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Read our new post on “taxe d’habitation” (“French taxe d’habitation: calculation and explanations on tax statement”) for further details on calculation and how to understand your tax role… also the latest post “taxe fonciere on French properties: significant increase over the past 5 years. Access to tax rate and increase everywhere in France!”

The “Observatoire SFL-forum” (1) has just released its yearly survey on local taxes in France, and it is a “must read” if you would like to buy a French property! The main French cities (41 towns with more than 100 000 people) increased their local tax rate on property by only 0.1% (2) in 2013. One may suspect that the next 2014 town hall elections have been an incentive for a wise management of the cities’ budget…  However, you have to add the 1.8% general increase of the “tax” rental value, leading to a moderate tax rise in 2013 by +1.95%, roughly the inflation rate.  “Taxe foncière” and “taxe d’habitation” are the main “local taxes” or “taxes locales” in plain French (see our post “rate and ranking of “taxe d’habitation”  and “rate and ranking of taxe fonciere” for a brief description of these taxes). In 2013, only 22% of the biggest French towns increased their local tax rate (3), Clermont-Ferrand recorded the highest increase at 1.8% (4).

The survey also calculates for each city, the local taxes paid by a family with two children living in their own property  -with a salary above Euros 42 923 per year- (5) (see spreadsheet 1 and 2). As a reminder, the “taxe d’habitation” is calculated by multiplying the rate set by the local authorities with the “tax” rental value of the property. Warning: this is different to the “market” rental value. For the “taxe foncière” the rate is multiplied by the “tax” rental value after a 50% rebate.

The median local tax (taxe foncière + taxe d’habitation) stands at Euros 2052 per year. However it varies widely from one city to another.  Paris and Villeurbanne rank as the cheapest (respectively Euros 1097 and Euros 1276 per year) and stand as outliers. Boulogne-Billancourt, Mulhouse, Lille, Lyon and Strasbourg rank between Euros 1500 and Euros 1700 per year, while a group of 19 cities clusters within the 1900-2200 range. The most expansive ones (above Euros 2400) are the 3 main cities of the Languedoc region (Montpellier, the highest tax at 2551, Perpignan and Nimes) and the capital of Picardie (Amiens). However, the cities have a decentralised power to grant exemptions or rebates for less affluent families based on revenues thresholds. These rebates/ exemptions only apply to the “taxe d’habitation”. For most cities, 50 to 60% of the inhabitants may benefit from tax rebates or exemption, the percentage goes above 70% in Nimes and Perpignan, while it stands below 40% in Paris (32%) and Boulogne-Billancourt (26.2%). Also, a couple with 2 children benefits from a tax rebate (for the “taxe d’habitation”) between 10 to 20% and a family with a 3rd child will benefit from an additional rebate of 15 to 25%. You can see that we know how to make things simple in France when dealing with tax matters! There is no rebate / exemptions for the “taxe foncière”.

We also adapted the survey data, to calculate the average “taxe foncière” paid by a property investor (see spreadsheet 3). You probably know that as a “property investor” you only pay the “taxe foncière” while the tenant pays the “taxe d’habitation”, if he is a permanent tenant. We deliberately recalculated the survey data with a lower rental value (1 time the average “tax” rental value, instead of 1.5 time in the survey) as French property investors tend to invest in smaller properties. The “taxe foncière” median for the 41 biggest cities is at Euros 687 per year, while the tax spans from Euros 393 in Lille to 881 in Amiens.  Among the cities below Euros 500, we also find Villeurbanne, Paris, Strasbourg, Mulhouse, Lyon, and the towns with a tax above 800 include Angers, Caen, Le Havre, Orleans, Perpignan, and Montpellier…

(1)“Observatoire SFL-forum”*: is a forum- observatory on the management of French local councils (“Forum pour la gestion des villes et des collectivites territoriales”)

http://www.forumgv.com/

You can find the detailed tax survey on (in French):

http://www.forumgv.com/ETUDESFL/Observatoire%20SFL-FORUM%20-%20%20Fiscalit%C3%A9%202013%20des%20grandes%20collectivit%C3%A9s%20locales.pdf

 

(2) local tax rate increase for the previous years:  0.2% in 2012, 0.9% in 2011, 2.8% in 2010…and +5.1% in 2009, higher increase were partly due to the devolution of more power from the French state to the local councils (jointly with a decrease of French state reallocation of taxes to the town halls) and the suppression of the “taxe professionnelle” a local tax which used to be paid by companies.

(3) versus 29% in 2012, 41% in 2011, 54% in 2010, 68% in 2009

(4) For an exhaustive view of the local tax increase, the change of “departments” tax rate on the “taxe foncière” should be taken into account. The rates increased by 1.8% in 2013 on average, but the impact on the local taxes of the 41 cities (>100 000 people) is not significant.

(5) As a reminder, the “taxe d’habitation” is calculated by multiplying the rate set by the local authorities (=city rate for the “commune” plus in some case “city group” rate for the “groupement”) by the rental value of the property. For the “taxe foncière” the overall tax rate (which also includes a tax rate for the “départements” on top of the “commune” and “groupement” rate) is multiplied by the rental value after a 50% rebate. The survey uses a rental value of 1.5 times the average ”tax” rental value in each city (warning: this is not the market rental value!). The rental value for the tax depends on the degree of “comfort”, the size and the building construction date; therefore it can vary widely from one property to another within the same city. The ”tax” rental values have not been updated since the early 1970ies (apart from a general and uniform increase all over France, e.g. 1.8% in 2013 and 2012, 2% in 2011).The government has launched a review of the “tax” rental values, to better reflect the “market” rental value which is due to be completed within 4 years. The taxes figures in the 1stand 2nd  spreadsheets are calculated for a couple with two children living in a dwelling whose rental value is 1.5 times the average rental value of housing in the municipality. There is no rebate related to the revenue of the family, which means that the family earn at least Euros 42 923 per year. Read our new post on “taxe d’habitation” (“French taxe d’habitation: calculation and explanations on tax statement”) for further details on calculation and how to understand your tax role

Spreadsheet 1:

calculation of “taxe fonciere” and “taxe d’habitation” (couple with 2 children and revenues above Euros 42 923 per year living in their own property with a “tax” rental value of 1.5 times the average “tax” rental value in each city) The taxe fonciere includes also the share of the “départements”.

tax fonciere and tax habitation SFL forum GIFf

source : 2013 “note d’information” on “fiscalite des grandes collectivites locales” Observatoire SFL-Forum

Spreadsheet 2:

total taxe fonciere (TF) + taxe d’habitation (TH)by alphabetical order and ranking (for a couple with 2 children and revenues above Euros 42 923 per year, living in  their own property with a rental value = 1.5 time the average “tax” rental value)

TF + TH ranking SFL forum

Source: adapted from 2013 “note d’information” on “fiscalite des grandes collectivites locales” Observatoire SFL-Forum

Spreadsheet 3

cities’ alphabetical order and ranking for taxe fonciere paid by property investors (for a 1 time average “tax” rental value)

TF investors SFL forum

Source: adapted from 2013 “note d’information” on “fiscalite des grandes collectivites locales” Observatoire SFL-Forum