Salary deductions and tax in France

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Salary deductions and tax in France


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Old 8th August 2017, 06:34 AM
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Default Salary deductions and tax in France

I am considering a position in France but struggling to find simple explanation to the question of what will be the final take ome amount after all deduction and taxes (which is declared end of tax year as I understand)

My questions are:

1) Is my understand of salary deductions and contributions correct:

- Gross Salary is what is mentioned in the contract including all allowances
- Net Salary is what I get paid each month after social and health contributions deducted, which according to some posts here around 25%-28%
- Tax is calculated on net salary after above deductions
- The net salary is divided on number of households (1 for adult and 0.5 for children, so 2 adults and 1 child is 2.5), the tax is calculated on that value (using standard bands and rates), then multiplied again by the number of households mentioned before. This value is what is paid end of year after filling all the declaration forms,..etc.

Is that correct?


2) Are dependents living overseas considered in the above calculations, or only those living in France in the same house?

3) is an 18 yrs old still considered dependent?


4) I understand that everyone even those who are not working (my wife in this case) should file a tax return. Does it mean that my wife will pay additional tax?


Thanks in advance for your help.

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Old 8th August 2017, 08:07 AM
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A couple minor tweaks to what you have understood:

Quote:
1) Is my understand of salary deductions and contributions correct:

- Gross Salary is what is mentioned in the contract including all allowances
- Net Salary is what I get paid each month after social and health contributions deducted, which according to some posts here around 25%-28%
- Tax is calculated on net salary after above deductions
- The net salary is divided on number of households (1 for adult and 0.5 for children, so 2 adults and 1 child is 2.5), the tax is calculated on that value (using standard bands and rates), then multiplied again by the number of households mentioned before. This value is what is paid end of year after filling all the declaration forms,..etc.

Is that correct?
Gross salary ("brutto") is salary before any deductions are taken for cotisations or any other "benefits." The cotisations run about 23 to 27% depending on your income level and any "options" (such as an employer backed saving plan, additional mutuelle, etc.).

What you are paid is basically gross salary less cotisations and any other deductions. "Taxable income" is gross salary less deductible cotisations (and appears as a separate item on your payslip). Not all cotisations are fully deductible for tax purposes, and again, it may depend on your income level to a certain extent. To be safe, figure 95% of your cotisations are probably deductible from your gross income for tax purposes.

"Taxable income" per your payslip is where the tax calculation starts, but there are adjustments made to that before you can calculate your taxes. First of all, there is a standard 10% deduction for "general expenses." And there are a number of other possible deductions or credits - charitable contributions, specific programs for ecological expenditures, etc. (Probably not relevant your first year in France.) In any event, use the taxable income less 10% figure.

Quote:
2) Are dependents living overseas considered in the above calculations, or only those living in France in the same house?
It depends. If you are paying your overseas dependents some sort of "pension" then that may be deductible in whole or in part. But I think to give you an additional "part" the dependent must be living in your household. (Someone else here will have more information on that.)

After age 18, it may be possible to claim a "dependent" if the child is enrolled in school or dependent due to a handicap. There is also a way to claim a married child (and possibly their spouse) as "parts" for the household, though I'm fuzzy on the details.

Tax declarations are filed in France by household, which means that a married couple must file a "joint" return that includes all dependents. The resulting tax assessment winds up being a very useful document to have, even if the amount of taxes due winds up being 0.
Cheers,
Bev
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Old 9th August 2017, 02:08 AM
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Thank you very much Bevdefroges, that was really helpful. I think diving in to more details at this stage would be hard for me until this opportunity materializes in to something solid.

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