FRANCE Law and Practice Contributed by: Véronique Millischer, Léna Sersiron, Eléonore d’Anthonay, Guillaume Nataf, Olivia Chriqui-Guiot, Pauline Celeyron, Damien Berruyer and Nella Picou, Baker McKenzie Paris
French tax residents are, in principle, subject to tax on their worldwide income (ie, from both French and for - eign sources), subject to the provisions of any appli - cable double tax treaty, whereas non-residents are taxed in France solely on their French-source income. Personal Income Tax Personal income tax ( impôt sur le revenu ) is calculated on the basis of the household unit ( foyer fiscal ) and is assessed under a progressive scale. For the 2026 tax year (income earned in 2025), the brackets are as follows: • 0% on income up to EUR11,600; • 11% on the portion between EUR11,601 and EUR29,579; • 30% on the portion between EUR29,580 and EUR84,577; • 41% on the portion between EUR84,578 and EUR181,917; and • 45% on income above EUR181,917. The tax liability is calculated using a household quo - tient ( quotient familial ) system, which divides total household income by a number of “parts” deter - mined by the composition of the household, thereby moderating the progressive effect for larger families. Non-residents are subject to a minimum withholding rate of 20% (or 30% on income exceeding a specific threshold) on French-source income, unless a tax • Exceptional contribution on high incomes (“ con- tribution exceptionnelle sur les hauts revenus ”, or CEHR ): This additional 3% surtax applies on all types of income exceeding EUR250,000 (for single taxpayers) or EUR500,000 (for married taxpayers), and a 4% surtax applies on income exceeding EUR500,000 (for single taxpayers) or EUR1 million (for married taxpayers). This surtax applies to all types of income received. • Differential contribution on high incomes (“ con- tribution différentielle sur les hauts revenus ”, or CDHR ): This additional surtax applies to French tax residents whose global taxable income, after some adjustments, exceeds EUR250,000 (for single treaty provides otherwise. Surtaxes may also apply:
taxpayers) or EUR500,000 (for married taxpayers). The purpose of the CDHR is to apply a minimum effective tax rate of 20% on income received by the taxpayers covered. In other words, where the amounts of income tax and CEHR result in an effective tax rate on the global taxable income (as adjusted for the purposes of the CDHR) of less than 20%, the differential contribution (CDHR) will be applied in order to reach this minimum effective tax rate of 20%. Personal income tax on employment income is collect - ed through a pay-as-you-earn mechanism ( prélève- ment à la source ), with the employer withholding tax each month at a rate communicated by the French tax authorities. These withholdings are advance pay - ments, and the final tax liability is determined upon filing of the annual income tax return. The CEHR and CDHR are not withheld and are paid directly by the individual when filing that return. Employee and Employer Social Contributions Employees and employers are subject to a range of social contributions levied on gross salary. The main contributions notably include for the employee the generalised social contribution ( contri- bution sociale généralisée ) and the social debt repay - ment tax ( contribution au remboursement de la dette sociale ), levied respectively at rates of 9.2% and 0.5% on 98.25% of the gross remuneration. Other social contributions borne by both employees and employ - ers primarily relate to retirement (basic and comple - mentary pension schemes), unemployment insurance, health and disability coverage, work accident insur - ance and family benefits. Overall, employee social contributions typically repre - sent approximately 22% to 25% of gross remunera - tion. However, as certain contributions are capped, the effective employee contribution rate decreases for higher levels of remuneration and may fall to around 10.1% on income exceeding EUR385,000 (2026). It should also be noted that a portion of these contribu - tions is deductible from the taxable income base for personal income tax purposes.
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