French taxes vs British taxes
French and English tax systems seem to differ in the sense that the different income stages do not tally as there are only 4 in the UK against 6 in France. What’s more, still talking about income there is no distinction in the UK whether one is single or married.
Here are the current tax rates for both countries:
| UK | France | ||
|---|---|---|---|
| Taxable income for 2012/2013 | Rate of tax | Taxable income 2013 | Rate of tax |
| Up to £8105 | 0% | Up to €5,963 | 0% |
| From £8105 to £42,475 | 20% | From €5,964 to €11,896 | 5.50% |
| From £42475 to £158,105 | 40% | From €11,897 to €26,420 | 14.00% |
| Beyond £158,105 | 50% | From €26,421 to €70,830 | 30.00% |
| From €70,831 to €150,000 | 41.00% | ||
| Beyond €150,000 | 45.00% | ||
For example, for someone earning £50,000/year he will receive a net income as follow:
UK: £50,000 gross, £7525 taxes, which means a net salary of £40,116 (19.77% taxes)
France: with an exchange rate of 1.16, a gross salary of €58,000, €10,098 taxes, this means a net salary of €47,902 (17.41% taxes).
There are also NI taxes applicable in both countries but it won’t change dramatically the results showing similar taxation in both countries.
Similarly to what happens in the income tables there are more CGT bands in France and the French don’t pay any tax if their CGT is below a certain amount (€50,000 profit) or used to be a main residence which is not the case for UK taxpayer.
CGT (Capital gain taxes)
| UK | France | ||
|---|---|---|---|
| Total taxable gains and income | Tax | Amount of taxable real estate capital gain | Tax |
| Up to £34,370 | 18% | Below 50,000 profit |
0% |
| From £34,371 | 28% | Above €50,000 profit | 34.5% |
| Entrepreneurs (qualifying relief) | 10% | 2% abatement per year after 5 years of ownership until 17 years of ownership | |
| trustees or personal representatives | 28% | 4% abatement per year during years 18 to 24 | |
| 5 | 8% abatement per year during years 25 to 30 | ||
| 6 | No CGT after 30 years | 0% |
French CGT tax rates are slightly more advantageous than the UK’s. It means that for people who hesitate between France and the UK to invest, should choose France as their rates are lower. Furthermore, Sextant French Properties has build a network of law and tax advisors to help its customers through their property investment process in order to pay as little taxes as possible.
Investing in French real estate might be the earning solution for those who have rather long-term views (more than 30 years) and wish to get a good return on investment.
This article aims only to give a general understanding of French taxes, for professional advice please refer to a French tax advisor, a UK solicitor or a French notaire.