|In general, taxation system in France is determined by the French Parliament votes setting the kinds of taxes which can be levied and the rates of the taxes which can be applied. Taxes are then collected by the central government, local governments and social security association (ASSO). All the people who have their tax residence in France are subject to French tax, no matter if they are natural or legal persons either living in France or just have their homes, principal residence, workplaces or economic interests in France – they are all treated as taxable. Moreover, despite of the nationality, a person who is a tax resident in France is also taxable on his or her worldwide income.
There are various types of taxes in the country such as taxes on production and importation, value-Added Tax or VAT which is a consumption tax, which applies to goods and services located in France, tax on petroleum products, taxes on wealth, including local property taxes on real estate, capital gains taxes which are payable when assets are disposed, taxes on the sale of buildings (in addition to local taxes), inheritance, gifts, assignment of businesses and registration of vehicles (total taxes should not exceed 75% of income) as well as succession and gift taxes which apply to gifts and inheritances.
Income taxation in France
Income taxes in France include corporate tax, income tax for individuals, tax for social purposes which is a calculated tax on all income available to individuals in a year and is a subject to industrial and commercial profits, land income, non-commercial and agricultural profits, salaries/wages, pensions/annuities, movable income, capital gains. These taxes are usually payable in the year after the income is earned by filing a French tax declaration stating the total taxable income received. The declaration should be filed by the normal filing deadline.
Personal income tax
Applies to all the incomes gained during any individual business activity in the country. However, those tax payers whose personal net income does not exceed €7,920 are exempted from the income taxation. It is calculated in accordance with the total income of the household which is equally distributed between each member of the household.
Corporate income tax
This type includes annual tax made by corporations and other commercial entities and can be applied to approximately 1/3 of French companies with a standard rate of 33.3% and generally based on company’s turnover.
Capital gain tax
Capital gain tax needs to be paid on the sale of land, buildings, and shares. It includes 19% capital gains tax and a 15.5% social charge which is 34.5% in total. In addition, there is also a supplementary tax on large gains. It comprises 5 different French tax rates depending on the amount of profit gained.
This tax applies to all buildings which have such extras as gardens, garages, private car parks etc. needs to be paid by any person who has a residential unit at his or her disposal.
The property tax on built lands is applied to properties built in France. The taxable properties consist of all permanent constructions, i.e. buildings (blocks of flats, houses, workshops, warehouses, etc.). The tax base is equal to 50% of the notional rental value of the building (i.e. the value set by the tax administration) and on land/location value. There are many exemptions and exceptions. In 2005, the product amounted to €17.73 bn.
This tax concerns people who are self-employed in France which amount is calculated by multiplying the taxable net by the rates approved by each local beneficiaries (communities and organizations) within limits set by national legislation.