New Tax on savings and dividends 24%


For anyone who has a savings plan in France there will be a shock when you get your next statement a 24% reduction!!!!

But all is not lost, here is the text of the advice I have just received from Credit Agricole

Tax legislation for 2013 income came into effect on 01/01/2013, and the new tax laws state that for income on savings and investments, there is now an advance of tax at a flat rate of 24% for interest and 21% for dividends taken at source in the same manner as social contribution tax; collected directly by the bank on behalf of the tax authorities.

This is however just an advance: you will still end up paying tax at the usual rate of income tax on all your income, and you declare the income from your savings as per normal.

What has changed is that the flat rate which exonerated tax payers from declaring the income from savings has disappeared; everyone must pay tax according to their tax bracket. Everyone must pay a 24% advance in tax, and then when tax returns are made for income 2013 (so in 2014), the tax authorities will reimburse any difference owed to those who are under a 24% tax bracket (difference between 24% and their highest tax rate – in France it’s a progressive rate), and claim payment for the difference from tax payers with a higher tax rate than 24%.

There is a way to be exonerated from this advance if your income is relatively low: those with a “revenu fiscal de reference” lower than 25 000 € for a one-person household, and those with a “revenu fiscal de reference” lower than 50 000 € for a couple can fill in a form requesting to be exempt from the 24% advance, and to pay tax at their standard tax rate only when the tax returns are sent out.

This form must be filled out with your bank and sent to the relevant tax authorities before the end of March, and this procedure must be repeated every year for the exoneration to remain in place.

We are not certain for the moment what will happen for those who will send in this form before the end of March in order to be exempt from the advance in tax for income 2013, but who have already paid an advance in tax on interest received since the beginning of the year (for example bonds with quarterly interest). We imagine however that they won’t be exonerated on the advance in tax they have already paid, and they will probably only be reimbursed at the end of 2014 for the amount they have overpaid.

Discuss ;-)