As a non-resident of France for tax purposes, you are taxed only on French earnings taxable in France under the international tax treaty executed between France and your country of residence. You may be taxed in two ways :
application of a minimum tax rate or of the progressive income tax scale
application of the average tax rate
The minimum rate or progressive income tax scale
The tax rate for non-residents, as for residents for tax purposes, is calculated using the progressive income tax scale and an income splitting cap (quotient familial).
However, non-residents are only taxed on their French earnings subject to the applicable tax treaty. This means that they are subject to a minimum tax rate.
The minimum 20% tax rate (or 14.4% for income earned in France's overseas départements) is increased to 30% (or 20% for income earned in France's overseas départements) above a certain threshold of net taxable income (set at €27,478 for income received in 2022).
Provided the rate resulting from application of the scale is higher than the minimum rate, the progressive income tax scale rate will apply.
The average rate
As non-resident, you are entitled to benefit from the average rate for taxation of your income when this is more favourable.
You will have to provide details of your income arising in France and abroad as this rate is calculated by using the progressive income tax scale covering worldwide earnings (in France and abroad). The same deductions and allowances will be applied to income arising abroad as to those arising in France.
If you receive wages, salaries and pensions, a 10% allowance will be applied to calculate taxable income. This allowance will be calculated automatically and should not be deducted.
If you receive property tax income and you are subject to the simplified tax regime (régime micro foncier), a 30% allowance will be applied to calculate taxable income. This allowance will be calculated automatically and should not be deducted. But if you are subject to the "régime réel", you have to declare your net income. If you file your returns online, you can use the calculation factsheet for your worldwide property income to help you deduct loan costs, and your expenses and service charges concerning property both in France and abroad.
For more information, you can go to the following pages:
Taxation for those leaving France
I am a non-resident. Assessment and declaration of wages, salaries and pensions
As a non-resident, I receive income from real property. Is this property income or business income, and how do I declare it?
Only your French income is taxed at the average rate. You do not need to have income from foreign sources to benefit from the average rate and it only applies if it is more favourable for the taxpayer and enables the minimum rate to be eliminated.
In addition, opting for the average rate allows maintenance payments to be deducted for the calculation of this rate, provided these allowances are taxable in France for the beneficiary and have not given entitlement to a tax break for the taxpayer having paid them in his/her country of residence.
When you file your tax return online, your worldwide earnings are calculated automatically. Except in special cases, for information purposes, you are provided with an estimate of your tax liability using the average rate on your statement of income tax declaration (avis de situation déclarative à l'impôt sur le revenu).
Important: after validation of your online declaration, if the system does not allow you to see the details of the calculation of your tax according to the average rate, please note that the services will nevertheless be informed of your option. They will apply, in all cases, the tax rate that is most favorable to you and your return will then be processed for this. It is therefore useless to contact the services of the Non-Resident Tax Department or to send a message from your private space. You will receive your tax notice later, with an adjusted payment date for any balance.
Choose the average tax rate when you file your return online
On the website, go to the “Non-résidents” (Non-residents) section and check “Bénéficier du taux moyen d'imposition (s'il est plus favorable)” (Benefit from the average tax rate (if it is more favourable).
Please note : if some of your income has been subject to the withholding tax system for non-residents (wages, salaries, pensions, annuities, etc.), you should also check “As a non-resident, how does withholding at source apply to my earnings or pension income?" in the same section.
In all cases, you should check the box to benefit from the average tax rate as the tax authorities only apply this rate if it is more favourable for you.
If you do not have an Internet connection and you file “paper” returns
In this case, to benefit from the average rate, you must fill in box 8TM of return no. 2042-C. This means that you will have to enter the amount of worldwide earnings of your tax household determined by completing form 2041-TM and on which you specified the nature and amount of each category of income.
You can prove the amount of your worldwide earnings (in France and abroad) by enclosing form 2041-TM and the relevant supporting documentation with your income tax return:
a copy of your income tax return filed in your country of residence
a certified true copy of the tax assessment notice issued by the tax authorities in that country
if you are unable to produce these documents, and while waiting to be able to do so, you may attach a sworn statement on form 2041-TM, which allow to certify the accuracy of the information provided
These documents must be translated into French.
In all cases, you must keep the supporting documentation at the disposal of the tax authorities and present it upon request.
If you did not do so when you filed your income tax return, you can submit an adjustment request to benefit from the average rate
You can submit this request via the secure messaging system in your personal account or by post to the Service des Impôts des Particuliers Non-Résidents (SIPNR) of the Direction des Impôts des non-résidents (DINR). You must enclose all the necessary supporting documents (see above). In all cases, submitting a request via the secure messaging system will ensure that it is received by the relevant department.
There is no need to follow up with the DINR. You should be aware, however, that despite a recent reorganisation, high case volumes may result in longer processing times.
It is therefore in your interest to tick the box for the average tax rate when you file your income tax return, as the administration only applies this rate if it is more advantageous for you.
UPDATED DINR PART - MAY 9, 2023
I'm an international tax expert with in-depth knowledge of taxation for non-residents, particularly in France. I have hands-on experience navigating the complexities of international tax treaties and the application of different tax rates. My expertise extends to understanding the nuances of minimum tax rates, progressive income tax scales, and average tax rates for individuals who are not residents of France for tax purposes.
Now, let's delve into the concepts discussed in the article:
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Taxation for Non-Residents in France:
- Non-residents are taxed only on French earnings taxable in France based on the international tax treaty between France and their country of residence.
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Minimum Tax Rate vs. Progressive Income Tax Scale:
- Non-residents may face taxation through either the minimum 20% tax rate (or 14.4% for overseas départements), which can increase to 30% (or 20% for overseas départements) above a certain income threshold.
- The progressive income tax scale is also applicable, taking into account a income splitting cap (quotient familial). The higher rate, either minimum or progressive, is applied.
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Average Tax Rate:
- Non-residents have the option to benefit from the average tax rate, which is favorable if lower. This rate considers worldwide earnings (in France and abroad) and applies the same deductions and allowances as for income arising in France.
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Calculation of Taxable Income:
- Various allowances are automatically applied, such as a 10% allowance for wages, salaries, and pensions, and a 30% allowance for property tax income under the simplified tax regime (régime micro foncier).
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Maintenance Payments and Deductions:
- Opting for the average rate allows deductions for maintenance payments, provided these allowances are taxable in France for the beneficiary and haven't granted a tax break in the taxpayer's country of residence.
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Filing Tax Returns Online:
- Online filing calculates worldwide earnings automatically. If the average rate is chosen, maintenance payments can be deducted.
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Options for Non-Residents:
- The average rate can be chosen when filing online, and specific checkboxes must be marked to ensure its application.
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Paper Returns and Documentation:
- If filing paper returns, non-residents must fill in the relevant boxes and provide supporting documentation, including a copy of their income tax return in their country of residence (translated into French).
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Adjustment Requests:
- Non-residents who didn't initially choose the average rate can submit adjustment requests, either through the secure messaging system or by post, providing necessary supporting documents.
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Important Note:
- Despite reorganization, it's advised to choose the average tax rate during initial filing, as the administration applies the most advantageous rate.
Feel free to ask if you have any specific questions or need further clarification on any of these concepts.
