Understanding the French tax system is essential for anyone moving to France. This guide explains how tax residency works, how income tax is calculated through the foyer fiscal, the PFU flat tax on investments and what expats need to know to stay compliant.
France is still one of the most popular destinations for British and international expats, but its tax system is different to other countries, even if some of the terminology sounds the same.
Understanding how the French tax system works is essential before moving or spending extended periods there.
This article is for general information only and should not be considered tax advice. Tax rules change and individual circumstances vary. If you are moving to France or already living there, professional advice should be sought before making financial or tax decisions. You can seek specialist advice by requesting an introduction to a trusted French tax specialist from our network.
1 January to 31 December.
Typically May to early June of the following year, depending on filing method.
You are generally considered tax resident if France is your main home, you spend most of the year there, your principal professional activity is in France, or France is the centre of your economic interests.
French tax residents tend to be taxed on their worldwide income, but tax treaties are used to avoid double taxation.
Non-residents are usually taxed only on French-source income.
Income tax is calculated based on household income using a system called the foyer fiscal.
Many investment gains and dividends are taxed at a flat rate of 30% (the PFU), which includes income tax and social charges. This may rise to 31.4% depending on the type of income.
Investment income is generally subject to social charges of around 17.2%.
Typically 20% up to around €29,579 and 30% above that level.
Taxed separately with potential exemptions depending on ownership period and residency status.
France has tax treaties with many countries, including the UK and US, to prevent the same income being taxed twice.
France determines tax residency based on your circumstances rather than your personal preference.
You are generally considered tax resident in France if any of the following apply:
Only one of these conditions needs to apply for French tax residency to arise.
If two countries could both consider you resident, tax treaties between those countries determine where you are treated as resident for tax purposes.
Unlike the UK, France calculates income tax based on the household rather than the individual.
This system is known as the foyer fiscal.
In many countries individuals are taxed separately. In France, certain family members are grouped together and their income is assessed collectively.
This tax household typically includes:
Married couples and PACS partners normally submit a single joint tax return covering the income of the household.
France uses a system called the quotient familial.
Instead of taxing total household income directly, the system divides that income into a number of household shares based on family composition. Tax rates are then applied to the income per share.
For example, a couple with two children may have three household shares. Their total income is divided by three before applying the progressive income tax scale. The resulting tax is then multiplied back up.
Because the progressive tax bands apply to a lower income figure, this system can reduce the overall tax burden for larger households.
Because France taxes the household rather than individuals, family structure can have a significant impact on tax outcomes.
For example, the income of one spouse may affect the tax rate applied to the other spouse, and the number of dependent children can influence the number of household shares used in the calculation.
Understanding how your household will be treated under the foyer fiscal system can therefore make a meaningful difference to your expected tax position when moving to France.
French tax residents are generally taxed on worldwide income, which means income earned outside France must usually be declared.
For income earned in 2025 and declared in 2026, the French progressive income tax scale applies approximately as follows
|
Income tax bands |
French tax rate |
|
Up to €11,497 |
0% |
|
€11,498 to €29,315 |
11% |
|
€29,316 to €83,823 |
30% |
|
€83,824 to €180,294 |
41% |
|
€180,294 and above |
45% |
These thresholds apply per household share, which means the effective tax rate depends heavily on family circumstances.
High earners may also face an additional surtax on high income.
In addition to income tax, many forms of income are subject to French social charges, known as prélèvements sociaux.
These charges help fund the French social security and healthcare system.
The most common rate applied to investment income is 18.6%, although employment income and pensions can be subject to different rates depending on circumstances.
For many expats these charges represent one of the largest differences compared with other tax systems.
France applies a flat tax system to many types of investment income known as the Prélèvement Forfaitaire Unique (PFU). It is sometimes referred to as the “flat tax”.
Introduced in 2018, the PFU simplified the taxation of many financial investments by applying a single combined tax rate rather than the progressive income tax scale.
The PFU rate is 31.4% in total, made up of:
This rate generally applies regardless of the taxpayer’s income level.
The PFU commonly applies to several types of investment income, including:
For many investors this means financial investment income is taxed separately from employment income under a fixed rate rather than the progressive income tax system.
Although the PFU is the default approach, taxpayers can choose to have their investment income taxed under the standard progressive income tax scale instead.
This option applies to all eligible investment income for the year rather than being selected individually for each investment.
In some situations, particularly where overall income is relatively low, the progressive tax system may result in a lower total tax liability.
An important element of the PFU is that it already includes French social charges.
These social charges, currently 17.2%, apply to most investment income even when income tax is calculated differently.
For many expats the social charge element can be unexpected, particularly if they are used to tax systems where investment income is not subject to additional social contributions.
For people moving to France, the PFU can significantly affect how investment portfolios are taxed.
Dividends, interest and capital gains from international investments may all fall within this regime once you become French tax resident.
Understanding how the PFU interacts with foreign investment income, tax treaties and portfolio structures is therefore an important part of financial planning when relocating to France.
France no longer applies a general wealth tax on financial assets. However, a tax known as Impôt sur la Fortune Immobilière (IFI) may apply to individuals with French real estate assets exceeding €1.3 million.
IFI applies to property holdings rather than financial investments and can affect both residents and non-residents depending on the location of the assets.
If you are not tax resident in France, you are usually taxed only on French-source income.
Examples include:
Non-residents are typically subject to a minimum income tax rate of 20%, increasing to 30% above approximately €29,579 of taxable income.
However if your worldwide income would result in a lower effective tax rate, you may be able to apply that lower rate instead.
If you move to France part way through the year, your tax position may effectively be split between resident and non-resident periods.
Income earned before arrival may remain taxable in your previous country of residence, while income received after becoming resident may fall within the French tax system.
Because the transition year can create complications, it is often worth planning the timing of relocation carefully.
France offers a special tax regime designed to attract internationally recruited professionals.
Under the impatriate tax regime, individuals moving to France for work who have not been tax resident there in the previous five years may benefit from partial exemptions on certain income for a limited period.
The regime can reduce tax on employment income and some foreign income streams, but strict eligibility conditions apply.
France has tax treaties with many countries, including the UK, designed to prevent income being taxed twice.
These agreements determine:
Understanding the relevant tax treaty is an important part of planning an international move.
The following French tax checklist highlights some of the key areas expats should review.
Confirm your tax residency position: Understand when you are likely to become tax resident in France and how the rules interact with residency in another country. This will determine whether France taxes your worldwide income or only French-source income.
Register with the French tax authorities: New residents must register with the French tax administration and obtain a tax identification number. Your first tax return is usually filed in the year following arrival.
Understand the household taxation system: France taxes income at the household level through the foyer fiscal. Ensure you understand who is included in your tax household and how the number of household shares may affect your tax calculation.
Declare worldwide income once resident: French residents generally need to declare income from all sources, including foreign employment income, pensions, investment income and overseas rental income.
Review investment taxation: Investment income may fall within the Prélèvement Forfaitaire Unique (PFU) flat tax regime. It is important to understand how dividends, interest and capital gains from international investments will be taxed once you are resident in France.
Consider social charges: Many types of income are subject to French social charges, which can significantly increase the overall tax burden compared with some other jurisdictions.
Report foreign bank accounts: French residents are required to declare foreign bank accounts and certain financial assets held outside France. Failure to report these accounts can lead to significant penalties.
Review pension taxation: Different types of pensions may be taxed differently in France depending on tax treaties and how the pension is structured.
Check property ownership structures: Rental income from property, whether in France or overseas, may need to be declared once you are French tax resident.
French tax filing deadlines: The French tax year runs from 1 January to 31 December, with tax returns usually filed between April and June the following year depending on how the return is submitted.
Double taxation agreements: Tax treaties may determine which country has the primary right to tax certain types of income. Understanding how these agreements apply can help avoid double taxation.
The French tax system can be complex, particularly for expats with cross-border income or assets.
Key areas that often require planning include:
Speaking with advisers who understand international taxation can help ensure you remain compliant while structuring your finances efficiently.
If you are moving abroad or already living in France and want help understanding the tax implications, Experts for Expats can introduce you to experienced cross-border tax advisers who specialise in expat situations.
