What tax do you pay on rental income in France?
What tax will a UK resident renting out a French property have to pay?
If you are a UK tax resident owning and renting a property in France, you may be subject to income tax in both countries.
Below we explore the different French and UK tax liabilities that someone who is renting a French property may have to pay.
Do UK residents need to pay French income tax if renting out a property in France?
As a non-resident in France, income deriving from the renting of your property in France will be subject to French income tax with a minimum rate of 20% up to €26,070 (in 2022) and of 30% above this threshold. Higher rates may apply for those with more important French income.
It is possible to opt for French resident progressive rates of income tax if more favourable. In such case, your worldwide income is taken into account to establish your average tax rate (taux effectif) – and this rate is then applied to your French income only in order to assess your tax liability in France.
What are the French social charges, and will they apply to my French rental income?
French social charges (prélèvements sociaux) will also apply to your rental income. The normal rate is 17.2% – however, you may qualify for an exemption under the post-Brexit EU-UK agreement if you are already subject to social charges in the UK. If so, your French-derived income will still bear a reduced solidarity tax at a rate of 7.5%.
How is my tax base calculated?
The French income tax rate as well as social charges will be levied on the net rental income. You can deduct either the costs incurred in the letting of the property or a fixed allowance, whichever is more tax efficient. The calculation of your tax base will hence very much vary depending on your situation. We strongly recommend you seek professional advice.
As a UK tax resident, will my French property income also be liable to UK income tax?
It is possible that you will need to pay both French and UK income tax on your rental income from any property you own in France. Particular attention must be paid to the tax base, which will be determined by reference to the UK domestic rules (deduction of actual costs incurred by the letting of the property) and which can therefore differ from the French tax base. In other words, the net taxable income will be different in France and the UK. Difficulties may also arise due to the tax year difference between the two countries. We therefore strongly advise that you speak to an expert who can help you to understand your French and UK tax liabilities.
How can I avoid paying double taxation on my French property rental?
To avoid double taxation on income tax, you may be able to offset tax paid in France against the UK liability under the UK/France double tax treaty. If the UK tax is higher, you will have to pay the difference.
Please note that social charges are not deductible under the UK/France double tax treaty.
International tax liabilities are highly technical and must be considered on a case-by-case basis. If you own a property in France, you could also be liable to pay the French property wealth tax, even though you are not French resident for tax purposes.