Last Updated on November 21, 2024 by Asen Yanev
French property taxes – Taxe d’Habitation, Taxe Foncière, and Cotisation Foncière des Entreprises (Local tax on businesses known as CFE):
Who has to pay them?
What is the deadline to file?
Can you overpay CFE tax and get a refund?
Can any tax deductions be claimed?
Everything you need to know!
Local Property Taxes in France
It’s hard enough to come to terms with tax rules in your own country, without having to familiarise yourself with international tax regulations too!
So, if you’re a non-resident landlord with a property in France, you may be feeling daunted by the prospect of managing your French tax obligations.
After all, there are a lot of different types of tax charges to consider.
Most property owners will be aware that they are required to submit a French property tax return to the French Tax Office if they are earning rental income.
But aside from rental income, there are several other property taxes that real estate owners should be aware of.
Take Taxe d’Habitation, Taxe Foncière, and Cotisation Foncière des Entreprises (Local tax on businesses known as CFE) for example. These local property taxes in France may apply to your property, depending on your circumstances.
In this guide, we will outline everything you need to know about your French property obligations and how you can claim your CFE refund.
- In this article:
- What taxes do I need to pay on my French property?
- What is Taxe Foncière – the French Land Tax?
- How is Taxe Foncière calculated in France?
- What are the Taxe Foncière exemptions?
- What is the French Taxe d’Habitation (Housing tax)?
- Who has to pay Taxe d’Habitation?
- Who is exempt from the French housing tax – Taxe d’Habitation?
- What are the housing tax rates?
- How to pay Taxe Fonciere or Habitation online?
- What is Cotisation Foncière des Entreprises (CFE) tax?
- Who has to pay CFE?
- Can you pay too much CFE and get a refund?
- Which countries have tax relief agreements with France?
- What are the deadlines for Taxe Foncière, Taxe d’Habitation, and CFE?
- Who can help me with my French tax obligations?
What taxes do I need to pay on my French property?
The two main local property taxes you need to be aware of when owning a property in France are:
-
Land Tax (Taxe Foncière or Property ownership tax)
-
Housing or Residence Tax (Taxe d’Habitation)
These taxes are important to understand and budget for when owning a property in France.
The Taxe Foncière and Taxe d’Habitation usually amount to approximately 10 to 20 euros per square meter per year each.
If you lease your property to a professional management company, they typically cover the Taxe d’Habitation, and you only have to pay the Taxe Foncière. Additionally, when you purchase a new property, you are exempt from paying the Taxe Foncière for the initial two years.
Rural gîtes, tourist rentals, chambre d’hôtes, and certain hotels in rural development areas can also be exempt from local rates (Taxe d’Habitation and Taxe Foncière) by submitting the required forms to the local tax office before December 31st, subject to the local council’s decision.
Below we will outline also Cotisation Foncière des Entreprises known as (CFE) tax, or Business property tax, and discuss how you can apply for a CFE refund with our help.
There is also a waste collection tax which is another tax you need to be aware of.
Got questions? Request a free callback from a tax expert.
What is Taxe Foncière – the French Land Tax?
Taxe Foncière (also known as property ownership tax) is a local property tax in France paid by property owners, and it applies whether the owner lives in it or rents it out.
It consists of two parts: tax on buildings and land tax. The tax on buildings applies to habitable properties, even if they are not occupied.
Tax Fonciere (also known as tax Foncier) applies to different kinds of properties like homes, businesses, factories, and offices.
Even land is taxed, but not as much, and there are exceptions for agricultural buildings.
If you plant new trees, you can get some tax relief. The tax is based on the year it’s implemented and needs to be paid by the property owner(s) on January 1st of that year.
If a property is sold during the year, the tax is adjusted by the notary handling the sale.
Exemptions are available for the main home if the occupant is 75 or older or qualifies for certain disability or old-age allowances.
Low-income households may also be exempt based on income benchmarks and family units.
Homeowners aged 65 to 75 with income below specific limits can receive a flat €100 discount on their main home’s Taxe Foncière unless they share the house with non-spouse dependents.
Newly constructed or renovated main homes are tax-exempt for the first two years, subject to certain conditions.
To claim these benefits, specific tax forms must be submitted within 90 days of property completion or renovation.
How is Taxe Foncière calculated in France?
The Taxe Foncière is an annual local property tax that needs to be paid each year.
The tax amount is usually determined based on the value of the property (called the valeur locative cadastrale (VLC)) as of January 1st of the year in which the tax is due.
The rates can vary depending on the type of real estate.
Local tax authorities use rules and scales set by the municipality to calculate the tax.
Factors such as the property’s size, location, type, and any improvements or renovations made to it also play a role in determining the tax amount.
What are the Taxe Foncière exemptions?
Starting in 2023, certain groups are no longer obligated to pay the property ownership tax. If you receive ASI ( supplementary disability allowance) or ASPA (this is a solidarity allowance for the elderly, a monthly benefit granted to low-income pensioners), you’re exempt from paying the Taxe Foncière.
Importantly, there’s no need for any means of testing to qualify for this exemption.
People aged 75 and older can be exempt from the tax, but this depends on their income (means testing).
The exemption also applies to their second home or vacation property, if they have one. If you receive the AAH (allowance for disabled adults), you also get this exemption, based on your income.
Changes in tax laws have removed certain marital rights for claiming exemption. For instance, if someone claims ASPA, they need to be the property owner or joint owner to get tax relief for the couple. This rule also applies to means testing.
Thankfully, these exemptions should be automatically considered after filing a 2023 tax return.
If you declare an income less than €27,947 for the main part of the family quotient, plus €6,530 for the first half-part, and an additional €5,140 for each additional half-part, you can get a reduction.
Owners might qualify for an exemption if a property meant for rent is unexpectedly empty. The same goes for commercial or industrial properties. But, in all situations, the vacancy has to be at least three months long.
If you buy a new house or one that’s still being built, you usually don’t have to pay property tax for two years after it’s done.
If it’s your main home and meets certain conditions, you can be tax-free for 15 years.
The conditions are: the house was funded by an HLM loan (An HLM loan in France is a special kind of loan from social housing agencies to help people with limited income afford housing), or was 50% supported by state loans unless it was a zero-interest loan.
As you can see there are many situations where exemptions apply, and here is a recap of some the most common:
For buildings:
- State-owned properties, rural buildings used by farmers, and buildings for photovoltaic electricity production are always exempt.
- New constructions are exempt for 2 years (with declarative obligations).
- Certain buildings financed by subsidized loans or in specific zones enjoy a 15-year exemption.
- Dwellings completed before 1989 with energy-saving works can receive a 50% or 100% exemption for 3 years.
- New energy-efficient homes completed from 2009 can get a 50% or 100% exemption for 5 years.
- Social housing is exempt for 15 to 30 years.
- People over 75 and those with disabilities are exempt from property tax on their primary residence.
- Low-income individuals may also qualify for exemption based on income thresholds.
- Individuals aged 65 to 75 may receive a €100 rebate.
For unbuilt estates:
- Municipalities can offer 5-year exemptions for certain plots operated using organic production methods.
- Young farmers with installation aid may get 50% relief (or 100% if decided by local authorities).
- Additional relief may be available in case of crop or livestock loss.
What is the French Taxe d’Habitation (Housing tax)?
Taxe d’Habitation (Housing or Residence tax) is a payable tax, either by the owner of a property or a tenant who is renting a property on a long-term basis (one-year lease).
It applies to furnished second homes and related structures (garages and outbuildings).
Otherwise known as the ‘Housing tax’, this local French property tax is based on the characteristics of your home, its location, and your situation.
It varies considerably and is determined by each municipality, and is used by your local municipality to support community services.
Starting from 2023, things have changed regarding the Taxe d’Habitation in France.
Now, you don’t have to pay this tax for your main home anymore.
However, if your main residence is in another country and you are officially a tax resident there, any property you own in France will be considered a ‘second’ home by French authorities, even if it’s your only property in the country.
If you have a second home that you rent out to someone else as their main residence, it’s considered the tenant’s primary residence, and you’re not required to pay Taxe d’Habitation for that property.
This applies mainly to properties rented for an extended period and typically does not include second homes used for services like Airbnb.
Yet, there is an option for properties exclusively set up for short-term holiday rentals, and if the owner pays the cotisation foncière des entreprises (CFE) tax, they may qualify for an exemption.
That said, if you own a second home or any additional properties, you still need to pay Taxe d’Habitation for those.
Who has to pay Taxe d’Habitation?
Individuals responsible for paying the “Taxe d’Habitation” include both French residents and non-resident foreigners who own a second home in France.
If you let out a property on an annual basis, the tax is payable by the tenant. Any tenant occupying a property on 1 January on a permanent or extended basis is liable for the tax.
However, it is important to note that tenants of holiday lettings do not pay the tax.
And, if you move into the property mid-way through the year, the former occupier is legally required to pay the tax for the entire year, unless any private agreement to the contrary is made.
The specific dates for paying this tax vary each year.
Got questions? Request a free callback from a tax expert.
Who is exempt from Taxe d’Habitation?
Before the permanent removal of the “Taxe d’Habitation” in 2023 only for main homes, there are exemptions for taxpayers in 2022 related to their main residence.
- If you didn’t have to pay the real estate wealth tax (IFI) in 2021, you’re exempt.
- If your 2021 income (RFR) is less than €28,150 for the first part of the family quotient, you get a full exemption.
- If your 2021 income is between €28,151 and €29,192 for the first part, you get a partial exemption.
- Other taxpayers, including those subject to IFI in 2021, receive a 65% exemption in 2022.
Extra relief:
- If you’re over 60 on January 1st or a widow/widower of any age, you might be entirely exempt if you live with adult children (taxed separately), they are registered job seekers, and their resources stay below certain limits.
For specific threshold amounts, depending on family situations (family quotient), you can inquire for details.
How much is Taxe d’Habition?
The formula to calculate the French tax rate is complex, to say the least!
Broadly speaking, it is based on the notional rent that the property might be expected to achieve in the open market and takes into account the condition, size, and location of the property.
The tax is calculated by multiplying the property’s notional rental value by the local tax rate and your personal income situation.
The exemption for the 2023 Taxe d’Habitation is determined based on the taxable income from 2022.
Having said that, Taxe d’Habitation is typically around 10 – 20 euros per m2 per year.
If you have children, you may be entitled to housing tax relief of between 10 – 15% for each dependant.
Finally, if you carry out major works to your property, you are required to advise the tax authority (Form IL 6704), who will then undertake a revaluation of the property.
The revaluation will be necessary if the works increase by at least 10% of the rateable value of the property.
How to pay Taxe Fonciere or Habitation online?
There are two options available for handling the tax paperwork:
-
You can complete the process yourself by visiting the government website and following the steps outlined in French.
-
Alternatively, you have the option to entrust all the tax paperwork to our French property tax advisors who can handle the entire process on your behalf online.
What is Cotisation Foncière des Entreprises (CFE) tax?
Renting out furnished property is a professional business activity that is liable to a tax called the business property tax, also known as “la cotisation foncière des entreprises” or CFE.
The CFE tax is an annual tax that property owners of furnished properties have to pay. It is based on the rental value of the property.
If you declare your income using the real mode of taxation, this tax applies to you.
However, if your property is unfurnished or leaseback, you don’t have to pay CFE.
Many property owners end up paying more than they should, but they can apply for a refund of the extra amount.
Also, homeowners are not required to pay CFE tax in the first year of owning the property. Our tax experts can help you get your CFE refund.
Who has to pay CFE tax in France?
CFE tax must be paid by people renting furnished property in France, who have registered their activity as non-professional furnished letting -LMNP- Location Meublée Non-Professionnelle.
You don’t have to officially sign up as a ‘professional landlord’ with the authorities to be responsible for the business rates.
The amount of the tax is based on the size and type of the property, as well as its location.
No matter if the property is rented out or occupied, the owner is liable for this local tax.
It’s important to note that the CFE is due regardless of whether or not you are a resident of France.
If you are not a resident, it’s advisable to appoint a tax representative in France to handle your tax affairs on your behalf.
Our French property tax experts can help you pay your tax due in France and claim a reduction of the paid CFE.
Who is exempt from CFE?
You will not be charged CFE in your first year of ownership of the property, or if your annual turnover is under €5,000.
Renting out your main or second home occasionally is exempt from business rates, as long as you live in the property when it’s not being rented. This exemption also applies to reasonably priced rentals used as the main home by the occupant.
Additionally, unless the local council decides otherwise, owners of a bed and breakfast (chambre d’hôte) or classified vacation rental (meublé de tourisme classés) are also exempt. This exemption covers the rental of any part of a main or secondary residence, whether it’s furnished for tourism or not.
In the first year of starting a business, you don’t have to pay any rates, and in the second year, it’s at a 50% rate.
Several professions are exempt from CFE including farmer, author, composer, painter, and sculptor. Also, certain businesses in development areas and seasonal businesses may get a tax reduction.
Can you pay too much CFE and get a refund?
Yes, it’s very common for French property owners to overpay on their CFE tax bill.
The good news is that, if this happens to you, PTI Returns can help you claim your CFE refund from the tax authorities.
Exactly how much you can claim will depend on your circumstances.
How do I apply for a CFE refund as a non-resident landlord?
To apply for a CFE refund as a non-resident landlord, you’ll need to complete and submit the appropriate form to the French local tax authorities.
You’ll need to provide information about the property, your ownership of the property, and your non-resident status.
It’s a good idea to seek the advice of a qualified tax professional to ensure that you are completing the form correctly and to maximize your chances of getting a refund.
Got questions? Request a free callback from a tax expert.How long does it take to get a CFE refund as a non-resident landlord?
The process of getting a CFE refund as a non-resident landlord can take several months.
Once you’ve submitted your application, it will be reviewed by the local tax authorities. If your application is approved, you’ll receive a refund of a part of the CFE that you’ve paid.
Is it possible to appeal a denied CFE refund as a non-resident landlord?
If your CFE refund application as a non-resident landlord is denied, you do have the right to appeal the decision.
You’ll need to provide additional information or evidence to support your claim for a refund.
Can I get a CFE refund if I rent out my property in France?
Yes. It’s possible to get a CFE refund if you rent out your property in France, but it will depend on the rental income you have earned.
It’s a good idea to consult with a French property tax advisor to determine if you are eligible for a CFE refund and to help you with the process of applying for a refund.
Can I get a CFE refund if I own multiple properties in France?
Yes, if you own multiple properties in France, you may be eligible for a CFE refund for some or all of the properties, depending on the specifics of your situation.
How long do I have to wait to get a CFE refund after I sell my property in France?
If you sell your property in France and are eligible for a CFE refund, you’ll need to wait until the end of the tax year to receive your refund.
Which countries have tax relief agreements with France?
France has signed international tax agreements with more than 120 countries.
In other words, if you are a citizen of one of the countries listed below, you may be exempt from, or entitled to a reduced rate of CFE or housing tax in France.
| Albania | Algeria | Andorra | Argentina | Armenia |
| Australia | Austria | Azerbaijan | Bahrain | Bangladesh |
| Belarus | Belgium | Benin | Bolivia | Bosnia and Herzegovina |
| Botswana | Brazil | Bulgaria | Burkina Faso | Cameroon |
| Canada | Central African Republic | Chile | China | Congo, Republic of |
| Croatia | Cyprus | Czech Republic | Ecuador | Egypt |
| Estonia | Ethiopia | Finland | Gabon | Georgia |
| Germany | Ghana | Greece | Guinea | Hong-Kong |
| Hungary | Iceland | India | Indonesia | Iran |
| Ireland, Republic of | Israel | Italy | Ivory Coast | Jamaica |
| Japan | Jordan | Kazakhstan | Kenya | Korea, Republic of |
| Kosovo | Kuwait | Kyrgyzstan | Latvia | Lebanon |
| Libya | Lithuania | Luxembourg | Macedonia | Madagascar |
| Malawi | Malaysia | Mali | Malta | Mauritania |
| Mauritius | Mayotte | Mexico | Monaco | Mongolia |
| Montenegro | Morocco | Namibia | Netherlands | New Caledonia |
| New Zealand | Niger | Nigeria | Norway | Oman |
| Pakistan | Panama | Philippines | Poland | Polynesia |
| Portugal | Qatar | Quebec | Romania | Russian Federation |
| Saudi Arabia | Senegal | Serbia | Singapore | Slovakia |
| Slovenia | South Africa | Spain | Sri Lanka | St Martin, St Pierre and Miquelon |
| Sweden | Switzerland | Syria | Taiwan | Thailand |
| Togo | Trinidad and Tobago | Tunisia | Turkey | Turkmenistan |
| Ukraine | United Arab Emirates | United Kingdom | United States | Uzbekistan |
| Venezuela | Vietnam | Zambia | Zimbabwe |
What will happen if I don’t pay the CFE tax in France?
If you fail to pay the CFE tax in France, you may be subject to late payment penalties and interest charges.
In addition, the local tax authorities may place a lien on your French property or pursue other collection actions.
If you own a rental property in France, it’s important to understand your tax obligations and ensure that you comply with the local tax laws.
If you have any questions about the CFE or other French property taxes, it’s a good idea to seek the advice of a qualified property tax professional like Property Tax International (PTI Returns).
We provide CFE tax services to non-resident landlords.
Our property tax specialists are qualified to provide you with the information you need to ensure that you comply with the French local tax laws and to avoid any potential penalties.
What are the deadlines for Taxe Foncière, Taxe d’Habitation, and CFE?
Individuals need to pay local taxes, like property taxes, within 30 days of receiving the tax notice. If payment is made 45 days later, there’s a 10% late payment increase.
The deadlines fall on different dates each year.
The tax bill for the property tax (Taxe Foncière) is usually issued in September, and the payment deadline is 15 October.
If paying online, you have until October 20th (or 25th with bank levy). You can also request monthly tax payments.
The bill for the residence tax (Taxe d’Habitation) is sent out in late September or early October, and the payment deadline is 15 November.
You can choose to pay this tax in monthly installments if you request it.
Meanwhile, the deadline to pay your CFE tax bill is 15 December each year.
Second homeowners typically have payment deadlines that are shifted by a month compared to primary homeowners, although this may not be the case in all situations.
Who can help me with my French tax obligations?
If you are a real estate investor with a property in France, Property Tax International (PTI Returns) can help you manage your French tax obligations and help you get your CFE refund.
We provide tax return services for property owners from all over the world.
So, whether your property is furnished or unfurnished, we offer a range of French tax filing services to suit your needs.
With unrivaled knowledge of French tax legislation, our team will minimize your tax liability by ensuring you avail of every relief you’re entitled to.
Save time and stress when filing your international property tax return.
What are the reasons why PTI Returns is better than a local accountant?
Here are some reasons why our clients owning French real estate prefer PTI Returns instead of local French accountants:
-
- Better value – we offer a more affordable service than your local accountant.
- One-stop shop – need to file tax documents in more than one jurisdiction? You can do it all online with PTI Returns.
- Tax specialists – We know international property tax! We guarantee to properly determine your residency status and apply every tax relief you’re entitled to.
- No language barrier – we speak our client’s language and communicate with the local tax authorities on their behalf, ensuring their forms are filed correctly.
- Local knowledge – we have offices all over the world. This enables us to have substantial local knowledge in every country and help you to maximize your investment profit potential.
