Understanding French Tax- What is a Fiscal Household in France?

   2

Essential Reading

Understanding French Tax- What is a Fiscal Household in France?

Every legal resident in France is required to submit an annual income tax declaration, but for married couples and families, income tax is calculated based on the entire household, not for each individual taxpayer as in some countries. So, what is a fiscal household in France, do you need to file a joint tax return, and what does this mean for your tax liabilities? Here’s what you need to know.

What is a Fiscal Household in France?

In France, each household submits a single tax return, meaning that if you are married or in a PACS (civil partnership) with your partner, you will file a joint tax return. Both of your incomes will be considered when calculating your tax liabilities, and this will be divided by the total number of ‘parts’ in your household. This is known as the ‘foyer fiscal’ in France, which is your fiscal household or taxable household.

What is a Quotient Familial?

Not only do couples file a combined tax return in France, but allowances are also made for the number of family members that make up your household. This number is known as the ‘quotient familial’, and it is designated as a number of ‘parts’, with tax liabilities assessed on each ‘part’.

How many ‘parts’ does your taxable household have?

Here’s how the ‘parts’ are calculated to make up your ‘quotient familial’.

  • A single person would be 1 part.
  • A couple with no children would be 2 parts.
  • A couple with one dependent child would be 2.5 parts (the first child counts as a ‘half part’).
  • A couple with two dependent children would be 3 parts (the first and second child each count as a ‘half part’).
  • A couple with three or more dependent children would be 4 parts or more depending upon the number of children (the first and second child each count as a ‘half part’; the 3rd child and any additional children each count as a full part).

The children of a single, divorced, or widowed individual also count towards the quotient familial. For example, a single person with one child would count as 1.5 parts. In the case of a separation with joint custody, the ‘parts’ awarded for any children may be shared between both households.

An additional half part is granted for any dependant holding a disability card.

How Much Tax Will Your Household Pay in France?

So, how is income tax calculated based on your quotient familial? Essentially, the combined taxable income for the household (for example, the combined total of your and your partner’s income) will be divided by your quotient familial. The tax owed on each share will be calculated and added together to obtain the amount of tax due. Generally speaking, a family with multiple dependent children will have lower income tax liabilities.

Here’s a very simple example using the 2022 tax rates to give you an idea:

You are a married or PACSed couple with three young children.

You both have salaries of €50,000, meaning a total combined annual income of €100,000.

This is divided by your quotient familial, which is 4: €100,000 % 4 = €25,000

The tax-free allowance on each part is €10,225, on which you will be subject to 0% tax.

€25,000 – €10,225 = which leaves €14,775 to be taxed on each part. This amount falls within the second tax band, so it is taxed at 11% or €1625.25 per part.

€1625.25 x 4 = €6,501, which is the total amount of tax due.

 

Compare this with how much tax the same couple might pay if they had no children:

You both have salaries of €50,000, meaning a total combined annual income of €100,000.

This is divided by your quotient familial, which is 2: €100,000 % 2 = €50,000

The tax-free allowance on each part is €10,225, on which you will be subject to 0% tax.

€50,000 – €10,225 = which leaves €39,775 to be taxed on each part.

The first €26,070 falls within the second tax band, so it is taxed at 11% or €2867.70 per part

The remaining €13,705 falls within the second tax band, so it is taxed at 30% or €4,111.50 per part.

€2867.70 + 4,111.50 = €6979.20 x 2 = €13,958.40 (rounded up to €13,959 which is the total amount of tax due).

For a couple where one partner earns a higher salary, or one partner does not work, there are potentially also tax advantages for the higher-earning partner, even if the couple does not have children.

*Please note that the above are theoretical examples only, and there may be other factors that come into play when calculating your household income tax bill.

For a more detailed look, see our guide Understanding French Income Tax- What You Need to Know.

Your Tax Responsibilities in France: Changes to Your Fiscal Household

It is your responsibility to inform the French tax authorities of any changes in your fiscal household. You should report any changes to the tax office (this can be done online via your tax account) within 60 days in the event of a marriage, PACS, divorce, the birth or adoption of a child, or the death of a spouse or dependant.

Any withholding tax will be immediately adjusted, but you must also reconfirm these changes when filing your tax return the following year.

Paying Your Taxes in France

Whether you are moving to France, own French property, or have business interests, assets, or investments in France—FrenchEntrée is here to help with all your tax questions. Our Essential Reading articles will talk you through all the basics, from income tax and social charges to wealth tax and property taxes. However, international tax liabilities can be complicated, so if in doubt, we always advise discussing your personal situation with one of our recommended financial or tax advisors.

Disclaimer: This guide is provided for general information purposes only and is not intended to be a substitute for professional advice regarding any aspect of your tax planning or tax liabilities in France. FrenchEntrée cannot be held responsible for the consequences of decisions or actions you may choose to take in connection with French tax declarations or tax liabilities.

Share to:  Facebook  Twitter   LinkedIn   Email

Previous Article What You Need to Know About French Social Charges
Next Article Understanding French Income Tax: What You Need to Know

Related Articles


Leave a reply

Your email address will not be published. Required fields are marked *

Comments

  • Vida Hills
    2022-05-07 08:31:14
    Vida Hills
    I own my property and my partner/concubine of 20 years lives with me. On the tax form he/we don't know how to respond to the question regarding the accommodation. He is not an owner nor a tenant, roommate or hosted for free. Can you please advise which option is suitable. He pays for all the shopping and animal supplies so would/could this be considered as rent? Any help gratefully received.

    REPLY

    • Zoë Smith
      2022-05-13 08:46:32
      Zoë Smith
      Hi Vida,
      We put this question to our partners at Blevins Franks. Here's their response:

      "Our understanding based on the information you have provided is as follows, but please note that we are not accountants and you should contact a French accountant to ensure that your tax return is filed correctly.
      Since you are cohabiting and your partner does not have a formal rental agreement with you, the best option to choose for the accommodation would be either ‘room mate’ or ‘hosted for free’. This should not have an effect on your tax position since household (foyer) basis of taxation only applies if you are married or have entered into a PACS in France.
      Contributing to the normal day-to-day living costs would not be classified as rental income and there is no need for you to report it as income on your tax return."

      Hope this helps and best of luck with your tax return!

      REPLY