In summary…
A non-resident who receives income from French sources is taxed at a minimum rate of 20 %, brought to 30% beyond a certain threshold. This rate applies even if, with the same income, a French resident would pay almost nothing.
This minimum rate is not inevitable: it can be exceeded by requesting the application of the average rate, calculated on all your worldwide income. The trade-off is explicit — you must declare to the French tax authorities what you earn elsewhere.
Second point, largely under-exploited: on real estate income and capital gains, social security contributions are reduced from 17.2 % to 7.5 % When you are affiliated with a social security scheme in another EU, EEA, Switzerland or UK state. Ten points, for a checkbox and supporting documentation.
You've moved to Lisbon, Dubai, or Montreal. You've kept your apartment in Bordeaux, which you rent out. You might still receive dividends from a French company, or a pension. Every spring, you file a non-resident tax return, and every summer you receive a tax notice whose amount seems disproportionate to the income in question.
It is. And in many cases, He shouldn't have been..
1. The minimum rate, and why it exists
20 %, then 30 % — on the French fraction only
The progressive income tax scale assumes that all household income is known. However, for a non-resident, France only sees part of the picture: income from French sources. Mechanically applying the scale to this portion alone would mean that taxpayers whose actual income is much higher would benefit from the lower tax brackets.
Hence a floor: the tax cannot be less than 20% of net taxable income from French sources, rate increased to 30% for the portion exceeding the upper limit of the second bracket of the scale. Reduced rates — 14.4 % and 20 % — apply to income originating in the overseas departments.
Specifically. A retired couple living in Portugal, receiving €24,000 in French rent and nothing else in France, are taxed at 20 % — whereas the same couple, residing in France with the same €24,000 total income, would be taxed at a much lower effective rate. The discrepancy is not a penalty: it is a presumption., and a presumption is overturned.
For the technician. Article 197 A of the French General Tax Code (CGI). Minimum rate of 20% up to the upper limit of the second tax bracket, 30% above that; 14.4% and 20% for income from French overseas departments (DOM). The minimum rate applies to net taxable income from French sources determined according to standard tax rules, subject to the provisions of the applicable tax treaty.
The same article provides for the deviation from the minimum when the taxpayer justifies that the average rate resulting from taxation in France of the’all of his income from French and foreign sources would be lower. The request is made in the declaration; it can also be submitted by way of a formal claim within the general claim period, which allows for recovery from previous years.
2. Demonstration of the average rate
What it brings in, and what it costs
The mechanism is simple in principle: you calculate what your French tax would be if all your worldwide income were subject to it, you deduce an average rate, and if this rate is less than 20 %, it is this rate that applies to your French income only.
The downside is real and we must face it: you inform the French authorities of all your worldwide income, with the corresponding supporting documents. This is not insignificant. For a modest retiree living abroad, it's a formality and the benefit is immediate. For an executive with a complex foreign income structure, the decision is made differently—and sometimes it isn't made at all.
- Retired, modest foreign pension, French rents — Almost always a winner. Frequent winnings of several thousand euros per year.
- Employed abroad, high global income — Generally interest-free: the average rate exceeds 20 %. Do not apply.
- Low foreign income, significant French assets — To be calculated. This is the case where the difference is largest in both directions.
- Complex foreign revenue structure — The calculation is favorable, but the required transparency must be decided separately.
3. The ten points that almost no one asks for
Social security contributions: 17.2 % or 7.5 %
Rental income from French sources and capital gains on real estate realized by non-residents are subject to social security contributions at the overall rate of 17.2%. However, a person affiliated with a compulsory social security scheme of another Member State of the European Union, the EEA, Switzerland or the United Kingdom, and not covered by a French scheme, is exempt from CSG and CRDS. All that remains is the solidarity levy, at 7.5%.
Specifically. On €30,000 of annual rental income, the difference is €2,910 per year. On a capital gain of €200,000 on real estate, it is €19,400 The tax is collected in a single payment at the notary's office. The benefit is not applied automatically: the corresponding box must be checked, and proof of membership must be provided. If this has not been done, a claim can still be filed within the standard timeframe.
For the technician. Exemption from CSG and CRDS based on the principle of a single applicable law in Regulation (EC) No 883/2004, enshrined in the judgment de Ruyter of the CJEU and transposed into Article L. 136-6 of the Social Security Code. The solidarity levy of 7.5% remains due, as it is not allocated to financing social security. The protocol resulting from the Trade and Cooperation Agreement with the United Kingdom maintained the benefit for British members.
Residents of third countries remain subject to the overall rate of 17.2%. This is a point to consider very early in any expatriation project outside the Union: for identical French real estate holdings, the country of destination changes the cost of ownership and the cost of exit.
4. Point of vigilance
Two topics almost always arise at the same time as this one, and nobody connects them.
The first is the declaration of accounts and contracts held abroad, which weighs on French residents — and therefore on those whose tax residence is not as clearly established outside France as they believe. The second is the’automatic exchange of information The French tax authorities receive taxpayers' bank details annually from over a hundred jurisdictions. Therefore, a request for an average tax rate based on incomplete worldwide income figures is hampered by information the authorities already possess.
The approach is excellent. It assumes that the file is in good order. That's the first thing we check, even before calculating the profit.
Three questions. Your latest tax assessment is sufficient to answer the first two.
Is the tax rate applied to your French income exactly 20% or 30%—in which case you're at the minimum rate, and you haven't requested anything? On your rental income, does the social security contributions line show 17.2% or 7.5%? And if you sell your French property next year, do you know which of the two rates the notary will apply?
Our position
The non-resident tax regime isn't inherently disadvantageous; it's simply misused. The minimum tax rate is a default floor, designed to be disregarded by those who can justify it, and the CSG-CRDS exemption is an automatic right that simply needs to be claimed. In both cases, the tax authorities don't handle the process for you and don't notify you that you're overpaying.
These two corrections are processed together, in one file, in a single step. And when a catch-up for previous years is possible, it is too — the deadline for claims doesn't wait.
Are you a non-resident and do you receive French income?
Send us your latest assessment. We'll tell you within an hour whether the average rate is favorable for you, by how much, and whether there's still a catch-up period for past years. When the answer is no, we'll say so too—this is the case for about one in three cases.
Are you a notary, chartered accountant or fellow consultant? The rate of social security contributions on a capital gain from real estate held by a non-resident is determined on the day of the transaction. We intervene in a joint venture, upstream.
Book an appointment
The initial consultation is to establish your exact situation and determine if there is anything that can be done—sometimes there is nothing, and we will say so as well. Thirty minutes, with no obligation.
