Taxes in France: An Overview of French Taxes in 2025

Understanding France’s tax system for expats and retirees.|©Declan Alyward

Understanding French taxes doesn’t have to be tricky if you’re moving to the country for retirement or if you don’t plan to seek employment—which is, in and of itself, a difficult route. France has a tax treaty with the US. This ensures that you will not be taxed twice on the same income. This is true of other countries in Europe as well. France cannot “double tax” you on monies already paid to the US government— i.e., any type of passive income, including social security benefits or pensions.

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For investment accounts in the US, you could be assessed on capital gains, but normally, you’ll receive a tax credit for any amount paid to Uncle Sam, and that credit of taxes paid would be applied to any liabilities in France. For investments and investment properties, it’s always a good idea to contact a tax professional.

Otherwise, you need to be a salaried employee, have your own business, or be receiving income from French sources to be taxed by the French government. Say you’ve bought a French property to use as a vacation home and want to rent it out at times when you’re not there. If so, you’ll be liable for French taxes on that income.

The question of whether you pay US taxes or French taxes on your worldwide income comes down to which country you make your fiscal domicile—that is, where you are resident for tax purposes. If you live for six months or more each year in France, then France is your fiscal domicile, and you must pay taxes to the French government on your active income in the US and/or France. Again, pensions and social security from the US cannot be double-taxed even if you are living full-time in France.

Remember, living (or earning income) outside the US does not relieve a US citizen of the responsibility for filing tax returns. To make sure your tax affairs are arranged to your best advantage, you should consult an attorney and/or an international tax accountant. Ideally, you should seek advice both in the country where you are a citizen and in France.

The French Taxation System

Income tax is known as the IRPP (Impôt sur le Revenu des Personnes Physiques). In a nutshell, income of all kinds and from all sources received by any resident in France is taxable in France. So, too, is income received by non-residents from a French source. This general rule is subject to the proviso of international tax treaties, of which France has signed more than 100. This prevents the double taxation of expats.

According to Invest in France, an agency of the French government, fiscal residence is defined based on the following criteria—and applies if you are a resident for 183 days or more, not necessarily consecutively:

Habitual place of residence of the person and their family.
Principal place of residence in cases of residence in two or more countries.
Main place of occupation where domicile and principal place of residence are in two or more countries.
The focus of economic interest in the case of dual residence.
Failing clear application of another criterion, citizenship.

French taxes aren’t low, particularly if you’re single and a high earner. The income of French residents is subject to progressive bands of taxation, ranging from nil to a punitive rate of 45% for taxable income in excess of €151,261 ($158,824). Income that ranges from €250,000 ($262,500) to €500,000 ($525,000) is taxed an extra 3% and a further 4% for over €500,000 ($525,000). Taxation is calculated on the total income of the fiscal household, which includes income from a spouse, children younger than 18, and, in some cases, adult children, too. Almost half of French households do not pay any tax at all—although most still pay for social charges.

Please keep in mind that this section is for salaried employees or entrepreneurs in France. If you are sent by a US employer, open a business, or manage to secure a work visa, these tax conditions would then be applicable.

You are given various personal allowances and credits to deduct from gross income before you start paying tax. Regarding personal allowances, the French use a method under which an individual’s taxable income is divided by the number of allowances to which he/she is entitled. The number of allowances reflects the composition of the family: A single person receives one allowance, but a married couple with two children receives three allowances. Other credits by which you can reduce taxation include contributions to private pension plans, personal insurance premiums, and charitable donations.

Dramatic changes were introduced to income tax collection from January 1, 2019, after being flagged several years ago and delayed until 2019. This system has been in effect for more than one year and will continue into 2024 and beyond.

The principal difference is that income tax will be paid at source instead of in arrears, with employers deducting income tax from salary. For income earned prior to January 1, 2019, the old system of payment in arrears applies.

Homeowners will automatically receive tax bills relating to taxe d’habitation (habitation tax) and taxe foncière (property tax). If you are renting long term, you will probably be liable for the taxe d’habitation, which is paid by the occupant of the premises on January 1, even if you vacate the property on January 2. The good news is that this tax is being phased out and has already disappeared in some areas.

If you’re an expatriate employee with an overseas company, it is likely that you will receive advice from a professional accounting firm. Otherwise, make inquiries at your nearest tax center (centre des impôts) or at your local town hall. The US Embassy provides a list of English-speaking tax accountants.