Taxation in France in 2026: Tax Types, Rates, and Payment Methods

Compared to other European countries, taxes in France aren’t exactly the lowest. However, this is normal for a developed, progressive country—the situation is similar in neighboring countries with strong economies. For example, the French income tax rate ranges from 0% to 45%, similar to Germany and the UK. Companies in France typically pay 25% of their profits, similar to Spain and Belgium. In return, France offers strong support for businesses, especially startups.

The 2025 Budget Law took effect in France on February 14, 2025, introducing several changes to the tax system. Specifically, income tax thresholds were increased by 1.8% to maintain the purchasing power of the population. A minimum effective rate of 20% was introduced for high-income individuals, along with a temporary exceptional tax for large companies with a turnover exceeding EUR 1 billion.

Which types of taxes are levied in France?

The French tax system is considered one of the most complex in Europe. According to various estimates, there are over 200 types of taxes and fees. In everyday life, however, the average person encounters only 5–7 main taxes, including those on income, real estate, business, and the purchase of goods and services. Some of these taxes are withheld without the taxpayer’s participation, such as the salary levy or VAT, which is built into the price of goods.

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French tax residency: who pays what

Tax residency determines which incomes are taxed in France and at what rate.

Tax residents pay taxes to the French treasury on all global income, including salaries, dividends, interest on deposits, and income from real estate in other countries. To avoid double taxation, France has signed numerous international tax treaties.

Non-residents pay taxes in France only on income derived from French sources. For example, this would apply to someone who rents out an apartment in Paris or receives a salary from a French employer. Non-residents are subject to different, less favorable income tax rates: a flat rate of either 20% or 30%, depending on the amount.

According to the French Tax Code, a person is considered a tax resident if they meet at least one of the following criteria:

• Their home is located in France. Typically, this is determined by where the person’s family (spouse/partner and children) lives. However, if you’re single, France will be considered your home if you live here most of the time.
• They spend more than 183 days per calendar year in France.
• France is the location of their wealth management center, where their main investments are made.
• They conduct their main professional activity in France, either as an employee or an entrepreneur.

For example, a foreigner may have registered a French company; however, this isn’t their main activity, and they choose not to relocate to France. In this case, they won’t automatically become French tax residents. The company itself is required to pay corporate taxes, while the owner only pays taxes on income earned in France.

Taxable income in France: What will be withheld, and how much will the employer pay?

If a person is employed in France, their salary tax consists of 3 main levies: income tax, social security tax, and withholding tax. The final amount of levies depends not only on the salary, but also on the family’s composition and total income.

Prélèvement à la source (withholding/deduction at source)

Since 2019, the withholding tax (PAS) has applied to nearly all income subject to regular income tax. For salaried employees, the required amount is withheld by the employer and transferred to the tax office.

PAS is withheld monthly, but the tax authorities determine the personal rate each September based on the employee’s tax return from the previous year, which is filed in the spring. You can find this rate in your personal account on the impots.gouv.fr website.

Example: In May 2025, an employee declared an annual income of EUR 36,000. The personal rate calculated in September was 7.5%. Starting in October, the employer automatically withholds 7.5% of the salary.

If a tax return has not yet been filed (for example, if the employee is in their first year of employment), the standard income tax rate applies.

If the tax deductions do not cover the final amount, the state will withhold the remainder. If the difference is less than EUR 300, one payment is made in September. If the difference is more than EUR 300, 4 payments are made between September and December. If you overpaid, the state will refund the money.

Example: In 2025, an employee had EUR 150 withheld monthly, for a total of EUR 1,800 for the year. In 2026, they filed an income tax return and were found to owe an additional EUR 300 in PAS due to a salary increase. In this case, the employee owes an additional EUR 300, which will be debited from their bank account.

Starting on September 1, 2025, new rules were introduced for spouses and partners. Previously, the general household rate (taux foyer) was applied by default. Now, each family member is assigned their own individual rate. This is intended to distribute the tax burden among spouses or partners more evenly. However, families can still choose to use the «taux foyer» when filing their tax return if it is more convenient.

Income tax (IR) and the share system

Personal income tax (Impôt sur le revenu) in France is calculated on a progressive scale. However, its main feature is the Quotient Familial (quotient family system). Rather than calculating tax for each individual, it is calculated for the household’s «share».

The calculation method involves the following:

• single: 1 share;
• couple (married or partnered): 2 shares;
• first and second child: +0.5 shares each;
• third child and subsequent children: +1 share each.

The total family income is then divided by the total number of shares. Then, the IR rate is applied to each share. Finally, the tax amount is multiplied by the number of shares.

Current IR rates:

Social contributions (Cotisations sociales)

The French often use the term «high taxes» to refer to social contributions. In France, most of the tax burden is transferred to the social system because these funds finance public healthcare, pensions, and other benefits.

On average, the difference between accrued salary and net take-home income is 22-25%. The contributions go toward:

• basic and supplementary retirement insurance;
• health insurance;
• CSG and CRDS, special taxes that fund the social security system.

The burden also seems high since employers in France pay an additional 40-45% in social contributions on top of the employee’s gross salary.

The French tax system: a step-by-step guide for beginners

Communication with the French tax office (Direction générale des Finances publiques) is entirely electronic. Although the process of filing and paying taxes may seem complicated at first, it is quite straightforward and consists of 6 main steps:

1. Determine your tax status.
   First, you need to determine whether you are a tax resident of France. This determines the income you should report on your tax return. If you are reading this article because you are planning to move to France and become a tax resident, you may want to consider immigration programs for self-employed individuals, entrepreneurs, and startups. iWorld lawyers can suggest the right solution and help you manage your finances.
2. Obtain your TIN.
   Numéro fiscal – 13-digit number is included in your tax return and provides access to your online taxpayer account. If you don’t already have one, contact your local tax office and provide your address, email address, marital status, and proof of identity (such as a residence permit card). After verifying your identity, the office will email you your tax identification number and notify you that you can now create an online account.
3. Create a personal account.
   Create an account on the impots.gouv.fr portal by entering your tax identification number and creating a password. After logging in for the first time, a 6 -digit security code will be sent to your email address. Enter the code in the designated field. In your account, you can view a payment calendar, file returns, and adjust tax rates. Additionally, you can communicate with the tax inspector on the website.
4. Set up withholding tax.
   If you have an employment contract, your employer will automatically withhold tax. However, you can check the withholding rate in your personal account. If your income changes (due to job loss or receiving a bonus, for example), update the information on the portal so the tax office can adjust your monthly withholding and you won’t have a tax debt at the end of the year.
5. File your tax return.
   In your personal account, select the «Declaring my income» section. Check the box next to «I am filing a tax return for the first time». Fill in the required fields to indicate your family situation and income. Even if you were unemployed during the reporting period, you must file a tax return. You must also confirm your current address with documentation such as a rental agreement. Once all the information has been verified, you can submit your tax return. In 2026, tax return filing will begin in April, though it usually occurs in May or June.
6. Receive the tax notice and payment.
   At the end of summer, you will receive a tax office decision, called an «Avis d’imposition», which you can download from your taxpayer account. The notice will indicate the amount due and the payment schedule. The amount will be debited from the bank account you linked to your taxpayer account. If you’re employed, this happens monthly. If your income comes from rental property or self-employment, you can choose to pay monthly or quarterly.

Social taxes in France: what employees, entrepreneurs, and capital owners pay

In France, the terms «taxes» and «social contributions» refer to different things. Taxes go to the country’s general budget, while social contributions go directly to social security funds.

For employees, social taxes are divided into 2 parts:

• Сontributions deducted from gross salary.
• Employer contributions, which are paid in addition to the employee’s share.

The employee’s share amounts to approximately 22-25% of the sum stipulated in the contract. The main deductions are pension insurance, social security, and CSG and CRDS contributions. The general CRDS rate is 0.5%, while the CSG rate is 9.2%, though a portion can be deducted.

The employer’s share is an additional 40-45% of the gross salary. Therefore, if the contract specifies a salary of EUR 3,000, the employee will receive approximately EUR 2,200, while the employer will pay approximately EUR 4,100.

The system is simplified for self-employed individuals. Low-income private entrepreneurs, or microentrepreneurs (Auto-entrepreneur), pay a single social tax contribution based on their turnover. The rate is 21.2% for commercial and artisan services and 12.3% for trading activities.

The tax burden for owners of large companies can range from 35 to 45%.

Even if you don’t work in France, you are required to pay social tax if you receive passive income there (from real estate rentals, dividends, or interest on deposits). Dividends, for example, are subject to a flat rate of 30%, 17.2% of which is social tax and 12.8% of which is income tax. If you rent out real estate in France, the same 17.2% social taxes will automatically be added to your income tax. These taxes include the CSG, CRDS, and a 7.5% solidarity tax.

Tax rates for entrepreneurs in France

The tax regime for entrepreneurs depends on the size and type of their business:

• Micro-entrepreneur (formerly Auto-entrepreneur).
  This status is the most popular among freelancers and aspiring entrepreneurs due to its simple accounting requirements. A fixed percentage is calculated based on turnover, not profits. Businesses with this status can choose a simplified tax regime with a flat rate (Versement libératoire) of 1–2.2%. Alternatively, they can include income in their general tax return with standard deductions (34%, 50%, or 71%, depending on the business type). However, micro-entrepreneur status is only granted if the business’s turnover does not exceed the limit: EUR 188,700 for trade and EUR 77,700 for services.
• Entreprise Individuelle (EI)– sole proprietorship.
  Since 2022, France has introduced a single EI status that automatically protects entrepreneurs’ personal assets. By default, income tax (IR) is paid on actual profits (revenue minus verified expenses). However, an entrepreneur can choose to pay corporate tax (IS) voluntarily. Social contributions amount to approximately 35%-45% of net profit. Unlike the micro status, all business expenses can be written off, which is advantageous for businesses with high-cost services or goods.
• Full-fledged companies (SAS, SARL).
  If you plan to attract investors or work with partners, you should register a classic company. The most popular forms are the SAS (Société par actions simplifiées) and the SARL (Société à responsabilité limitée). Companies pay regular corporate tax on their income. When profits are distributed to shareholders, a Flat Tax of 30% (including taxes and social contributions) applies. In most cases, companies are also required to pay VAT in France.

Corporate taxes in France

The main tax for French companies is corporate income tax (IS). The standard rate is 25%. However, for small and medium-sized businesses with a turnover of less than EUR 10 million, a 15% rate applies to the first EUR 42,500 of income.

Most companies in France collect and pay value-added tax (TVA). The standard rate is 20%, with two lower rates: 10% and 5.5%. There is also a special rate of 2.1%, which is primarily applicable to pharmaceuticals. The threshold at which a company is required to pay VAT depends on its industry.

Companies also pay a territorial economic contribution (Contribution Économique Territoriale), consisting of 2 parts. The first part is a tax on real estate used for business. The amount of the contribution depends on the business’s turnover or the property’s rental value. The second part is the corporate value-added tax (CVAE). The French government plans to abolish the CVAE entirely by 2027 to improve competitiveness. The rate will steadily decline through 2025.

Additional tax liabilities arise if a company has employees. For instance, a 0.68% training tax is levied on payroll. There is also a vocational training contribution and a payroll tax, which organizations that do not pay the CVAE (e.g., banks and medical centers) must pay.

Despite its complex tax system, France is one of the best countries in Europe for startups, thanks to its support system. For instance, startups can receive a tax credit of up to 30% for scientific research or take advantage of a small business incentive to develop new product prototypes. iWorld lawyers can explain the advantages of France for startups in more detail and help you develop a strong business plan.

VAT (TVA) in France: rates and important updates for 2025

French companies collect VAT from their customers and pay it to the tax authorities. The standard rate for most goods and services is 20%. There are also 2 reduced rates and one special rate:

• 10% for restaurants, passenger transportation, and certain types of repairs;
• 5% for essential goods and books;
• 1% for insurance-reimbursed medications and certain printed publications.

A company is exempt from paying VAT and filing a VAT return if its annual turnover does not exceed EUR 37,500 for services or EUR 85,000 for the sale of goods. This is called the franchise system en base de TVA. However, VAT cannot be deducted for business-related purchases in this case.

Microbusinesses may register for VAT to claim deductions, and registration takes effect on the first day of the month in which the application is submitted.

The French government had planned to establish a single VAT exemption threshold of EUR 25,000 in 2025. However, this decision was later reversed, and the previous threshold was reinstated. A review of this issue is planned for 2026, but no clear forecasts have been made yet.

If a company’s turnover exceeds the threshold, it must pay VAT starting January 1 of the following year. Depending on the tax amount and turnover, companies choose one of 2 regimes:

• Régime Simplifié: applies to companies with a turnover of EUR 85,000–EUR 840,000 (for services, EUR 37,500–EUR 254,000). The annual VAT amount must not exceed EUR 15,000. The tax is paid twice a year, in July and December. At the end of the financial year, a tax return must be filed with information on all taxable transactions for that period.
• Régime Normal: for companies with a turnover exceeding EUR 840,000/254,000. You must file and pay your tax return monthly. If your annual VAT amount does not exceed EUR 4,000, you can switch to quarterly filing.

France continues to prepare for the mandatory implementation of electronic invoices. Starting September 1, 2026, all companies will be required to accept electronic invoices, and starting in 2027, they will be able to issue them.

How high are taxes in France? An unbiased analysis

France’s tax burden is among the highest in Europe, sometimes reaching 45-50%. However, this money is used to improve the quality of life. Residents receive substantial social support, and businesses receive ample opportunities and benefits.

France consistently ranks among the world’s best healthcare systems. The state reimburses 70 to 100% of treatment costs, including complex surgeries and cancer treatment. Even if you are unemployed, you are entitled to basic medical coverage.

Unlike in many other countries, where retirement pensions are considered a «living wage», French pensions allow for a decent standard of living. Pensions can amount to up to 50% of the average annual income during the insured period, averaging EUR 1,500 per month.

In France, tuition at public universities is much lower than in other European countries, even for international students, yet the French education system is highly regarded. Third-country nationals pay EUR 2,895 per year for a bachelor’s degree, and the state covers most of the tuition.

Residents of France can count on:

• Benefits for low-income individuals.
• Housing allowances (e.g., rent).
• Participation in a supplementary health insurance program.
• Financial support for people with disabilities.
• Benefits for families with children.
• Unemployment benefits.
• Social services at home, such as assisting the elderly.

There are various types of support available for businesses. For instance, if you decide to start a business in France, your company can participate in programs within the French Tech ecosystem. The French Tech 40/120 program assists with finding funding, recruiting personnel, and protecting intellectual property. Those working in R&D can apply for a young enterprise status, such as the jeune entreprise innovante (JEI) exemption from property tax.

France also offers research tax credits of up to 30% and subsidies. Startup founders can obtain a residence permit for up to four years. High salaries and robust social support make France a popular destination for highly qualified professionals.

However, if a foreigner moves to France as a financially independent individual and becomes a tax resident, they must pay taxes on all their global income. In return, however, they gain access to reliable banks and comfortable infrastructure. As a permanent resident, even if you’re not employed, you can count on PUMa (Protection Universelle Maladie) health insurance. Your children can attend prestigious schools and world-renowned universities, such as the Sorbonne, at affordable prices.

In France, taxes translate into a high quality of life, stability, business prospects, and confidence in your family’s future. If you’re planning to move to France, iWorld lawyers can help by providing detailed advice, analyzing your case, and helping you choose the right immigration program. They can also help you gather documents and obtain a residence permit. Schedule a personal consultation to learn more.

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