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WORKING IN FRANCE

France extends work-from-home tax breaks

The French government has renewed several measures aimed at people who have been working from home over the past two years.

France extends work-from-home tax breaks
Photo: Paico Oficial / Unsplash

In 2020 and 2021, many people who hadn’t previously worked from home began to do so, as for large parts of those two years it was either compulsory or recommended. 

And if you incurred extra expenses during this time, there are a number of tax breaks and allowances that can be claimed when you come to do your tax declaration in April.

READ ALSO Who has to make a tax declaration in France?

Measures were introduced last year to help cover certain costs – such as:

  • communication costs (internet subscriptions etc.);
  • supplies and printed matter (ink cartridges, paper etc);
  • costs related to the use of private premises (electricity, water, heating etc);
  • travel expenses between home and place of work, with justification of the need for travel between home and place of work;
  • mobile phone costs (subscription, communication and mobile phone acquisition costs);
  • purchase of furniture and computer equipment for the needs of the professional activity.

These allowances have been rolled over for employees who worked from home in 2021, and who will soon declare their 2021 income for tax purposes.

The allowances paid by the employer to cover the costs of working from home, which may take the form of lump-sum reimbursements or even reimbursement of actual expenses, are exempt from income tax, up to a maximum of €2.50 per day, €55 per month and €580 per year.

The deduction of professional work-from-home expenses is different, depending on whether an employee opts for the actual costs and whether an allowance covering the costs of teleworking is already paid by the employer.

For those who have incurred such costs but who have not received any allowance from their employer, a fixed 10 percent abatement is calculated on salaries listed on income tax declarations.

If you choose to deduct actual expenses, you can deduct all professional expenses (related to home-working or not) from your income tax, but you must be able to justify them.

Those who work from home part of the week can also benefit from the allowance up to a maximum of €10 a month for one day a week’s teleworking, and €20 per month for two days.

When you receive an allowance for remote-work expenses, it is presumed to be used in accordance with its purpose up to €10 per month for an employee performing one day of remote-work from home per week. This flat-rate allowance increases to €20 per month for an employee remote-working two days per week.

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TAX DECLARATION

Late fees, fines and charges: What you risk by missing French tax deadlines

The deadlines for the annual French tax declaration are upon us, but what are the penalties if you either miss the deadline or fail to file your return at all? We take a look at the sanctions.

Late fees, fines and charges: What you risk by missing French tax deadlines

The annual Déclaration des revenues – income tax declaration – involves virtually everyone in France filling out a form giving detailed information on their income to French tax authorities.

If you live in France, it’s almost certain that you will have to complete this – even if you’re a salaried employee and your tax has already been deducted at source, or if all your income comes from outside France (eg a pension received from the UK or USA).

There are only a very few exemptions to the requirement to fill out the tax declaration and they are listed here

Declarations for the 2021 tax year opened in April 2022 and the deadline is either late May or early June, depending on where you live – find the full calendar here

But what happens if you miss the deadline?

For most people there is a staggered system of late charges.

If you are less than 30 days late your overall tax bill can be increased by up to a maximum of 10 percent.

Once you receive a notice of late payment, the overall bill can increase by up to 20 percent, or 40 percent if you have still not filed within 30 days of receiving the later payment notice.

You will also be charged interest on late payments.

What if I don’t pay income tax in France?

If you have no taxable income in France – for example your only income is a pension from another country – then you still have to fill in the declaration.

If you file late the increases cannot be applied, since your tax bill is €0, but you can instead be liable for a late fee of €150.

What if I have exceptional circumstances?

If you know that you will not be able to file in time, you can ask the tax office for a remise gracieuse (remission) in order to avoid late fees and penalties.

You will need to outline your reasons for not being able to file in time and while there isn’t a list of accepted excuses, the reason must be exceptional circumstances such as serious illness or the death or a loved one.

If you have previously missed deadlines, the tax office will be less likely to accept your request.

The request should be made by June 29th either in person at the tax office or through the messaging system in your online tax page.

What if you don’t declare everything?

If you have not declared income which is subsequently discovered by authorities, the increase in your overall tax bill can be up to 80 percent – the maximum penalty is usually reserved for people who have deliberately tried to hide parts of their income.

We have a full guide to what you need to declare HERE, but the basic rule of thumb is that you need to declare everything, even if it is not taxable in France, eg income from a rental property in another country.

France has dual taxation agreements with countries including the UK and USA so if you have already paid tax on income in another country you won’t need to pay more tax in France – but you still need to declare it.

What about foreign bank accounts?

Another item that frequently catches out foreigners in France is overseas bank accounts.

If you have any non-French bank accounts, you need to list them on your tax declaration, even if they are dormant or only have a very small amount of money in them.

This also applies to any foreign investment schemes you have, such as life insurance policies. 

The penalty for not listing accounts is between €1,500 and €10,000 and that applies for each account you fail to declare. 

What if I made a mistake on my declaration?

In 2018 France formally enshrined the ‘right to make mistakes’, giving people the right to go back and correct their declarations without attracting a penalty.

So if you realise you have missed something off or added the wrong info you can either go back into your online declaration and correct it or, if you file on paper, visit your local tax office.

However the ‘right to make a mistake’ does not extend to late filing.

What if I didn’t make a declaration?

The French tax system is often confusing for foreigners, with many people wrongly assuming that if they are not liable for tax in France then they don’t need to fill in the declaration.

For people who persist in not making the declaration, even after the arrival of the notice of default, tax authorities can make an estimate, based on earnings and lifestyle, and present the bill.

However for new arrivals in France it’s likely that they will not be registered with the tax office and will therefore never receive a notice. 

In this instance it’s always better to come clean – if you have made a genuine mistake and you approach the tax office  (rather than waiting for them to watch up with you) you will usually be dealt with quite leniently. 

How can I get help?

If you’re struggling with the system, there are ways to get help.

The tax office has an English language information page here, and a dedicated helpline for internationals on + 33 1 72 95 20 42.

You can also visit your local tax office, every town has one and you can simply turn up without appointment and ask for help (although if the office is small and your query is complicated you may need to make an appointment for the full discussion). Surprising as it may sound, employees at the tax office are generally pretty friendly and helpful and can guide you through the forms you need to fill in.

If your tax affairs are complicated and/or your French is at beginner level, it may be better to hire an accountant to ensure that everything is in order. You can find some tips on getting professional help HERE.

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