When Do I Need to File My First Tax Return After Moving to France?
If you’re moving to France, it is your legal responsibility to file a tax return each year and declare all your worldwide income. However, depending on when you move and your work situation, you may find that you don’t need to pay taxes in France for more than a year after arrival. Here’s what you need to know about when to fill in your first tax return.
When do I need to file my first French tax return?
In France, the tax year runs from January to December in line with the calendar year (unlike in some countries, such as the UK for example, where it runs from April to April). Tax is declared the following year for income earnt/received that year – for example, income earnt/received in 2023 will be declared on your 2024 tax return.
This means that if you move to France, you won’t need to file a tax return until the following year. So, if you moved to France in 2023, you would file your first tax return in 2024. It is possible, therefore, if you moved to France in January 2023, that you wouldn’t need to file a tax return until May 2024, almost one and a half years later.
When do I need to pay taxes in France?
Despite the fact that you won’t need to declare your income to the tax authorities until the following year, it is important to note that you will still be liable for French taxes from the date that your residency in France starts. For example, if you move to France on March 14th 2023, all income that you earn/receive from that point on will be subject to French taxes and social security contributions. We won’t go into details of French tax liabilities in this article (see our guides to Understanding French Income Tax: What You Need to Know and What You Need to Know About French Social Charges for more on that), but it’s important to keep records of all of your income, including work income, rental income, investment income, and any other worldwide income from this point on.
Working in France: when will you pay your taxes?
If you are working in France, you will also be subject to the PAYE (Pay As You Earn) system, whereby your taxes will be automatically deducted from your monthly salary – similarly, many business regimes and auto-entrepreneurs/micro-entrepreneurs will be subject to monthly or quarterly tax declarations or payments. Calculations will be estimated depending on your salary and situation, so you may find that you pay slightly more or less tax in that first year. You will still file a tax return the following year, at which point you will be able to claim back any overpaid taxes or balance your account in the case of owing additional taxes.
Your first tax year in France: considerations for expats
There are a few general things for expats to consider when moving to France. Firstly, it’s important to understand your tax liabilities in both France and your previous home country for the year that you move. Being as few people move on January 1st, it is inevitable that your first year in France will be a partial year. From the French side, this is simple – regardless of when you move, you will file your first tax return the following year. However, you will only declare your earnings during that year from the point at which you moved to France. Using the aforementioned example, if you move to France on March 14th 2023, on your 2024 tax return, you would declare all income received from March 14th 2023, through to December 31st 2023.
This means that all income made from January 1st 2023 through March 14th 2023 should still be declared on your tax return in your previous home country. The important thing to remember here is the start date of your residency in France (typically, this will be the start date of your France long-stay visa) – this will be the date used to determine in which country your taxable income is declared.
It’s important to heed the tax rules of your previous home country, too, and it’s smart to research this in advance – it might even affect your decision over when to move. Things to consider are how your tax is paid and calculated in your previous home country, and the tax year itself. For example, in the UK, the tax year runs from April to April, so this income would be declared on your 2022/2023 return in the UK. Choosing to move in March means you would only need to file a tax return in the UK for the tax year of 2022/2023, but if you moved to France in May 2023, you would also need to remember to file a tax return for the year 2023/2024, even though you would only have been tax resident in the UK for one month of that year. If you can be flexible about moving dates, it would mean less paperwork to make the move in March.
If you are working, freelancing or running a business in France, it’s important to also assess how your taxes are paid. In the UK, for example, many businesses pay their taxes in arrears – i.e. you pay your taxes the following year, meaning the first year of your business start-up is seen as a ‘free tax’ year (of course, you do still pay those taxes, they are just paid the following year!). The difficulty with this is that if you move to the French system, where you are making monthly or quarterly tax payments in the first year of your business, you may find you are paying tax in France and still paying off your UK tax from the following year. It’s essential, therefore, to plan ahead and seek advice on how to best manage this transitional year.
Do I need to file a French tax return?
If you’re moving to France on a visitor visa or retiring to France, you may question whether or not you need to file a French tax return at all, especially if you aren’t actually earning income and aren’t liable to pay taxes. The answer to this one is easy – if you live in France, you must file a tax return every year by law. This applies regardless of the type of visa you have (unless you are only visiting on a temporary 6-month visa and not residing in France), whether you work or not, whether you have any income, or whether your income comes solely from overseas. Everyone resident in France is obligated to file a tax return and declare all of their worldwide income. However, don’t worry – just because you file a tax return doesn’t necessarily mean you will be liable to pay taxes…
Taxes on worldwide income, pensions & investments
If you receive any kind of income from your previous home country (or any other country for that matter), whether that be a pension, rental income, investment income, or other, you must by law declare this on your French tax return. However, that doesn’t necessarily mean you will be liable to pay taxes on that income in France. If there is a double-tax treaty in place between France and the country in question (which is the case for many countries, including EU countries, the UK, the United States, Canada, Australia, and New Zealand), you will not find yourself paying the same taxes twice.
However, where you pay taxes on worldwide income, how this is declared and deducted from your French tax liabilities, and whether or not there will be extra tax to pay in France will depend upon the rules of that treaty. The general rule is that you will need to declare said income in both countries, and you will typically end up paying the amount set by the country with the higher tax liability.
To take a very simplified example, if you declare and pay taxes on an income source in the US, the same income would then be declared on your French tax return, and the amount of US tax already paid would be applied as a tax credit on your French tax return. But, on occasion, you may find that the French tax system taxes this particular type of income at a higher rate to the US and therefore, your tax credit doesn’t meet the full tax amount. In this instance, you may be liable to pay the difference in French taxes.
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 are designed to give you an overview of the basics, from income tax and social charges to wealth tax and property taxes. However, tax laws and rates are always subject to change, and international tax liabilities can be especially 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.
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