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Property tax in France – two instead of one
In England you have the dreaded Council Tax, in France we have Taxe d'Habitation and Taxe Foncière. There's no escaping it, in whichever country you decide to take up residence, you will have to pay a property tax of some sort. Taxes can be a very worrying part of the decision to make a new life abroad, so it is important to know exactly what taxes you may be liable for and how you will be charged. You may also wonder, will you be better off in France or in England? On the face of it, one tax sounds better than two, but does it really pan out like that?
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Taxe Foncière and Taxe d'Habitation - why must I pay these taxes?
Wherever you live, you will benefit from local services such as street lighting, street cleaning and collection of waste and recyclable materials. Local administrative services have to be maintained and financed, and everybody who is part of a community has to pay their share. Both the property taxes in France and the Council Tax in England serve the same purpose, that is, to cover these and similar costs.
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First tax on French property - Taxe Foncière
Taxe Foncière is the tax that is levied on property owners. Whoever you are, whether you live in the property or not, if you own it you must pay up.
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How much is the Taxe Foncière?
Taxe Foncière is more expensive than the other property tax, Taxe d'Habitation, but the actual amount varies according to where the property is, as well as the "Valeur Locative Cadestral", or in English, the (notional) rental value.
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Who decides the amount of Taxe Foncière payable?
The amounts payable are decided by the local authorities of each region. Some regions are much more expensive than others, so you cannot make a guess at the rates of taxation by comparing your house with a similar property elsewhere.
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Once set, will the amount of Taxe Foncière remain the same?
The valeur locative cadestrale is reviewed every year, so the Taxe Foncière can be changed according to the findings of the review committees. The tax is calculated on two counts, that is, on the buildings and the land that together form the property. It is also your responsibility to update the information held on your property if you make substantial improvements that will affect the notional rental value, such as the addition of a swimming pool (Installing a swimming pool in France) or a gîte (Owning Gîtes and Chambres D'Hotes (B&Bs) in France, Gites for sale).
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When do I have to pay Taxe Foncière?
Taxe Foncière is usually payable in October, on a date that will be specified on the form you receive in the post. Take note, though, if you have only just become a French property owner and this is your first Taxe Foncière bill, make sure that you have received it during September. If not, go to the local council offices, or contact them and request it. What happens frequently in these circumstances is that the bill is sent to the English address (even if you have sold up and moved out to France) with the result that the tax is not paid on time and a fine is levied. Sometimes it is possible to have this fine revoked in these circumstances, but it is a subjective matter and cannot be relied upon! To avoid possible problems, as with all things to do with taxes and France, take the initiative and make sure it is paid before any problems can arise.
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Second tax on French property - Taxe d'Habitation
The second property tax in France is known as Taxe d'Habitation, and this is paid by the occupiers of a property, whether they own it or rent it. If you live in the property but do not own it, therefore, you are liable to pay this tax although you do not have to pay the Taxe Foncière. If you own the property but rent it out to someone else, the Taxe Foncière is your responsibility but not the Taxe d'Habitation... as long as the occupiers do pay up. If not, the bad news is that you, as owner, then become liable. It is also worth noting that this tax also includes the television licence fee, and this is obligatory to pay if you have a television at all in the property, whether or not you claim to use it to watch television, let alone French television (Television in France and French TV)!
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How much is Taxe d'Habitation?
Taxe d'Habitation, or the occupancy tax, is less expensive than the tax on ownership of property. Like the Foncière tax, however, it varies considerably from place to place. As a general rule, towns are more expensive than villages, and country properties less costly still.
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Who decides the amounts?
The amounts are decided by the local authorities in the same manner as the Foncière tax.
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When is it due?
The Taxe d'Habitation is payable in November each year.
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Council Tax in the UK
Council Tax is England's equivalent of the property taxes levied in France. Brought in to replace and rationalise the highly unpopular Poll Tax, Council Tax is set according to property value and organised into bands, with Band A being the lowest end of the scale, and Band F the highest. The amount of Council Tax payable also varies from place to place according to the rates set by local authorities. Council tax is set to cover the cost of local services such as refuse collection and street cleaning in much the same way as the property taxes in France.
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Tax exemptions
It is worth noting that although most people are liable for these taxes, there are a few exemptions in both countries. Some new buildings may be exempt from property taxes in France for the first couple of years, but you need to make an application to the authorities. France also makes exemptions for those over the age of 75, for students, for people with certain disabilities and for those on low incomes. In England there are similar exemptions and reductions for those on disability allowance, pensioners and the unemployed.
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Comparison between France and UK
Will you be better off in England or in France? I must stress here that it is impossible to say with complete certainty or accuracy, as every case is different, but as a comparison, take a look at the figures for a Band F property in Derwentside, Co Durham. The council tax for this type of property (value on or over £320,000) is currently standing at almost £3,000. A similar property here, in a similar situation (as in terms of value, facilities, proximity to towns etc.) is charged at 700 Euros for the Foncière tax and 450 Euros for the d'Habitation tax. That is a significant difference!
Additional articles which may be of interest:
Tax in France
Savings and investments in France
Sarkozy and French property owners
Banking in France
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About the author
Joanna Simm moved to the Languedoc area of south-west France in October 2004 having found her property through French Property Links.
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