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TAXES

Why is the French taxman sending you money today?

Some 9 million residents in France will receive a bonus into their bank account from the French taxman on Tuesday, but you'd be wise not to spend it all at once. We explain all.

Why is the French taxman sending you money today?
Photo: AFP

What's the bonus?

The “bonus” that you might receive in your bank accounts on Tuesday is actually a tax credit and is linked to the long-awaited government income tax reform which will see salaries taxed at the source for the first time this year.

Those who didn't hand over their bank details to the tax man will be sent a cheque.

Explain more please

Many taxpayers in France receive tax credits for various reasons, whether linked to the cost of childcare, making environmentally friendly renovations to their homes, employing cleaners or home carers or making donations to charities.
 
Up until now these credits are included in the annual tax declarations which the tax man takes into account before sending out the final tax bill.
 
But under the new income tax plan the government plans to pay out advances to those eligible for credits in January 2019.
 
The credits paid out are based on your 2018 tax declaration for the year 2017. So if you only employed your cleaner or began paying childcare in 2018 you'll have to declare it in your May tax declaration. In this case you won't receive any advance on your tax credits, but will have them paid in a lump sum later in the year.
 
So those eligible taxpayers will actually get money into their account – roughly the equivalent of 60 percent of the tax credit. The rest will be paid in later in the year after your 2019 tax declaration has been sent off and studied.
 
In all some 8.8 million households in France will benefit from the advance on their tax credits which will total around €5.5 billion.
 
Note that the advances are based on tax credits for charitable donations, money spent on childcare, employing cleaners or gardeners or dependency costs in retirement or care homes, donating money to trade unions or for investments made in rental property.
 
The advance does include tax credits for eco-friendly home renovations you may have carried out last year as these will be paid out later in the year.
 
So how much could I get?
 
Obviously it all depends on your personal situation and the level of tax credits you receive.
 
According to France's finance ministry at Bercy the average amount paid out to tax payers will be €627.
 
The money should appear in your bank from the source: CREDIMPOT ALASOURCE and it will appear on January 15th.
 
So why can't I just spend it?
 
Basically because the amount on tax credits transferred to your bank account may actually be too much.
 
Remember the figure is based on your financial earnings and spends in 2017 that were declared in your 2018 tax declaration. Maybe your situation has changed and come May, when you fill out out tax declaration, it turns out you stopped giving money to charity and no longer spend it on child care. 
 
In which case if the government has paid you too much in January 2019 then you'll have to pay it back at a later date.

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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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