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Taxation of Rental Income in France

Rental income translates to “Revenus Fonciers”. It must be declared to the French tax authorities. However, you may opt for a tax regime or another (whichever is the most interesting for you).

So what are the different tax regimes? What are the deductible costs? How to declare real estate income?

Last Update: April 2020

“Revenus Fonciers” stands for Rental Income, Property Income

TacoTax.fr

Investing Into A Rental Property

Buying a rental property can be interesting because:

However, you may be afraid of the French taxes. Don’t be, our guide is here to help.

Taxation Of Rental Income

The French Tax Authorities

If you invest in a property in France, you will pay rental income taxes in France. Indeed, rental income is always taxed in the country where the property is situated.

In addition, you will need to declare the income to the tax authority in your home country. However in many cases, you will not endure double taxation (bilateral agreements).

How to Declare Your Income?

Each year, in April/May, you must declare your property income (TacoTax). All revenues, including rental income, must be declared filling in the form Cerfa n°2042. Whatever the tax regime you chose, this first step is mandatory for all landlords. Depending on which tax regime you opt for, you may fill in complementary tax forms, such as the Cerfa n°2044 (Régime Réel, see below).

Tax Return Dates

The closing date by which the tax declaration must be submitted to the French tax authority varies by department. However generally, consider mid-May to end of May. According to TacoTax, thetax return dates are:

  • 21 May for departments 01 to 19
  • 28 May for departments 20 to 49
  • 4 June for departments 50 to 976

How Much Tax?

Régime Micro-Foncier, or Régime Réel?

How much tax you will pay on rental income, depends on a series of factors. The tax authority’s website in France is impots.gouv.fr. Subject to certain conditions, property income must be declared either under the “régime micro-foncier” or under the “régime réel” (actual regime).

Questions? Contact the Tax Authority on impôts.gouv.fr or call them : + 33 (0)8 09 401 401

Amarris Immo

Getting Help to Declare Rental Income

As it can be a bit complicated to opt for the right fiscal regime without professional advice, I decided to work with Amarris Immo, a firm with accountants who are experts in real estate.

Zoom on “Loueur Meublé Non Professionnel” – LMNP

Since 2017, I work with the French accounting firm Amarris Immo to declare the rental income I get from a French property I own. I declare these revenues under the “régime réel en LMNP”. Benefit? Under this tax regime, you can:

  • Deduct expenses: maintenance, repair, management costs, mortgage interest
  • Deduct the amortization of your property and of your furniture

As a result, your taxable income is significantly lowered. It can bring down your taxable revenues to zero, or close to zero, during a period of five to ten years. This is especially true if you renovate the property, as renovation costs create a deficit, hence increasing your costs, and lowering your taxable net income.

Here is a simulation I did using a simulator from another accounting firm, INELYS:

  • Property price €176.000 (€168K + furnitures)
  • Yearly rental income: €12.000
  • Yearly costs: €1.200
  • Loan: €165.000 for 25 years, at 1.55% interest rate
  • Under LMNP, two possibilities: “micro BIC simplifié” or “régime réel BIC”
  • Rental income taxes per year = €1.086 per year or €788 per year, depending on the system used

Bonus – Hiring People in France

France VS Switzerland: Costs for Employer and Employee

Let’s take the example of an employee who earns CHF 10,000 (€ 8,920) in Switzerland and considers moving to France.

Cost for the Employer in Switzerland, for a Gross Salary of CHF 10,000 per month

For a swiss gross salary of CHF 10,000 per month (€ 8,920), the costs for the employer and employee are:

  • Close to 30% for the employer. So the employer will pay in total 13,000 CHF per month (€ 11,500)
  • Close to 30% for the employee when including income taxes. So the employee will earn 7,000 CHF after tax, (€6,191)
  • However, this still does not include the health costs: count on average 400CHF per month (€353) for a good health coverage.
  • 13,000 CHF of costs for the employer brings 6,400 CHF (€5,660) in net revenues to the employee (post income tax, and health insurance). The difference is 49,2%.

Cost for the Employer in France, for a Gross Salary of CHF 10,000 per month (€ 8,920)

Now, let’s consider that this employee considers moving to France. Considering that we keep the same total monthly costs for the employer of € 11,500 (13,000 CHF), we now have:

  • Gross salary becomes € 8,027 (CHF 9,076)
  • Net salary becomes € 6,376 (CHF 7,209 )
  • Net salary after tax becomes € 5,051 (CHF 5,711)
  • Bottom line: CHF 13,000 (€ 11,500) of total costs for the employer brings CHF 5,711 (€5,050) in net revenues to the employee (post income tax). The difference is 56%.

Sources: Talent.com‘s tax calculator, and URSSAF

Conclusion: the same employee, who moves to France instead of staying in Switzerland, will earn 689 CHF (€609) less per month, or CHF 8,268 (€ 7,311) per year, for the same total costs for the employer.

Therefore, it is less advantageous for the employee to live in France, than in Switzerland, other things equal. Yet, this doesn’t include the difference in living costs from a country to another.

Employing French people from Abroad

Companies that don’t have a branch in France can still hire people in France. Simply, they need to:

Centre national firmes étrangères- CNFE
67945 Strasbourg Cedex 9
France