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TAXES

Reader question: How do I convert income into euros for my French tax declaration?

If you're a foreigner in France, you may be declaring income from another country - here's how to do your currency conversions.

Published: 22 May 2023 12:40 CEST
Reader question: How do I convert income into euros for my French tax declaration?
Photo by ISABEL INFANTES / AFP

Question: On the French tax declaration I’m required to declare my non-French income, which is mostly in dollars – what method should I use for converting the amounts into euro?

If you’re living in France you will almost certainly have to complete the annual income tax declaration, even if you have no income in France – eg retirees living on a UK or US pension.

READ ALSO What you need to know about the 2023 French tax declaration

You are also required to declare all your worldwide income – if you have already paid tax on it in another country you probably won’t have to pay more tax in France, if your country has a tax treaty with France, but you have to declare it all the same.

All of which means that foreigners living in France are likely to be declaring at least some income – earnings, pensions, rental income or share dividends – that is not in euros.

So how do you do the conversion?

The first thing to note is that all income on the French tax form must be declared in euros, there is no facility to declare in another currency, which means that you need to convert your income into euros before you start.

In terms of how you do the conversion, there is no fixed formula, and most people use online currency converters such as XE or Google for the sake of simplicity, but you can also look up the exchange rate and do your own calculations. 

It is advised that you take a note of which method you used, and the date you did the conversion, just in case any of your working is challenged by the tax office.

Accountants report that it is very rare that the French tax office would challenge your return based on how you convert foreign currency into euros, but it is wise to keep a note of your method just in case.

Chartered accountant Faten Amamou, who specialises in international clients, told The Local: “Before you start to fill out your tax declaration, if you have any income that isn’t in euros, you’ll need to convert it to euros. There is no set method for doing this, but keep a note of the method, logic and currency conversion you have used in case you are questioned about it.”

READ ALSO Ask the expert: How to fill out your 2023 tax declaration

You can find more details about the 2023 tax declaration, tax deadlines and the property tax declaration in our tax section HERE.

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PROPERTY

Property tax surcharge: Where in France second-home owners are liable for extra taxes

Local authorities in certain parts of France are entitled to place an extra property tax on second homes - here's how the system works and how to find out if your area is introducing such a rule.

Published: 31 May 2023 15:56 CEST
Property tax surcharge: Where in France second-home owners are liable for extra taxes

France’s householders’ tax – taxe d’habitation – has been almost completely phased out, but there is one group that it still applies to; second-home owners.

Not only do second-home owners still have to pay the tax, an increasing number of communes are imposing a ‘surcharge’ on second homes which increases the bill by up to 60 percent.

The government has given local authorities in areas where there is a housing shortage the power to increase taxes on second homes in order to fund more affordable housing for locals and an increasing number of communes are choosing to use this power.

READ ALSO Second home or main address? French property tax rules explained

Towns and cities with more than 50,000 inhabitants and “a marked imbalance between supply and demand for housing” are known as zones tendues (troubled zones) and may increase their portion of the taxe d’habitation by between five and 60 percent.

For the record, taxe d’habitation is based on the rental value of dwellings, payable on all furnished premises used for residential purposes, in accordance with article 1407 of the CGI (French General Tax Code).

The aim of the surcharge is to encourage second home owners to either sell the property, or rent it out long term.

Earlier this year, we reported that the Mediterranean glamour resort of Saint-Tropez hopes to raise €3 million a year for new local housing by increasing the taxe d’habitation on second homes by 60 percent from next year.

They are far from the only town to do this. Paris decided to raise its portion of the taxe d’habitation bill on second homes by 60 percent in 2022; while some 255 towns and cities across the country – of the 1,136 eligible to do so – have taken up the option of boosting their rates. 

READ ALSO Second-home owners: What French taxes do you need to pay?

Last year, city councils in cities such as Bordeaux, Lyon, Biarritz, Arles and Saint-Jean-de-Luz voted to increase the tax to the maximum 60 percent.

Cities must be able to demonstrate significant second-property rates and that property purchase and rental prices are higher than the national average in order to be eligible.

New rules, which do away with the 50,000 lower limit on population, come into force in 2024 (delayed from 2023) and could see the tax rises implemented in up to 4,000 additional towns.

According to the Direction générale des finances publiques (DGFiP) a total 22.4 percent of the municipalities authorised to levy a surcharge on taxe d’habitation for second homeowners did so in 2022. 

The full list of towns able to impose higher taxe d’habitation rates is here.

READ ALSO Reader question: Who has to pay France’s ‘vacant property’ tax?

Exemptions

There are some. You may be able to claim exemption from taxe d’habitation on second homes if:

  • Your professional activity is close to their second home and obliges you to live there;
  • Your primary residence is a long-term care facility, meaning your former primary residence is now your second home;
  • The property is uninhabitable for a reason outside of your control. For example, if work is needed to make it habitable. If this is the case – and it’s not uncommon of you have bought a property as a restoration project – you need to register it as uninhabitable with your local tax office. You will usually then benefit from a reduced or zero tax bill for a limit period – in most areas two years is the maximum time you can declare the property uninhabitable. 
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