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Taxation of wages, salaries, pensions and annuities received by individuals domicilied in France

This category includes:

• wages, salaries, compensation and emoluments received in consideration of an employment, including the remuneration of senior managers of joint-stock corporations (chairman of the board, chief executive officer, deputy CEOs and members of the management board) and managers of limited liability companies, allowances paid to members of the French and European Parliaments and, at the beneficiary’s discretion, allowances paid to the holders of local elected offices;

• pensions and annuities.

The net amount of taxable income in this category is determined by deducting, inter alia, mandatory social security contributions and, when the person is in active employment, expenses inherent in the function or job from the gross amount paid.

Unless otherwise provided, gross earned income includes all amounts and benefits in kind available to the taxpayer. Expenses incurred in the acquisition of earned income are normally taken into consideration on a notional basis (a 10% deduction, capped and reviewed each year). However, taxpayers may opt to deduct the actual amount of their professional expenses, subject to the production of vouchers. Pensions and annuities without consideration are eligible for 10% special relief, though the amount for all members of the household may not exceed an amount revalued each year in the same proportion as the upper limit of the first band of income tax.

Purchased life annuities are eligible for notional relief at a rate which varies from 30% to 70% according to the recipient’s age (from under 50 to 70 or over) when the annuity becomes payable.

NB: Under Article 1 of Act 2007-1223 of 21 August 2007 for work, employment and purchasing power, payment received for overtime (for full-time workers) or additional hours (for part-time workers) worked since 1 October 2007 is exempt from tax and gives entitlement to reduced employee social security contributions.

Source: French Tax Office

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Posted by on Aug 12 2010. Filed under Wages, salaries, pensions and annuities, Wages, salaries, pensions and annuities. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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