“Talking Expat “”Taxe”” Time”

I’ll bet many of you Americans are feverishly preparing your tax returns to submit by midnight tomorrow night, April 15th. Lucky us…if you are a U.S. citizen or “resident alien” (I love this term — makes me think of E.T!), living and working (or on military duty) outside the U.S. and Puerto Rico, you have plenty more time — until June 16th.

The French have a little more time to submit their returns — May 5th for professionals and companies, May 30th for individuals and taxes may be paid in installments depending on the circumstances based on the previous year’s declaration — but mostly paid in three: February 15, May 15 and September 15 (“le solde”).

Aside from income tax, residents of a property pay an annual habitation tax (“taxe d’habitation”), regardless of whether they are the owner or renter, occupying the property on the first day of January. It’s calculated on a complicated formula roughly based on the rental value of the property.

Tacked on to that is one I’d guess is cheated on more than any other — the “Redevance Audiovisuelle,” or Television Tax, paid by every household with one or more televisions. It is designed to go toward funding public programming (France Télévisions, Arte-France, Radio France, RFO, RFI, Institut national de l’audiovisuel) and was important when comm

ercial television didn’t exist here. It was easier to cheat on it before cable TV existed and you could buy a second hand television and then claim you didn’t own one, seeing as there was no proof. In 2007, the tax was 116€…just to watch a little CNN, BBC or France 24 in English (my favorite). Both taxes are due before November 15th.

If you own property, then you will be liable for annual property taxes (“Taxe Foncière”). The basis for the tax is determined by the “valeur locative cadastrale” — or the annual rent on the open market, but the true formula per district is quite complicated. Even the official government site doesn’t explain it in detail, so don’t even try! I view it as a big pie representing the “budget” that is cut up into as many pieces as exist to fulfill the needs of the budget. So, the more densely populated or commercial a district, the more pieces of the pie, therefore the lower the tax per owner.

In comparison to annual U.S. property taxes, which range from .5% to 3.5% of the assessed value of the property, Taxe Foncière is less than .001%! In Paris, the taxe is quite a bit lower than in the countryside where fewer individuals or businesses support the “pie” and I find that Taxe d’Habitation is normally about the same as Taxe Foncière. Neither are hardly worth discussing!

Recently Brian Knowlton wrote in the International Herald Tribune (April 1st), that “U.S. Expats Fight Their Soaring Tax Burden” — about the change in the American tax code which took place two years ago, raising the Expat’s tax burden making it more expensive for U.S. companies operating abroad to keep Americans on their payrolls. The U.S. is the only country taxing its citizens on foreign earned income. The current non-taxable limit is $82,400, but anything over that is double taxed. Knowlton says that “A few Americans have even renounced their citizenship because of soaring tax bills.”

I questioned my own CPA in the U.S., John Gosch of Ironbridge, LLP , who said that he has “seen foreign employers in the past replacing U.S. employees — one of the reasons why you do not see so many Americans as employees on foreign registered cruise ships.” Americans abroad get ‘hammered’ by paying the difference in the U.S. tax and end up expecting higher salaries to make up the difference. The subject is often tossed around in congress, but he noted that “some congressmen actually have questioned why ‘mink swathed’ Americans living abroad should get a special tax break.”

Guess now we know what they think really think of us ‘traitors’ living outside the U.S.! Can’t you just imagine me swathed in all that mink thanks to all that foreign earned income? Ha! Muskrat maybe. Mink? I wish.

A la prochaine…

Adrian Leeds
Editor, Parler Paris