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French celebrate freedom from hungry tax man

French workers can now celebrate being free from the burden of the tax man because for the rest of the year, they won’t pay another cent in taxes, an economic study claims. The Belgians however still have a bit of work to do.

French celebrate freedom from hungry tax man
French workers are now free from the tax man until the end of the year, according to an economic study. Photo: AFP

The carefully calculated study published by Brussels-based liberal think tank, the Molinari Economic Institute, this week revealed that Tuesday was the “day of fiscal liberation” meaning effectively any money they earn from now is theirs.

The annual study carried out for the whole of Europe calculates how much tax, social charges and VAT a person must pay to the state compared to what they earn on average. It then works out the equivalent of how many days a year it will take them to pay it.

For French workers the tax liberation day came on Tuesday July 28th – two days later than last year – and long after the British workers became “tax-free” on May 12th.

German workers were able to relax earlier this month (July 11th) knowing their taxes had been paid and in Sweden, which is famous for its high taxes, locals could start saving on June 23rd.

Only the Belgians are still working to satisfy the tax man’s needs. August 6th marks the day when they will finally be free of him.

In 2014, the average worker’s real tax rate reached 45.27% in the EU, but in France it stood at 57.17 percent.

According to the study a French worker must earn €233 to be able to have €100 at his disposal. The institute did acknowledge that "on paper" the French were among the highest paid in Europe, earning on average €55. 314.

The Molinari Institute, which is a liberal economic think-tank "inspired by the teachings of Milton Friedman" as one French news site described it, is highly critical of France’s taxation policies and claims various studies show that French tax payers are not getting value for money.

“France’s situation is very worrying,” says the Institute’s Cecile Philippe, who co-authored the study. “Despite calls for a tax freeze, the tax pressure has been constantly growing. In 2014, the tax burden on the average French worker has increased significantly, in contrast to what happened in Italy, the Netherlands, Belgium, Germany and the United Kingdom.

“And despite a tax grab the like of which we had not seen since 2010, public accounts still record a deficit and government debt is sky-rocketing. Once virtuous France has joined the club of Europe’s most indebted countries,” Philippe says.

In recent months however the French government has pledged to cut taxes for millions of lower income households across the country.

France’s finance minister Michel Sapin said the planned cuts would not just be “a one-off measure”.

“There is a sense of injustice among French people who have had to pay more tax while their incomes have not risen,” Sapin added.

Doubts have been raised in France however about the Institute’s method of calculating the tax freedom days.

Left wing French daily Liberation points to the fact that France’s highest rate of VAT is applied even though it varies across sectors. Certain labour taxes, that are actually paid by employers, were added onto employee’s tax calculations.

To read the study in full CLICK HERE.

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PROPERTY

Property taxes: How much will it cost to extend your French home?

Installing a swimming pool, building a garden shed, or adding a conservatory to your French home has become more expensive in 2023.

Property taxes: How much will it cost to extend your French home?

If you are planning a renovation project in 2023 you’re likely looking at rising cost for materials and labour due to inflation – but there is one other cost to consider; taxes. 

In France there is a one-off tax that has to be paid on certain building works, and the government has raised the rate for this.

The taxe d’aménagement, sometimes referred to as the garden shed tax, applies to all property development – construction, reconstruction and extension – of buildings that require planning permission or a building permit.

Garden sheds, swimming pools or extensions with a surface area of more than 5 square metres are subject to the development tax – although a 50 percent reduction is applied to the flat-rate values of certain buildings, particularly the first 100 square metres of main residences.

READ ALSO Everything you need to know about installing a swimming pool at your French property

The tax is collected by local councils, who set their own percentage rates for the tax, working off the base rate set by the government.

A decree published in the Journal Officiel set the base figures for 2023 at the following rates: 

  • €1,004 per square metre in Île-de-France (up from €929 per square metre in 2022);
  • €886 per square metre outside Île-de-France (€820 per square metre in 2022).

The flat-rate values per square metre of building space, which constitute the basis for the development tax, are revised on January 1st of each year according to the latest construction cost index published by national statistics body Insee. 

Additionally, specific rates are set for:

  • €250 per square metre  for a swimming pool (up from €200 in 2022);
  • €12 per square metre of ground-fixed solar panels (up from €10 in 2022);
  • €3,000 per wind turbine more than 12 metres high;
  • €3,000 per pitch for tents, caravans and mobile leisure homes;
  • €10,000 per pitch for a holiday chalet or bungalow.

The amount of the tax is calculated according to the following formula: 

(Taxable area multiplied by the government-set base figure) multiplied by the percentage tax rate set by the local authorities. This gives the total to be paid in cents. Bills are rounded down.

So, the tax for a 30 square metre extension in an area where the combined local and departmental tax rates total 6.25 percent would be calculated like this:

30 (the size of the development) x 886 (the base tax rate outside Ile-de-France) = 26,580

6.25 (local and departmental tax) x 26,580 = 166,125 cents, more usually expressed as €1,661. 

If the total payable is less than €1,500, you will receive a bill in the six months after planning permission was granted, with details of how to pay.

Otherwise, it is paid in two instalments, 12 months and 24 months after authorisation, with a 10 percent surcharge applied in cases of late payments.

READ ALSO The hidden costs of owning property in France

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