French Tax for British Expats: Income Tax, Social Charges and Succession

France is home to a substantial British expatriate community, concentrated in Paris, Provence, the Dordogne, Brittany, and the Cote d'Azur. It is a wonderful country to live in — but the French tax system is demanding by international standards, and the combination of progressive income tax rates and substantial social charges on investment income makes France one of the highest-tax environments for internationally mobile HNW individuals.

This guide covers the key elements of French taxation for British residents: tax residency, income tax, social charges, the IFI wealth tax, assurance vie investment wrappers, French succession law, and the French exit tax.

French Tax Residency

France uses multiple tests to determine tax residency, and meeting any single test creates French tax residency for the full calendar year.

Principal home: If your principal home — your foyer — is in France, you are French tax-resident regardless of days spent. Your foyer is where you or your family habitually live, not merely where you own property.

183-day rule: If you spend more than 183 days in France during the calendar year, you are French tax-resident.

Principal professional activity: If your main professional activity — employment or self-employment — is exercised in France, you are French tax-resident even if you live elsewhere.

Centre of economic interests: If France is where you hold most of your investments, where your business interests are centred, or where most of your income is generated, France claims tax residency.

French residents are taxed on their worldwide income. The UK-France double tax treaty (1968, updated by 2008 and 2009 protocols) allocates taxing rights between the two countries and provides relief mechanisms, but it does not eliminate French tax on most categories of income for French residents.

French Income Tax Rates

French income tax (impot sur le revenu) is progressive and calculated on "parts" — the household income is divided by the number of household parts (one part per adult, additional parts for children), with the tax calculated on each part and then multiplied back up. This "family quotient" system reduces the tax burden for families with children.

The 2026 marginal rates (applying to 2025 income) are approximately:

• Up to €11,600: 0%
• €11,600 to €29,579: 11%
• €29,579 to €84,577: 30%
• €84,577 to €181,917: 41%
• Above €181,917: 45%

In addition to income tax, a 3-4% surtax applies to high earners (contribution exceptionnelle sur les hauts revenus).

These rates apply to salary, business income, and pension income. Investment income may be subject to either the progressive scale or a flat tax (prelevement forfaitaire unique, or PFU) — see below.

The Flat Tax on Investment Income (PFU)

Since 2018, France has taxed most investment income (dividends, interest, capital gains on financial assets) under the prelevement forfaitaire unique (PFU) — a flat tax of 30%. This breaks down as:

• 12.8% income tax (flat rate)
• 17.2% social charges (prelevement sociaux)

Taxpayers can elect to opt out of the PFU and be taxed at the progressive income tax rates instead — which may be beneficial for lower-income households but is almost always worse for high earners.

The Social Charges: A Critical Distinction

The prelevement sociaux — social charges — are levied at 17.2% on investment income, dividends, capital gains on financial assets, and rental income. They are not income tax — they are contributions to the French social security system.

For British nationals living in France since Brexit, the position on social charges has been uncertain and evolving. The general principle established by EU law was that if you are paying social security contributions in another EU member state, France cannot levy its own social charges on your passive income. British nationals paying UK National Insurance may be able to claim exemption from certain French social charges on investment income under the withdrawal agreement and subsequent guidance.

In practice, the position depends on the specific type of income and requires confirmation from a French tax adviser. The reduction in social charges (from 17.2% to 7.5% on some income types) can be very significant for those with substantial investment portfolios.

Rental Income in France

French rental income is taxed under one of two regimes:

Foncier (unfurnished letting): Real expenses are deductible (mortgage interest, repairs, management fees, insurance, property tax). If annual gross rents are below €15,000, a simplified Micro-Foncier regime allows a 30% flat deduction for expenses.

Meuble (furnished letting): A more favourable regime. Under the Micro-BIC simplified option, a 50% deduction for expenses applies (or 71% for classified gites and chambres d'hotes). Under the actual expenses regime, furniture depreciation and all real expenses are deductible.

UK rental income received by a French resident is taxable in France (after a credit for UK tax paid), under the UK-France DTT's mechanism for relieving double taxation — France credits the UK tax paid against the French tax due on the same income, rather than exempting the income.

The IFI Wealth Tax

The IFI (Impot sur la Fortune Immobiliere) replaced the old ISF (Impot de Solidarite sur la Fortune) in 2018. Unlike the ISF, which applied to all wealth, the IFI applies only to net real estate assets.

Who is liable: French residents are liable to IFI on worldwide net real estate assets above €1.3 million. Non-residents are liable to IFI on French-situs real estate above the same threshold.

What counts as real estate: Property owned directly; shares in property-holding companies (societes civiles immobilieres, or SCIs) to the extent attributable to real estate; and indirect real estate holdings through investment funds or listed companies with predominantly real estate assets.

Rates: After a tapering allowance, the effective rates are:

• 0% on assets below €800,000
• 0.5% on assets between €800,000 and €1.3m
• 0.7% on assets between €1.3m and €2.57m
• 1% on assets between €2.57m and €5m
• 1.25% on assets between €5m and €10m
• 1.5% on assets above €10m

Mortgages and debts secured against real estate are deductible. The IFI return is filed as part of the income tax return.

Assurance Vie: The French Investment Wrapper

The assurance vie (life insurance contract) is one of the most important financial planning tools in France. It operates as an investment wrapper — the policyholder makes contributions, which are invested in a range of underlying funds. The investment returns accumulate within the contract, and tax is deferred until withdrawal.

Income tax on withdrawals: Withdrawals are partially return of capital (not taxed) and partially gain. The gain element is taxed as follows:

• For contracts less than 8 years old: PFU at 30% (12.8% income tax + 17.2% social charges)
• For contracts held more than 8 years: 7.5% income tax on the gain element (plus social charges), after an annual allowance of €4,600 (single) or €9,200 (couple) of gains tax-free

The 8-year threshold for preferential rates makes assurance vie most suitable as a long-term holding vehicle.

Succession advantages: The assurance vie has important succession benefits. Capital invested before age 70 (and the associated gains) passes to named beneficiaries outside the French succession rules. Each beneficiary receives a tax-free allowance of €152,500; the excess is taxed at 20-31.25%. Capital invested after age 70 is treated differently: only contributions above €30,500 are included in the estate, though gains remain outside the estate.

Use by British expats: Many British expats in France use assurance vie policies alongside or instead of offshore bonds, particularly because of the 8-year rule and the succession advantages. It is important to note that an assurance vie is a French domestic product — the succession and tax advantages apply under French law and may not be recognised in other jurisdictions.

French Succession Law: Forced Heirship

France applies "forced heirship" — the "reserve hereditaire" — which requires a minimum portion of the estate to pass to children, regardless of the contents of a will. The reserved portion is:

• 1 child: one half of the estate
• 2 children: two thirds of the estate
• 3 or more children: three quarters of the estate

The "quotite disponible" (the freely disposable portion) is what the deceased can leave as they wish. Spouses have certain protected rights but are not "heirs reserves" in the same sense.

Post-Brexit implications: The EU Succession Regulation (Brussels IV) allows EU nationals resident in an EU member state to elect the law of their nationality to govern their entire succession. British nationals can still make this election (choosing UK succession law), but since the UK left the EU, the implementation of the election has become more complex — particularly in ensuring French courts recognise and apply a choice of UK law. A French notaire experienced in cross-border succession is essential.

Assurance vie contracts can pass assets outside forced heirship rules to named beneficiaries (within the limits described above) — making them a key succession planning tool for those with children from prior relationships or who wish to benefit a partner who is not a spouse.

The French Exit Tax

France levies an exit tax (impot de sortie) on unrealised capital gains when individuals cease to be French tax-resident, if they have been French-resident for at least 6 of the last 10 years.

The exit tax applies to unrealised gains on:

• Securities (shares, bonds, fund units)
• Rights attached to company profits
• Claims at market value above cost

The tax is calculated as if the assets had been sold on the day of departure, at the normal capital gains rate plus social charges. However, a deferral is available in many cases — particularly when moving to another EU or EEA country (including post-Brexit transitional arrangements in some cases). Payment can be deferred until actual disposal of the assets.

How Global Investments Can Help

France presents a demanding tax environment for British expats, with high marginal rates, substantial social charges on investment income, complex succession law, and the IFI wealth tax. Getting the structure of your investments and estate plan right — including the appropriate use of assurance vie, the potential for social charge exemption, and succession planning under French law — requires coordinated advice across the UK and French tax dimensions. Global Investments advises British expats in France and works alongside specialist French advisers to ensure your financial plan is effective under both UK and French law. Please speak with one of our advisers.