, this formality can be accomplished indifferently by one or the other.

2 – Page 2

The sums appearing on the annexes numbered from 2 to 6 (which we will see in detail) are shown on this page on the lines bearing the same references.

The calculation elements shown in this page will be used as a basis for the calculation of the amount of the IFI carried out by the tax administration.

II – Appendix 1: Properties assigned to professional activity

The taxpayer must complete this annex 1 if he owns, individually or within the framework of a company, goods used for professional activity, exempt from IFI.

Must be mentioned:

the exemption linked to the sole condition of exercising a professional activity primarily in a company (individual or company), mention should be made of the name, the Siren number, the address and the activity of the company;
the exemption related to the function and the possession of social rights for the leaders. Must be mentioned, the name, address and activity of the company, the function exercised in the company, the percentage of capital that the debtor and the members of his family group, hold directly or by company interposed in the company.

III – Appendix 2: Properties held directly (buildings and lands)

This document is made up of two parts. The first page is devoted to the declaration of built buildings and non-built buildings that are not exempt, this concerns:

built buildings;
buildings under construction;
real estate rights relating to built buildings;
buildings or fractions of buildings represented by shares or shares of real estate co-ownership companies;
agricultural land used for agriculture as well as crop land;
rural properties;
building land;
historic monuments.

On the second page, have to be declared, timber and forests, shares of forest groups, rural property leased on a long-term lease, shares of agricultural land groupings (GFA) and GAF partially exempt.

1 – Part 1 of Annex 2 (buildings and lands)

Column 1 Numbering of goods: A number must be assigned to each good indicated on each of the annexes. The primary residence must be listed in the appropriate column on the first line.
Column 2 Date and purchase price: For each building, you must indicate the date of purchase and the purchase price.
Column 3 Nature of the property and location: It is necessary to indicate here the nature of the building: individual house, apartment in a collective building, collective apartment building (if you own the whole building), isolated room, box or garage space, shop, office, workshop, shed.

The nature of taxable lands must be specified (building land, cropland, meadow, orchard, vineyard, woods and forests, wasteland, moors, ponds, marshes, etc.).

Property located abroad. Natural persons having their fiscal domicile in France are also taxable on their immovable property and property rights located outside France.
Column 4 Characteristics of the property: This is the area and the number of rooms. For the main residence and built buildings, it is necessary to indicate:
- the total area of the land,
- the total living area in square meters.
Column 5 Taxable fraction of mixed properties: This concerns properties that are partially used for professional activity, only the percentage or non-professional fraction of their value should be mentioned here.
Column 6 declared value:
- Main residence: Its value must be subject to a reduction of 30% on the market value of the property free of any occupation.
- Other buildings: The value of buildings is indicated in the first column and land in the second.
  The value to be declared is in principle the market value on January 1^st. Discounts may be applied to the market value of the property when it is rented or jointly owned.
  In order to determine the market value to be declared, the administration makes available to the taxpayers the property values declared on the occasion of transactions which have occurred during the last 5 years (consult the PATRIM service for this).
Column 7 Nature of the rights held: This only concerns taxpayers who do not have exclusive ownership of the property (joint possession) or if they do not have full ownership of it.

2 – Part 2 of Annex 2 (rural goods, timber and forests… partially exempt)

Column 1 Numbering of goods: Each good is normally the subject of an article number. However, can be grouped together, several plots even non-contiguous located in the same commune, the woods and forests of a single holding all the parts pertaining to the same grouping.
Columns 2, 3, and 4 Nature of goods, location and characteristics: As above, the information concerns the nature, address, surface of the land or the names of the land groups.
Columns 5, 6 and 7 Declared value: Timber, forests and shares of forestry groups benefit, under certain conditions, from an exemption of three quarters of their value. The taxpayer must indicate column 5 their value before deduction of 75%.
Rural properties leased on a long-term basis GFA and GAF shares which cannot be considered as professional assets are exempt up to 75% of their value if it does not exceed 101,897 €, and 50% beyond this limit.
Column 8 Nature of the rights held in the property: This column the nature of the rights when the person liable does not hold full ownership (usufruct, right of use, bare ownership, etc.).

IV – Appendix 3: Properties held indirectly

This appendix must include the fraction of the value of the securities of companies representative of real estate property and rights, regardless of the number of interposition levels.

It also includes property and property rights held via investment funds and collective investment schemes or housed in life insurance contracts.

Consequently, it is necessary to enter in this annex the value of the titles representing real estate and real estate rights held via:

a society;
investment funds and collective investment organizations (OPCI, OPCVM);
a redeemable life insurance contract expressed in units of account or, under certain conditions, a PER invested in units of account;
a capitalization voucher or contract expressed in units of accounts.

Columns 1 to 4 relate to the article number: The name of the company or body, the Siren number of the company or body and the percentage of capital held.
Column 5 Market value of the rights, shares or stocks: If the assets of the company or the organization whose debtor holds the titles includes buildings, it is necessary to indicate the market value of these titles. The person liable is taxable at the IFI on the fraction of the market value of these securities representative of taxable immovable property and rights, up to the amount of its shareholding in the company or organization.
Clarification: from the IFI due for 2024, for the valuation of taxable shares, debts contracted by an organization or a company owned by the taxpayer which are not relating to a taxable asset are no longer taken into account.
Column 6 declared value: To determine the taxable fraction, a coefficient corresponding to the ratio between, on the one hand the market value of taxable property or property rights and, where applicable, the value of shares or shares representing these same goods and, on the other hand, the market value of all the assets of the company or organization.
The amount obtained is multiplied by the participation rate held in the company or organization.
Column 7 Nature of rights held over the property: If the property is held in divided ownership, the status of usufructuary or bare owner of the debtor should be indicated.

V – Appendix 4: Liabilities and other deductions

Column 1 numbering of articles: As in the other annexes, each article is numbered in column 1.
Column 2 Nature, object and date of the debt: The date of the contract, deed or court decision from which the debt results, the nature of the debt, must be indicated.
The following are deductible:
- the co-ownership charges due on January 1^st of the tax year;
- the loans contracted for the acquisition repair or maintenance of taxable property as well as shares of companies or organizations (deduction in proportion to the value of taxable assets);
- the capital constituting the life annuity;
- the property tax (excluding tax on household waste);
- the tax on vacant premises;
- the tax on offices in Île de France and departments of Bouches-du-Rhône, Var and Alpes-Maritimes;
- the theoretical IFI;
- gift or inheritance tax pending payment on January 1^st.
Columns 3 and 4 name and address of the creditor and amount due on January 1^st: Note that column 4 is divided in two. The first must contain the amount due on January 1^st of the taxation year for the repair, maintenance and improvement, construction or enlargement of taxable property. The second must contain the amount remaining due on January 1^st of the taxation year of other debts.
Clarification: The IFI due for the year is to be deducted from the assets. For the calculation of the theoretical IFI, taxpayers have a calculation help sheet.

VI – Appendix 5: Calculation of the elements of the ceiling

Persons concerned: Benefit from the cap on those liable for the IFI who have their tax domicile in France and non-residents established in another State of the European Union when the latter derive all or almost all of their income from France .

The cap system allows taxpayers of the IFI to spend no more than 75% of their income on paying their taxes. If this percentage is exceeded, the amount of the IFI is reduced by the excess.

Annex 5 contains two tables:

A table A which makes it possible to determine the amount of taxes due in France and abroad in respect of income from the past year and used for the calculation of the cap. This amount must be reported on line 9PR, page 2 of the 2042-IFI declaration;
A table B which makes it possible to determine the amount of income to be taken into account for this same calculation, amount to be reported on line 9PX, page 2 of the 2042-IFI declaration.

VII – Appendix 6: I.F.I. paid outside France

This form is used to calculate the wealth tax paid outside France, which will be chargeable to the IFI due in France.

Only persons who, domiciled for tax purposes in France on January 1^stof the declaration is filed, own immovable property and property rights located outside France must complete this annex if they have paid tax outside France, the characteristics of which are similar to those of the I.F.I.

Foreign taxes comparable to French local taxes are not deductible. The amount of attributable tax is limited to the fraction of French tax relating only to property located outside France.

We are at your disposal to answer your requests: contact us!

Why not sign up for our newsletter!

L’article Overview of the principal information to be indicated on the 2042-IFI print (tax on real estate fortune) est apparu en premier sur FBA - French Business Advice.

Tax on Real Estate Fortune (Impôt sur la Fortune Immobilière)

FBA team — Fri, 26 Apr 2024 17:13:32 +0000

Article written on 2018, updated on April 2024

The real estate wealth tax (I.F.I.) is an annual tax payable by individuals holding, on January 1^st of the tax year, net taxable real estate assets greater than an amount set at €1.3 million.

The taxpayers affected by this tax are the following:

Individuals having their tax domicile in France, on their real estate and real estate rights, held directly and indirectly, located in France or outside France;
Individuals who do not have their tax domicile in France, on their real estate and real estate rights, held directly and indirectly, located in France.

Individuals who transfer their tax domicile to France after having been tax domiciled abroad for the previous 5 calendar years are only temporarily taxable on their property and real estate rights located in France.

I – The definition of the tax household concerned by the I.F.I.

Only natural persons are taxable at the I.F.I. The declaration must be made at the tax household level including:

Married couples, regardless of their matrimonial regime with the exception of spouses separated by property and not living under the same roof and spouses undergoing legal separation or divorce and residing separately;
People linked by a PACS;
People living in notorious cohabitation.

Property belonging to minor children are taxed with that of their parents who have legal administration of their property.

II – I.F.I. Bases

1 – Tax base

Real estate and real estate rights:

The tax base is the net value on January 1^stof the tax year of all real estate owned by a person (or two persons living together married or not) and their minor children.

The tax administration extends the notion of ownership of property to real estate rights held through companies or any other structures, French or foreign, without legal personality.

The following are thus assimilated to the direct ownership of real estate:

The holding of shares in joint ventures;
The holding of shares in real estate co-ownership companies for the buildings corresponding to the rights of the taxpayer in the company;
The holding of assets through trusts.

Shares of companies:

Definition: These are shares of companies or any other body established in or outside France belonging to taxable persons, representing real estate held directly or indirectly by the company or the body. Only the value of shares represented by taxable real estate is kept in the base of I.F.I.

Exclusion of buildings assigned to a professional activity: For the calculation of the taxable portion of the shares of companies, we do not retain properties held by the company or the rights held when these buildings or rights are allocated to the commercial, industrial, artisanal, liberal or agricultural activity of the company holding them.

Definition of the professional activity:

The professional activity defined by the law (which exonerate the buildings concerned) includes operational activities. Thus, a company engaged in its own asset management is not considered as professional.

Holding companies are considered as commercial companies when they actively participate in the conduct of the corporate group policy and render administrative, accounting, legal and other services to their subsidiaries.

Special cases:

The assets encumbered with a usufruct are taxed at the usufructuary for the freehold value.
Assets placed in a trust are included for their market value in the assets of the settlor (or of the beneficiary deemed to be a settlor).

2 – Evaluation rules

Buildings and real estate rights must be valued according to their market value on the day of the event giving rise to the tax, i.e. on January 1^st of each year.

A 30% deduction is made on the market value of the property when it is occupied as a principal residence by its owner.

Likewise, a discount of 20% to 40% on the market value of the property may be applied when this property is rented or, under certain conditions, held in joint ownership.

Listed securities must be valued using one of the following two methods:

spot price of the last quotation of the year preceding the year of filing of the declaration;
or average of prices over the last thirty days of trading.

Unlisted securities are in principle valued at their market value determined primarily by reference to the price set during another comparable transaction.

3 – Liability deductible from the tax base

Only certain debts relating to taxable assets are allowed as deduction, in proportion to the fraction of their taxable value.

To be deductible, debts must exist on January 1^st of the tax year, be contracted and paid by the taxpayer and be related to taxable property.

The debts must correspond to expenses of acquisition of real estate or shares of companies, to expenses of maintenance of repair or extension. We can also deduce due taxes, these taxes must be generated by the property.

Finally, the theoretical IFI is also part of deductible debts.

4 – Exempt assets

Property allocated to a professional activity:

Assets must be allocated to the taxpayer’s core business. Partnership shares are likewise exempt if the taxpayer carries on his principal activity (industrial, commercial, craft, liberal or agricultural) in that company.

Buildings held directly or owned by the taxpayer and used for its furnished rental activity are totally or partially exempt from IFI if the following conditions are met:

the owner, who carries out this activity as his main activity, generates more than €23,000 in annual revenue;
and he withdraws from this activity more than 50% of the income including the tax household, within the meaning of the IFI.

Taxpayers who carry out the activity of renting commercial or industrial establishments equipped with the furniture or equipment necessary for their operation are exempt on the value of these buildings. This activity must constitute their main activity.

Properties held by companies subject to corporation tax and securities representing these same properties are exempt if the property is allocated to the professional activity. The exemption is subject to conditions of exercise of management function within the company by the owner of the shares and a minimum percentage of ownership of the capital. We are at your disposal, if you think you hold exempt units, to study your particular situation in order to confirm or not the exemption.

Other properties:

Other real estate may be totally or partially exempted, these are:

Wood and forests;
Properties leased by long term rural lease;
Actions of farmland groupings.

III – Calculation of I.F.I. tax

1 – Tax scale

The rate based on the taxable net worth of the assets is as follows:

-Until € 800 000……………………………….…………………………….0%

-Greater than € 800 000 and up to € 1 300 000………………0.50 %

– Greater than € 1 300 000 and up to € 2 570 000….………0.70 %

-Greater than € 2 570 000 and up to € 5 000 000……..……1.00 %

-Greater than € 5 000 000 and up to € 10 000 000…………1.25 %

-Greater than € 10 000,000………………………………………….…1.50 %

2 – Tax reductions and caps

The taxpayer may deduct 75% of the donations made to bodies defined by law up to the limit of € 50,000.

Taxpayers domiciled in France may reduce I.F.I. of the amount of the difference between:

The total amount of taxes paid in France and abroad on the income of the previous year, and,
75% of the previous year’s global revenues.

The amount of taxes equivalent to I.F.I. Paid outside France on real estate located outside France is deductible to this tax in France.

IV – Reporting obligations

Taxpayers filing a tax return in France must file a 2042-IFI or 2042-IFI-K declaration. Non-resident taxpayers (or adults attached to their parents’ tax household) who do not file a tax return in France must provide a 2042-IFI or 2042-IFI-SK declaration, accompanied by a 2042-IFI-COV declaration.

Regarding the information to be provided in each of these declarations as well as the filing deadlines, we suggest you consult our article entitled OVERVIEW OF THE PRINCIPAL INFORMATION TO BE INDICATED ON THE 2042-IFI PRINT (TAX ON REAL ESTATE FORTUNE) in this same website.

Our chartered accountants are of course at your disposal to answer any question concerning this new tax that concerns any resident or non-resident who owns real estate in France.

Why not sign up for our newsletter!

L’article Tax on Real Estate Fortune (Impôt sur la Fortune Immobilière) est apparu en premier sur FBA - French Business Advice.

Withholding at source for employees posted abroad

FBA team — Mon, 01 Apr 2024 20:04:26 +0000

In order to protect against the risk of non-recovery of taxes, the tax administration requires that the organization which pays certain income from French sources to persons not domiciled in France, to carry out withholding at source or a specific sample.

Thus, companies which carry out an activity in France and which pay certain sums to persons domiciled or established outside France are subject to withholding tax. This concerns in particular the salaries paid to employees posted abroad. It should be added that this deduction can also concern non-commercial activities and artistic or sporting performances.

I – Definitions of important terms

1. Definition and mechanism of withholding tax

Non-residents in tax matters who receive salaries in France taxable in France must in principle pay withholding tax deducted by the employer. The employee must then declare this deduction on his income tax return.

The calculation of this deduction is based on the net amount of salary after application of the 10% deduction for professional expenses. It is not possible here to opt for a calculation according to actual costs.

The amounts withheld by the employer must be paid to the business tax service no later than the 15th of the month following the calendar quarter during which the salaries payment took place.

This withholding tax is then deducted by employee from French income tax.

However, the fraction not exceeding the limit beyond which the rate of 20% is applicable is exempt from income tax (this is the levy taken at the rate of 12%). The corresponding fraction of salary is therefore not taxed on the scale and the corresponding deduction is not attributable.

It is not discharging for the fraction which exceeds the limit of application of the rate of 20%. This fraction of income is therefore taken into account for the calculation of the tax and the withholding tax already paid is then attributable to the amount due.

When the overall amount of withholding tax paid exceeds the amount of tax, the taxpayer can request reimbursement of the excess.

1. Definition of an employee posted abroad

Article 182 A.I of the General Tax Code stipulates: “With the exception of salaries falling within the scope of article 182 A bis (concerning artistic services provided or used in France, by a debtor who exercises an activity in France), salaries, wages, pensions and life annuities, from French sources, paid to persons who are not tax domiciled in France give rise to the application of withholding tax.”

In return, article 81-A of the CGI specifies: “Employees who are posted abroad by their employer and who maintain their tax domicile in France benefit from special tax rules (total or partial exemption of their salary) under certain conditions and limits.”

Thus, withholding tax only concerns employees whose tax residence is abroad. To determine the place of tax residence, it is necessary to find out if there is a tax convention between France and the employee’s host country. International tax conventions between States set the taxation priority of one country over another (principle of single tax residence). They set criteria which go beyond those of the internal legislation of the States. Their essential purpose is to avoid double taxation of income.

In the absence of an agreement between the two countries concerned, the internal law of each country applies.

II – The scope of application of withholding at source (R.A.S.)

1. Seconded employees retaining their tax domicile in France

These are the people concerned by article 81 A of the CGI who meet four cumulative conditions:

be tax domiciled in France;
exercise a salaried activity (holder of an employment contract);
be employed by an employer established in France or the European Union, Norway, Iceland or Liechtenstein;
be sent to a State other than France and the State where the employer is established.

These employees are not affected by the R.A.S. in the following cases:

When the tax in the country of activity is greater than or equal to 2/3 of that which would have been borne in France, there will be a total exemption from this remuneration. Other household income is taxable in France according to common law rules.
The tax in the country of activity is strictly lower than 2/3 of that which would have been borne in France, the remuneration received for the activity abroad is taxable at the level of that which would have been received in France for the same activity. Other household income is taxable in France according to common law rules.
Total exemption from salaries derived from certain salaried activities carried out abroad which are:
- Activities carried out for a duration greater than 183 days during a period of twelve consecutive months when it relates to the following areas:
  - Construction or assembly sites, installation of industrial units, their start-up, their operation and the related engineering;
  - Research or extraction of natural resources;
  - Navigation on board ships registered in the French international register.
- Activities carried out for a duration of more than one hundred and twenty days during a period of twelve consecutive months when it relates to commercial prospecting activities.

In other cases it will be necessary to check, by reading the international tax convention concerning the employee, whether his tax domicile is located in France to decide whether the R.A.S. is applicable or not.

1. Employees considered as non-residents of France

An employee considered as a non-resident is no longer considered a French taxpayer, he pays his taxes in his host country. If he retains income from French sources (subject to contrary provisions in the tax convention between France and the host country), he remains taxable in France only on this income corresponding to an activity carried out in France.

Salaries subject to income tax paid to taxpayers whose tax domicile is located outside France are subject to withholding tax when this income is actually taxable in France and is not already subject to another withholding tax at the specific source provided for by the CGI. Clarify that the foreign source income of people whose tax domicile is located outside France is not, in principle, taxable in France and therefore outside the scope of withholding tax.

Consequently, for taxpayers whose tax domicile is located outside France:

Salaries from foreign sources are subject to withholding tax when they are paid by a debtor established in France and they are taxable in France in accordance with the provisions of international tax conventions without being subject to withholding tax specific source;
Salaries from French sources are, however, outside the scope of withholding tax if they are subject to one of the specific deductions provided for by articles 182 A to 182 B of the CGI which we saw above.

III – The practice of withholding at source

1. R.A.S. calculation

As we saw in Chapter I-1, the basis of the withholding consists of the net taxable amount, determined in accordance with the applicable income tax rules. The base is therefore constituted by all the sums and benefits in money or in kind paid to the employees in return for their work, with the exception of allowances for exempt expenses. Salaries are taken into account for their net amount after application of the standard deduction of 10% for professional expenses. The employer cannot opt for the deduction of actual costs for the calculation of the withholding.

The withholding tax is calculated according to a scale of three brackets, to which the rates of 0%, 12% and 20% correspond (reduced rates in the French Overseas Territories).

The tranche limits are set according to the period to which the payments relate (year, quarter, month, week, day or part of a day).

1. Declaration and payment of the R.A.S.

The employer must complete a declaration 2494 (CERFA n°10325) in duplicate, showing in addition to the identity and address of the beneficiary’s tax domicile or head office (address abroad), the gross amount of the sums submitted withholding and the rate and amount of the withholding.

This declaration must be sent, accompanied by the corresponding payment, to the tax service of the debtor’s head office or establishment in France (or to the tax service of foreign companies when the debtor does not have an establishment in France-10 rue du Centre, TSA 2011, 93465 Noisy-le-Grand Cedex).

Payment of the amounts withheld must be made to the business tax service no later than the 15th of the month following the calendar quarter during which the payment took place. Withholding tax payments of an amount greater than €1,500 per due date and per reporting medium must be made by transfer to the Treasury account at the Banque de France.

There is, however, an exception to the R.A.S. payment deadlines: Agricultural operators who employ seasonal workers domiciled abroad are authorized to pay the deductions relating to payments made during a quarter, no later than the 10th of the 2nd month of the following quarter.

Don’t hesitate to contact the FBA team for more information!

Why not sign up for our newsletter!

L’article Withholding at source for employees posted abroad est apparu en premier sur FBA - French Business Advice.

Finance act for 2024 – Main provisions concerning Personal taxation

FBA team — Thu, 29 Feb 2024 09:11:00 +0000

We present below the main measures of the French finance act for 2024 (law n°2023-1322 of December 29^th 2023).

This article has three chapters:

Tax Calculation Measures
Measures concerning certain tax categories
Miscellaneous provisions

This law also includes other measures that we don’t feel are relevant enough to explain here. However, we are obviously at your disposal to provide you with more details on your request!

I. Tax calculation measures

1. Calculation of income tax

Scale: as every year, the law provides for indexing the income brackets of the income tax (IR) scale, as well as the thresholds and limits associated with it, on the forecast of changes in the consumer price index excluding tobacco for 2023 compared to 2022, an increase of 4.8%.

Withholding tax – Application of the individualized rate: currently the tax rate is identical for spouses or partners linked by a PACS, it can however be individualized at the request of taxpayers. The law reverses the current process, it therefore provides for the automatic application of the individualized rate, while providing the possibility for the taxpayers concerned to opt for maintaining a common rate for the tax household.
The entry into force of this measure is scheduled for September 1^st 2025.

1. Tax reductions

Various previous tax reduction measures are extended, these are as follows:

Tax reduction granted for capital financing of audiovisual cinematographic works, extended until December 31^st 2026;
“Malraux” tax reduction for buildings located in degraded neighborhoods. The application of this tax reduction is extended until December 31^st 2024;
“Denormandie” tax reduction for old housing. The application of the tax reduction is extended until December 31^st2026.

Other tax reduction measures are extended and/or subject to modification, these are:

Tax reduction granted for donations made by individuals: the law extends until December 31^st 2026 the ceiling increased to €1,000 (instead of €552) of income tax reduction for donations to organizations aid to the most deprived. This system allows tax exemption of up to 75% of payments made to associations helping the most deprived.

In addition, the tax reduction rate is increased to 75% for donations made between September 15^th 2023 and December 31^st 2025 for the benefit of the “Fondation du Patrimoine” with a view to ensuring the conservation and restoration of real estate heritage religious belonging to municipalities in mainland France with less than 10,000 inhabitants or to overseas municipalities with less than 20,000 inhabitants. These payments are retained within the limit of €1,000 per year.

Donations made by individuals and businesses: the tax reduction is extended to donations for the benefit of works or organizations of general interest contributing to “equality between women and men”.

A device is subject to several modifications: Subscription to company capital.
We indicate below the main characteristics as they are now codified.

“Common law” regime: Tax reduction of 18%
Taxpayers domiciled for tax purposes in France can benefit from a reduction in their income tax equal to 18% of payments made for:
- Cash subscriptions to the initial capital of companies or to capital increases of companies of which they are neither partners nor shareholders.
  In addition, capital increases of a company of which they are associates or shareholders are permitted when these subscriptions constitute a follow-on investment, including when said company has been carrying out its activity on a market for more than ten years after its registration or more seven years after its first commercial sale, carried out under several cumulative conditions indicated in the law.

- Subscriptions to equity securities in certain production cooperative companies or in other cooperative companies governed by Law n°47-1775 of September 10^th 1947 establishing the status of cooperation.
  
  Subscriptions must only confer on subscribers the rights resulting from the status of shareholder or associate, to the exclusion of any other consideration, in particular in the form of capital guarantee, preferential rates or priority access to goods, products or services provided by the company.
  
  The law also mentions a large number of conditions that must be met by the company receiving the contributions as well as the conditions for obtaining the tax credit in the event of subscribing to the capital of a holding company. We do not indicate them here but we can provide them to you upon your request.
  
  Payments giving entitlement to the tax reduction are withheld within the annual limit of €50,000 for single, widowed or divorced taxpayers and €100,000 for married taxpayers or those bound by a civil solidarity pact subject to joint taxation.
  
  The benefit of the tax advantage is subject to the taxpayer retaining the securities received in return for his subscription to the capital of the company until December 31^st of the fifth year following that of the subscription.

Special regimes
- Young innovative companies: the tax reduction rate is increased to 30% for payments up to €75,000 for single, widowed or divorced taxpayers and €150,000 for married or related taxpayers by a PACS and subject to common taxation. However, the total benefit cannot provide a reduction in tax due of more than €50,000 over the period from January 1^st 2024 to December 31th 2028.
- Young innovative companies making 30% of research expenses: the tax reduction rate is increased to 50% under certain conditions. Payments are withheld up to an amount of €50,000 for single, widowed or divorced taxpayers and €100,000 for married taxpayers or those bound by a civil solidarity pact and subject to joint taxation and the total of the advantage cannot provide a reduction in tax due of more than €50,000 over the period from January 1^st 2024 to December 31^st 2028.

1. Tax credits

Expenditure on assistance to people: the tax credit for housing adaptation is extended for two years and its scope is refocused on the most vulnerable intermediate households. Furthermore, households with the highest incomes will no longer be able to benefit from it from January 1^st2024.
Equipment specially designed to make housing accessible to the elderly and disabled is therefore no longer eligible for the tax credit.
The tax credit applies provided that the taxpayer or a member of their tax household is aged 60 or over and suffers from a loss of autonomy or (if they are under 60) has a rate disability greater than or equal to 50% determined by decision of the commission for the rights and autonomy of disabled people.
This (reformed) tax credit is renewed until December 31^st 2025 and is applicable to the income tax due for 2023.
Carrying out work to strengthen housing against technological risks: this tax credit is extended until December 31^st2026.
Tax credit for the acquisition and installation of charging systems for electric vehicles: from January 1^st 2024, the tax credit ceiling is increased to €500 (instead of €300). However, only “controllable” electric charging stations are now permitted.

II. Measures concerning certain tax categories

1. Income from movable capital

We simply point out the establishment of a “Future-Climate Savings Plan” relating to green industry and reserved for young people under the age of 21.

1. Non-commercial profits

Taxation of activities linked to the development of digital assets (crypto-assets): the law establishes for professionals a reporting obligation, concomitant with the declaration of results, relating to the references of digital asset accounts opened, held, used or closed with companies, legal entities, institutions or organizations established abroad (like the system currently planned for individuals).

1. Salaries and wages

Coverage by the employer of fuel costs: the advantage resulting from the cover by the employer of fuel costs or costs incurred for powering electric, plug-in hybrid or hydrogen vehicles incurred by employees is exempt from tax up to the overall limit of €600 per year, including a maximum of €300 for fuel costs.
Tip exemption: this exemption is extended until December 31^st2024.

1. Real estate capital gains

Transfer to social organizations
The exemptions are extended until 2025 and some details are added to the system:
- Transfer to organizations committed to providing social housing:
  - Transfer to HLM and similar organizations: the assignees undertake personally, within ten years, to carry out construction.
  - Transfer to any other assignee: commitments to carry out construction must be fulfilled within four years.

- Transfer to a local authority: the exemption is calculated in proportion to the living space of the social or intermediate housing intended to be built. The benefit of the exemption is subject to the condition that the property is transferred, within one year following its acquisition, extended to three years for transfers made by a public land establishment.

Reduction for the transfer of building lands
- A 60% reduction is applicable on capital gains resulting from transfers of building lands in application of town planning regulations, built real estates or rights relating to these same properties, located, for all or part of their surface area, in municipalities classified by order of the ministers responsible for the budget and housing in geographical areas characterized by a significant imbalance between supply and demand for housing.
- A 75% reduction is applicable on capital gains resulting from transfers of building lands, built real estates or rights relating to these same properties located for all or part of their surface area within the perimeters of major town planning operations set by the aforementioned act in the second paragraph of article L. 312-4 of the town planning code or operations of national interest.
- These rates are increased to 85% when the transferee undertakes to ensure that the habitable surface area of the housing thus created is allocated upon completion, for at least 50% of the total surface area of the constructions to social housing subject to a real joint lease or intermediate housing.

These provisions apply to transfers made from January 1^st 2024.

III. Miscellaneous provisions

1. Payment of services to companies established abroad

Reminder of the current system: “Amounts received by a natural or legal person domiciled or established outside France, as remuneration for services rendered by one or more persons domiciled or established in France, are taxable in France in the name of the latter:

or, when they directly or indirectly control the person who receives the remuneration for the services;
or, when they do not establish that this person primarily carries out an industrial or commercial activity, other than the provision of services;
or, in any case, when the person who receives the remuneration for the services is domiciled or established in a foreign State or a territory located outside France where he is subject to a privileged tax regime within the meaning mentioned in CGI article 238 A.”

The law extends the scope of the system to remuneration paid for the commercial exploitation of rights attached to the image, name or voice of one or more people, the use of copyright or neighbouring rights, or industrial or commercial property or similar rights.

This text applies to income received from January 1^st 2024.

1. Recording rights

Reporting obligations relating to transfers of corporate rights of legal entities with a preponderance of real estate: in order to avoid certain fraud, the law requires the addition of new information in acts and declarations relating to the transfer of interests in a legal entity predominantly in real estate.

1. Local taxes

Exemption from property tax and CFE for wind turbines: in order to remedy the differences in treatment observed between concrete masts and metal masts, this amendment specifies that the exemption applies to wind turbine masts, whatever their design.

Exemption from property tax for homes that have undergone energy renovation: the conditions for benefiting from property tax exemptions on built properties are updated.

The following conditions must be observed cumulatively:
- the housing has been completed for more than ten years on January 1^st of the first year for which the exemption is applicable;
- the total amount of expenses paid during the year preceding the first year of application of the exemption is greater than €10,000 per accommodation or the total amount of expenses paid during the three years preceding the first year of application of the exemption is greater than €15,000 per accommodation.
  
  The exemption applies for a period of three years starting from the year following that of payment of the total amount of expenses. It cannot be renewed during the ten years following the expiration of an exemption period.

Exemption from property tax for new housing meeting energy performance criteria: municipalities and public intermunicipal cooperation establishments with their own tax system may, by deliberation, exempt from property tax, up to a rate of between 50% and 100% and for their share, the construction of new housing, meeting energy and environmental performance criteria.

The exemption applies for a period of five years starting from the year following that of completion of the construction.

The owner must attach to the construction declaration all elements justifying that the construction meets the required energy and environmental performance criteria.

This law also includes other measures that we have not detailed in this article. However, we would be delighted to talk to you about them, or to answer any questions you may have on the points we have covered in the article!

Why not sign up for our newsletter!

L’article Finance act for 2024 – Main provisions concerning Personal taxation est apparu en premier sur FBA - French Business Advice.

Property tax “Taxe foncière” and Housing tax “Taxe d’habitation”

FBA team — Fri, 15 Sep 2023 11:04:29 +0000

Article updated on 15/09/2023

Every owner, whether they are residents or not, of a professional or residential building in France, currently receive a notice of “Taxe foncière”. Similarly, people who have secondary residences or furnished housings not assigned to the main residence will soon receive a notice of “Taxe d’habitation”.
Here are the main details about the features of these two taxes as well as the housing tax on vacant housing.

I – “Taxe Foncière”: Property Tax

1. Taxable persons

The taxpayer is anyone who owns a built or unbuilt property (in the case of bare land). It is the owner on January 1^st, who receives the tax for the entire year.

Both spouses are eligible, but not jointly. When a property is held in joint ownership by several owners, the tax is assessed in the name of all the joint owners, and payment must be agreed between them.

In the event of dismemberment of ownership, the usufructuary is liable.

If a property is sold during the year, the seller may request that the amount be shared with the buyer on a pro rata temporis basis, provided this is stipulated in the deed of sale.

2. Taxable real estates

Property tax on buildings:

Constructions fixed to the ground in perpetuity
Commercial or industrial installations assimilated to constructions (workshops, hangars, industrial buildings, etc.)
Storage facilities
Masonry works which have the character of real constructions
Bridges and communication channels
Boats used at a fixed point
Lands forming an addiction with a construction
Certain uncultivated land assigned to industrial or commercial use, except for land assigned to the practice of golf
Land used for advertising
Light leisure dwellings resting on a masonry base, and which cannot be moved without being demolished
Yurts used for housing built on concrete pads which include fittings

Property tax on unbuilt estates:

Bare land used for agriculture
Mines and peat bogs
Ponds, salt pans and salt marshes
Lands occupied by greenhouses used for agricultural purposes
Golf courses, whatever their operating conditions

3. Tax calculation

Property tax on buildings:

The basis of calculation is the “Valeur Locative Cadastrale” (Cadastral Rental Value) which is determined as follows:

For premises allocated to housing, the rental value is determined by comparison with that of reference premises chosen, in the municipality, for each type and category of premises.

The rental value of the reference premises is determined according to a fixed rate, by municipality or sector of municipality, for each type and category of premises, based on the rent of the premises rented freely under normal price conditions.

This rate is applied to the weighted surface area of the reference premises. This price is corrected to consider the nature of the different parts of the premises, its location, its importance, its condition, and its equipment.

New rental values will be put in place from 2028. The finance law for 2020, amended by the finance law for 2023, determined the terms and timetable for the revision of rental values. The rental value of each property or fraction of property will be determined based on the state of the rental market on the reference date, i.e., January 1^st, 2025, subject to an annual update.
For professional premises (commercial and liberal professions) other than those allocated to housing or to the exercise of a salaried activity at home, the rental value of these professional premises is calculated considering 3 criteria:
- Weighted surface area of the room: the overall surface area of the premises is weighted according to the use and physical characteristics of the different parts of the premises for the activity carried out (1 for the main surfaces of the premises, 0.5 for the secondary covered surfaces and 0.2 for the uncovered secondary surfaces).
- Category of premises (and its dedicated rate): each premises is attached to one of 38 categories, depending on the use of the premises (i.e., store, office, depot, hotel, etc.) and its physical characteristics. Prices per square meter have been determined in each sector.
- Local location coefficient: this coefficient takes different values between 0.70 and 1.30. It applies to the rate per square meter of the category of each professional premises. It is linked to the geographical location of the premises.

For industrial establishments and industrial lands and buildings, the rental value is established essentially on accounting data, based mainly on the cost price of soil, land, buildings, materials, and tools.

This “Valeur Locative Cadastrale” is then multiplied by 0.5 and the result gives the “Revenue Cadastral”.

At the request of the taxpayer, the rental value of the premises assigned exclusively to the accommodation of seasonal agricultural employees and apprentices is reduced in proportion to the period during which these premises remained vacant during the year preceding the tax year.

The tax rate for each local authority is then applied to the “Revenue Cadastral” to determine the amount to be paid.

The main territorial authorities are the commune, the intercommunity, the department, and the region.

The tax also includes an element named “Taxe Ordures Ménagères”, the refund of this amount can be claimed by the owner to the tenant when it is a property for the purpose of a lease. Special equipment taxes and the tax for the management of aquatic environments and the prevention of flooding (GEMAPI) may also be added.

Note: The municipalities and other territorial authorities may institute, upon deliberation, an abatement on the rental value, of which here are three examples:

30% on certain social housing in priority neighborhoods of city policy (QPV)
30% for industrial or commercial premises converted into housing, located in collective buildings and in a municipality on whose territory one or more QPVs are located
50% for buildings assigned directly to research operations

Property tax on unbuilt estates:

The calculation mode is identical but the “Valeur Locative Cadastrale” is reduced by 20% except for building land or land used for hunting, to give the “Revenue Cadastral”.

Concerning building land located in tense areas, a flat rate increase of €3 per m² (which can be modulated) can be decided upon by local authorities.

4. Payment date

The payment of local taxes for individuals (property taxes, in particular) is due 30 days after the date of collection of the role. Any payment made 45 days after this collection is subject to a 10% increase for late payment.

The tax notice is usually received by the taxpayer in the month of September and the payment deadline is October 15^th.

In case of payment by internet, the delay is postponed to October 20^th (or 25^th in case of bank levy).

The taxpayer may request the monthly levy of his tax.

5. Discounts and exemptions

There are many cases of exemption, here are the most common.

Property tax on buildings:

A mandatory permanent exemption applies to state property, rural buildings used by farmers and buildings used to produce photovoltaic electricity.
New constructions are temporarily exempt (usually 2 years) but subject to declarative obligations. However, the municipality may, by deliberation and for its share, limit the exemption to 40%, 50%, 60%, 70%, 80% or 90% of the tax base. The EPCI may, by deliberation and on its part, remove this exemption.
Optional exemption from 2 to 5 years in favor of companies benefiting from a tax exemption on profits (new companies created in AFR zones – companies created to take over a company in difficulty).
Optional exemption of 50% or 100% for 3 years, decided by municipality, for dwellings completed before 1989 subject to energy saving works.
Optional exemption of 50% or 100% for 5 years, decided by municipality, for new homes completed from 2009 meeting a level of overall energy performance higher than that imposed by the legislation in force.
Certain social housing financed using regulated loans benefit from exemptions of 10, 15, 20 or 25 years.
People over the age of 75 whose reference income for the previous year does not exceed certain limits are exempt from tax on their residence (primary and secondary).
There is also an exemption for people with low incomes. We can provide you, at your request, with the amount of income thresholds.
Anyone over 65 and up to 75 years of age can benefit from a €100 discount.
Recipients of the solidarity allowance for the elderly (ASPA) or the supplementary disability allowance (ASI) regardless of their age.
Recipients of the allowance for disabled adults whose income for the previous year does not exceed certain limits, regardless of their age.

Property tax on unbuilt estates (TFPNB):

Permanent exemption of soils and land subject to property tax on built properties (soils of buildings and land forming an essential and immediate dependence on constructions).
Optional exemptions (decided by municipalities and other local authorities) for 5 years for certain plots operated according to an organic production method.
Exemption for a maximum of 8 years for orchards, fruit crops, trees and shrubs and vines.
Agricultural operators are exempt from 20% of the TFPNB. This exemption does not apply to properties which benefit from total exemptions.

II – “Taxe d’habitation sur les résidences secondaires” (Housing tax on secondary residences) THRS

Since January 1^st, 2023, the housing tax on the main residence has been abolished for all taxpayers. However, it is maintained on second homes. Similarly, a new reporting obligation must be completed each year in principle before June 30^th.

1. Taxable persons

The tax is due by natural or legal persons (owner, tenant, free occupant) who have the disposal or enjoyment of the premises on January 1^st of the tax year.

Companies allocating buildings for timeshare use are liable for the THRS relating to the premises allocated for use to their members.

Note: People who retain the exclusive use of the home which constituted their main residence before being permanently accommodated in an establishment or service welcoming the elderly or an establishment providing long-term care are exempt from THRS.

2. Taxable premises

Are subject to housing tax on second homes and other furnished premises not assigned to the main dwelling (THRS):

All furnished premises assigned to the dwelling other than those assigned to the main dwelling
Premises furnished in accordance with their purpose and occupied privately by entities (associations, in particular) which are not subject to the business property tax (CFE)
Furnished premises without an industrial or commercial character occupied by state bodies, departments, and municipalities, as well as by public establishments, other than those referred to in article 1408, II.1° of the CGI.

3. Exempt premises

Are exempt from THRS:

Premises liable to the CFE when they are not part of the taxpayers’ personal residence
Buildings used for rural operations
Premises intended for the accommodation of pupils in schools, boarding schools, and summer camps
The premises allocated to student accommodation in university residences.

4. Tax calculation

The basis of calculation is, as for the “Taxe foncière”, the “Valeur Locative Cadastrale” housing.

This amount is then multiplied by the tax rates of the various local authorities (commune, inter-municipal, department, region) to calculate the tax due.

At the request of the taxpayer, the rental value of the premises assigned exclusively to the accommodation of seasonal agricultural workers and apprentices may be reduced in proportion to the number of days of occupation of the accommodation the year preceding that of taxation.

Statement: We remind you that, under penalty of a fine, owners of premises used for housing must declare to the tax authorities, before July 1^st of each year, the nature of the occupation of the premises for which they reserve the use, or, for premises occupied by third parties, the identity of the occupant(s). However, owners of premises for whom no change in the information transmitted has occurred since the last declaration are exempt from this declaration.

5. Payment date

The tax notice is usually sent by the administration between late September and early October, it is payable on November 15^th.

This tax may be paid by monthly levies upon request of the taxpayer.

In municipalities in geographical areas where the annual tax on vacant housing is established (see below), the municipal council may, by deliberation, increase by a percentage between 5% and 60% the municipal share of the housing contribution. THRS due for furnished accommodation.

III – Taxes concerning vacant housing

There are two different taxes depending on the geographical location of the accommodation.

1. Vacant housing tax (TLV)

Tax definition:

Vacant housing located in municipalities belonging to an urban area of more than 50,000 continuous inhabitants where there is a marked imbalance between supply and demand for housing is subject to an annual tax.

The tax is due for each accommodation, habitable and unfurnished, vacant at the same time:

On January 1^st of the year preceding that for which the tax is established
On January 1^st of the tax year
Who has not been employed for more than 90 consecutive days during the year preceding that of taxation

It is not due in the event of a vacancy beyond the control of the taxpayer. Housing belonging to HLM organizations and semi-public companies, intended to be allocated subject to means testing, does not apply.

Annual tax calculation:

The tax rate is 17% of the rental value of the housing (determined as for housing tax) the first tax year (and each time the premises re-enters the scope of the tax), and 34% from the second year.

2. Housing tax on vacant housing (THLV)

Tax definition:

Municipalities and other local authorities (other than those referred to above) may decide to establish, for their share, the housing tax on premises for residential use, habitable and unfurnished, vacant for more than 2 years on January 1^st of the tax year. These local authorities may subject these premises to housing tax on second homes from the 2023 taxation.

Calculation:

The rate applicable for the housing tax on vacant housing (THLV) corresponds to the rate of the council’s housing tax, increased, where applicable, by the rate of the EPCIs without their own taxation of which it is a member.

Exemption cases:

As for the TLV, housing inhabited for more than 90 consecutive days in the year or undergoing an involuntary vacancy (the owner is looking for a tenant or a buyer), requiring significant work to be habitable (more than 25% of the value of the housing) and furnished second homes subject to housing tax are exempt.

Housing owned by HLM organizations and semi-public companies, intended to be allocated subject to means testing, are exempt.

All the team of French Business Advice is at your disposal to help you, so do not hesitate to contact us!

Why not sign up for our newsletter!

L’article Property tax “Taxe foncière” and Housing tax “Taxe d’habitation” est apparu en premier sur FBA - French Business Advice.

News on revenue declarations for 2022

FBA team — Sun, 30 Apr 2023 14:42:21 +0000

Tax returns must be completed, same as every year, and the deadlines for filing them with the tax department are as follows:

By paper declarations (only in some exceptional cases):
- Monday, May 22nd, 2023 at midnight.
By e-declaration on “impots.gouv.fr”, the deadlines are set based on the region of residence:
- Thursday May 25th, 2023, for regions n° 01 to 19, as well as for non-residents;
- Thursday June 1st, 2023, for regions n° 20 to 54;
- Thursday June 8th, 2023, for regions n° 55 to 974 / 976 as well as for EDI declarations (Electronic Data Interchange).

The main changes regarding the declarations n° 2042, 2042 C PRO and 2044 are listed below.

For further information, do not hesitate to check our articles from previous years which are still relevant:

I – News about all income statements

1. Calculation of the overall net taxable income and methods of applying the ratio system

The following order lists the possible deduction from the total categorial net income:

Previous global deficits that can be carried forward to the global income. On the other hand, the ordinary deficit realized in the category on which the exceptional income depends must not be deducted from the global net income, this deficit having already been absorbed for the determination of the categorical net income;
Deductible fraction of the CSG (Generalized Social Contribution);
Deductible expenses from the overall income of the fiscal year (e.g. alimony);
Allowances for elderly or disabled;
Allowances for fiscally connected adult children (above 18).

These tax deductions are implemented in the exact order listed above.

As from now, the overall deficit or, when applicable, the negative overall net income (taking into account the overall deficits of the previous six years, deductible expenses and specific allowances) is deducted from the amount of exceptional or deferred income before application of the system of the ratio.

2. Reassessment of the mileage scale

The mileage scale is revalued at 5.4% in 2023 to take into account the 2022 inflation.

3. Abolition of the TV license fee

The abolition of audiovisual contribution in 2022 leads to the disappearance of the RA box, which was used to report whether a person owned a television, which served to avoid having to pay the television license fee needlessly.

4. Increase in the tax credit for childcare expenses

For amounts paid from January 1st, 2022, expenses are deducted within the annual limit of €3.500 per dependent child or €1.750, in the event of separation or divorce between the parents, when the child alternately resides between its parents’ homes.
The limit of €3.500 (or €1.750) is not subject to any reduction prior temporis when the child:

Is below 6 years old or reaches 6 during the fiscal year of reference;
Was given custody for only part of the year.

5. New reporting obligation for your real estate for residential use

Although it is not related to the declaration of income, you must be aware that in this new declaration, especially for all real estate owners. For each of their properties, owners must indicate the use they make of them. If they do not occupy the property themselves, they are required to provide the identity of all occupants as well as the duration of their stay (on date January 1st, 2023) in the declaration filed by latest, June, 30th, 2023.

II – Update regarding forms n°2042 and n°2042 C

1. Wages (2042 form)

Reassessment of the mileage scale: the mileage scale is revalued at 5.4% in 2023 as stated further above.

Exemption from the Value Sharing Bonus (PPV): the PPV is exempted from income tax and social security contributions when paid between July 1st,2022 and December 31st, 2023, up to a limit of €3.000 per year and per beneficiary for employees whose remuneration is less than 3 times the minimum wage during the 12 months prior to the payment of the bonus. This ceiling increases to €6.000 for:

Companies with a profit-sharing agreement;
Companies with less than 50 employees applying a voluntary participation scheme;
Some associations (NGOs) and foundation;
Disabled workers under supported-contracts and help through work in ESAT.

Increase in the exemption ceiling for overtime and additional hours: overtime and additional worked hours paid from January 1st, 2022, are exempted from income tax, up to an annual limit of €7.500 (against €5.000 the years before).

Exemption from tips paid in 2022 and 2023: they are usually taxable, for their actual amount. However, tips paid during 2022 and 2023 are excluded from the social security contribution base and are exempt from income tax. However, this reported and exempt income is taken into account in the calculation of the reference tax income, consequently, to benefit from it, you will have to be very careful when filing your tax return and correcting the corresponding boxes. The exemptions apply on the condition that the remuneration of the employees concerned does not exceed the amount of the minimum legal wage (SMIC) increased by 60%.

2. Self-Employed Income (2042C form)

Profit increase, applied to companies that do not belong to an approved management organization (O.G.A.) or do not use the services of a professional accountant: for the calculation of income tax at a progressive scale, the result declared for self-employed, professional and non-professional activities may be subject to an increase. Taxpayers who use the services of a chartered accountant or a management association approved by the tax authorities are exempt from this increase. Incomes that are not subject to the increase must be mentioned in the boxes of the 2042 C PRO declaration provided for this purpose (OGA columns).
The previously mentioned increase applies for the last time to incomes for 2022. It is 10% this year (compared to 15% for income in 2021).
The tax reduction for membership fees to an approved organization and bookkeeping is not affected by this measure.

Merged tax and social declarations: the income used as a basis for the calculation of social security contributions and contributions is now collected directly from the income tax declaration. This declaration is supplemented by a social component and replaces, since the 2020 income, the social declaration of the self-employed (DSI). This merging was effective only for self-employed workers carrying out a craft, industrial, commercial, or liberal activity, the merged declaration is extended to two new populations:

Approved medical practitioners and life support workers (PAMC);
Self-employed agricultural workers (MSA).

Tax compliance review (E.C.F.): as part of the development of the relationship of
trust and in line with the principle of the right to make mistakes, companies are offered an option for the tax compliance review (ECF).
For companies subject to a real regime, the option for the ECF is materialized when filing the declaration of results. The 2042 C Pro form includes new sections dedicated to taxpayers covered by a micro scheme in order to materialize their option for the ECF and the designation of the service provider in charge of carrying out the ECF:

Boxes 5 AC to 5 CC for micro-entrepreneurs who have opted for the withholding of income tax;
Boxes 5 AG to 5 CG for micro-BA (agricultural benefits);
Boxes 5 AX to 5 CX for professional BIC income (Industrial Benefits);
Boxes 5 AT to 5 CT for professional BNC income (Non-Commercial Benefits).

III – Real estate income update – Form n° 2044

1. Property income

Property income collected by an intermediary assimilated to collection by the owner: the property income to be declared for a year, during the given year, was made available to the taxpayer. Thus, when a taxpayer entrusts a third party with the task of collecting his property income on his behalf, the sums collected by the latter are deemed to be immediately made available to the owners, by the mere fact of their collection by the intermediary. The taxpayer may, however, provide proof that it was impossible to dispose of the sums. These are then not considered as revenue received and do not constitute gross taxable property income.

Occupancy allowances: the allowances received by the renter, in addition to the annual rent, constitute taxable land revenue whether they are received by compensation or collected by the renter.

Sales of buildings to be renovated: the works carried out by the seller in a contract for the sale of a building to be renovated constitutes an element of the acquisition price of the building. Therefore, the cost of this work cannot be deducted from the property income from the rental of the property thus acquired.

2. Land deficit

Increase in the ceiling for charging the deficit to overall income in the event of energy renovation: the property deficit resulting from deductible energy renovation work expenses for which the taxpayer proves the acceptance of an estimate from November 5th, 2022, and paid between January 1st ,2023, and December 31st, 2025, benefits from a limit on the total income of €21.400 instead of €10.700.
This increased ceiling applies when these expenses allow the property to move, no later than December 31st, 2025, from an energy classification E, F or G to an energy performance classification A, B, C or D.

Land deficits created within the framework of a family SCI (real-estate company structure) and fraud against the law: abuse of rights may be retained by the administration when the conclusion of a residential lease is only intended to generate land deficits attributable to other property income.
Constitutes in particular an abuse of right the device leading the spouses to deduct from their total income the land deficits resulting from works, within the framework of the transfer of movable property to a family SCI.

3. Assisted rental investments

Extension of the “Malraux” system: the components of the tax benefit system in favor of buildings located in an old, degraded district or in a so-called “NPNRU” district, which were to end on December 31st, 2022, are extended for one year by the finance law for 2023.

Tax reduction rate in the “Pinel” system: the extension of the “Pinel” system by the finance law for 2021 comes with a gradual reduction in the tax reduction rates in 2023 and 2024.
The rates applicable to investments made until December 31st, 2022, however, continue to apply in favor of certain properties, meeting the minimum quality requirements.

Regulatory clarifications concerning the “Loc’Avantages” scheme: the 2022 finance act replaced the “Cosse” deduction with a tax reduction for rental investment at affordable rent, known as “Loc’Avantages”, the terms of application of which have been specified by regulations. These details concern the methods for setting and the values of the monthly rent ceilings excluding charges to be respected, the tenant’s resource ceilings, the level of energy performance to be respected and the reporting obligations of taxpayers.

All the team of French Business Advice is at your disposal to help you, so do not hesitate to contact us!

Why not sign up for our newsletter!

L’article News on revenue declarations for 2022 est apparu en premier sur FBA - French Business Advice.

Archives des Taxes for Individuals - FBA - French Business Advice

Withholding tax on certain services paid to foreign companies

I – The conditions for applying withholding tax

II – Withholding tax calculation

The taxable base

Withholding tax rate

III – Payment of the withholding tax

Obligations of the debtor

Withholding tax credit

Reimbursement of withholding tax

IV – The particularities of withholding tax on artists’ income

Finance act for 2025 – Main provisions concerning Personal taxation

I – Tax calculation measures

1 – Indexation of the tax brackets

2 – Differential contribution on high incomes (CDHR)

3 – Tax reductions

II – Measures concerning certain tax categories

1 – Income from movable capital

2 – Capital gains for individuals

3 – Salaries and wages

III – Miscellaneous provisions

1 – Registration fees

2 – Accounts held abroad

Main categories of revenues to be declared on annual forms

Forms n° 2042 C, 2042 RICI and 2042 C-PRO

I. 2042-C Form

1 – Taxpayer identification

2 – Salary pensions and annuities

3 – Income from securities and movable assets

4 – Gains from the sale of securities

5 – Property incomes

6 – Deductible expenses and tax reductions and credits

7- Withholding tax and various

II. 2042-RICI Form

III. 2042-PRO Form

1 – Identification of the taxpayers concerned

2 – Income of micro entrepreneurs

3 – Farm incomes

4 – Industrial and commercial profits

5 – Non-commercial incomes

6 – BA, BIC, BNC to be taxed to social taxes

7 – Tax rebates and credits

News on revenue declarations for 2023

I – News concerning all income statements

1 – Online declaration

2 – Pre-filled information on the online declaration

3 – Declaration of real estate

II – Update concerning 2042 and 2042 C forms

1 – Wages (2042 form)

2 – Income from securities and movable capital

3 – Gains from the sale of transferable securities and corporate rights

4 – Income of the self-employed (BA, BNC, BIC) 2042C form

III – Real estate income update – N° 2044 form

IV – News on tax reductions and credits -N°2042 RICI

Overview of the principal information to be indicated on the 2042-IFI print (tax on real estate fortune)

I – 2042-IFI Form

1 – Page 1

2 – Page 2

II – Appendix 1: Properties assigned to professional activity

III – Appendix 2: Properties held directly (buildings and lands)

1 – Part 1 of Annex 2 (buildings and lands)

2 – Part 2 of Annex 2 (rural goods, timber and forests… partially exempt)

IV – Appendix 3: Properties held indirectly

V – Appendix 4: Liabilities and other deductions

VI – Appendix 5: Calculation of the elements of the ceiling

VII – Appendix 6: I.F.I. paid outside France

Tax on Real Estate Fortune (Impôt sur la Fortune Immobilière)

I – The definition of the tax household concerned by the I.F.I.

II – I.F.I. Bases

1 – Tax base

2 – Evaluation rules

3 – Liability deductible from the tax base

4 – Exempt assets

III – Calculation of I.F.I. tax

1 – Tax scale

2 – Tax reductions and caps

IV – Reporting obligations

Withholding at source for employees posted abroad

I – Definitions of important terms

Definition and mechanism of withholding tax