Looking for some ideas to pay less taxes while living in France? Not knowing if you are missing some opportunities to pay less? How to optimize your taxes? Are you paying more than you should?
We will share some simple & common ideas in this blog that has helped us (as expats living in France) to save some money in the past. Let’s start…
Table of Contents
Different tax advantage types in France
As explained in our blog Key points about income tax in France, there are different advantages when it comes to taxes. It can translate as ”Deduction’, ‘Reduction’ or ‘credit’ on your taxes:
- Deduction : Income – €. It means you deduct from your income the tax advantage.
- Reduction: Income tax – €. Once your income tax is calculated, you can reduce this amount.
- Credit = Income tax – € but surplus reimbursed if credit > Income tax. Similar to Reduction but you can even get paid by the government.
Notice that in France you have a limit of 10 000€ per year per home, that you can use to deduct from your total taxable revenue (so called ‘niche fiscale’. This applies for most of the advantage types, with some exceptions.
Idea #1: Child daycare
If you have your child of less than 6 years old in a daycare you can benefit of a 50% tax credit (limited up to 3500€) per child. It means a max. of 1750€ per child.
The conditions are:
– Having your child in a daycare such as public ‘creche’, or ‘assistant maternales’, ‘garderies’, ‘centres des loisirs’
– Your child should be registered as for the 1st of January of the year you want to claim the tax advantage (ex: if 1st Jan 2023, then you claim the tax credit for 2023 income tax return).
– You need to exclude from the tax credit any support from your company.
– If you are divorced, then you can claim only half of the tax benefits.
Note: We register this amount to credit in boxes 7GA, 7GB, 7GC (2042 template). This is not a tax advice, please look for professional service when needed.
Idea #2: Services at home
If you have paid any professional services at home such as cleaning, maintenance, trainings (music, sports), gardener, tax advisor, babysitting, etc… you can benefit of 50% reduction limited to 12000€ per couple which translate into max. 6000€ of savings.
You could extend the limit up to 15 000€ under certain conditions. Mainly if in your home there are childs, people older than 65 years old. There are as well limits to each expense type (ex: max. 5000€ for gardening, etc.). You can check more details on the official french government site.
Note: We register this amount to deduct in boxes 7DB and 7DR (for the amounts of any aide such as ‘APA, PCH, CESU préfinancé’). This is not a tax advice, please look for professional service when needed.
Idea #3: Donations
There are 2 types of institutions and charity organizations that you can reduce your taxes.
1) If purpose of the organization receiving the donation is to help, assist people directly, you can benefit of 75% reduction up to 1000€ max. which translates into 750€ max savings. It does not affect your 10 000€ total limit of deductions per year. Some popular organizations helping people: Restos du coeur, UNICEF, etc.
2) For other kind of charity organizations, then 66% deduction up to 20% of taxable income. Some examples could be donations to your religion, or health research institutions such as ‘Ligue contre le cancer‘, etc.
It is important to check that the organization receiving the donations can deliver to you a receipt or ‘reçu fiscale’.
We register this amount to deduct in boxes 7UF and 7UD of our income tax file. This is not a tax advice, please look for professional service when needed.
Idea #4: Investing in small and medium business
If you invest your cash in a small and medium business (so called PME) you can benefits of a deduction up to 25% up to a 50 000€ investment. If you are in couple, the limit goes up to 100 000€.
There are several conditions to respect in order to get this benefits. Some are related to the nature of the company (created less than 7 years, having more than 2 employees but less of 250, revenue no more than 50M€…), and some to the investment itself like it should be for at least 5 years, not through holdings but direct ownership, etc.
You would need to complete an additional tax template 2042RICI, « Autres réductions et crédits d’impôt ».
We highly recommend to read the government site for more details.
Idea #5: Deduct your stock capital losses
It feels bad to lose money when investing in the stock market but we have a little good news for you to relief a bit your pain 😉
The total net loss amount ‘moins value’ can be included within your tax return file so you can carry it forward and deduct it from other earnings that you may have in future years. These carried-forward losses can be used to offset capital gains up to 10 years.
This applies to standard brokerage accounts and not to tax advantaged accounts (like PEA, AV, PER), which has different rules.
Important notes:
- Keep Records: Maintain detailed records of all your stock transactions, including purchase prices, sale prices, dates, and any related costs.
- Use the Correct Forms: When filing your tax return, ensure you complete all necessary sections and forms related to capital gains and losses. You will need to use forms 2042-C, box 3VH and 2074 form for detailed capital gains calculations (if required).
- Don’t mix revenue types: You can only deduct gains from the same nature (stocks). For example: It means you can not deduct stock capital loss from a real estate one.
- Consult a Tax Advisor: French tax laws can be complex, and individual circumstances vary. Consulting with a tax advisor can help ensure you are correctly applying the rules and maximizing your potential deductions.
By following these guidelines, you can effectively manage your stock market losses to minimize your tax liability in France.
Idea #6: Deduct the money you send to your parents
One more idea that could be interesting for expats and foreigners living in France, would be about the remittance sent to your parents in your home country. To be able to apply to this benefit you would need to demonstrate that:
– your parents are financially dependant on you (so called ‘pension alimentaire’)
– the money has been sent and received directly by your parents (intermediaries not allowed)
– the money was spent to pay basic services (food, health care, etc.)
There are several specific conditions to fulfill. The box to fill in your tax return will be 6QR. We invite you to read more here (This is not a tax advice, please look for professional service when needed).
Idea #7: Support French overseas territory development
The Loi Lodeom, (formerly known as Loi Girardin), is a French tax incentive scheme designed to encourage investment in the overseas territories of France (DOM-TOM), particularly in sectors such as housing, industry, and renewable energy.
The primary benefit of the Loi Girardin is the substantial tax reduction it offers to individuals and businesses that invest in eligible projects in the overseas territories. The one-time tax reduction can be significant (up to 120%), sometimes amounting to more than the actual investment made, depending on the type of investment and the specific conditions met.
We strongly recommend to contact a Financial advisor, as selecting the right company is crucial to secure the tax reduction.
Other ideas to pay less taxes in France
There are many more possibilities to get tax benefits such as Investing in forests, buying a new property (Pinel), Subscription to your labor union, buying electrical car charges for your home, renovating old properties (Denormandie), etc. A Tax financial advisor could recommend the best-fit for your personal situation.
Final thoughts
Do not forget to keep available in your archives for at least 5 years documents proving your claimed tax benefit such as donation receipts, investments documents, invoices, etc. You will need to prove to the Tax authorities any claimed benefit in case of control.
Avoid making investment decision considering only the tax advantages. If you get any promotion, advertisement, commercial proposal that makes lot of emphasis on the tax advantage, be doubtful and check first the fundamentals of the investment itself.
We hope that now you have some ideas and simple ways to pay less taxes. Of course, we have listed here those that applies for most of us living in France. We do not intend to be tax adviser, and we are just sharing our own experience and knowledge.
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Bon chance!
Disclaimer
Please remember that we are neither a financial nor tax advisors. We are just sharing our best understanding based in our own experience. This blog is for educational purposes only. Do not make investment decisions solely based on what you read in this blog. What works for us, may not for you. Do your own research and look for professional service if required. Read our full disclaimer in the ‘about’ page.
