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:
- Main categories of revenues to be declared on annual forms n ° 2042 C, 2042 RICI and 2042 C-PRO
- List of the main French annual income tax declaration form
- Finance act for 2023 – Main provisions concerning Personal taxation
- Finance act for 2023 – Main provisions concerning Companies
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!
