What is taxe d’habitation and do I have to pay it?

Taxe d’habitation is a residence tax homeowners have to pay in France, similar to UK council tax. Find out what it is, how it is calculated, who has to pay it and details of recent reforms to the tax

What is taxe d’habitation?

The taxe d’habitation is the occupier’s rates, roughly equivalent to council tax in the UK. The funds collected are split between the commune and the group of communes that the commune belongs to. TV licence fees are recovered at the same time as the taxe d’habitation, on the same demand. It should be noted that if you have more than one property in France, you will only pay the TV licence once, even if you have a TV in both properties.

Who pays taxe d’habitation?

This is due by the person residing in the property as at 1 January of the year of charge, whether this is a tenant (paying or otherwise) or the owner.

If the property is rented out for short-term holiday lets or is used as a holiday home only, the owner will normally remain liable to this charge. In years of purchase or sale of a property, the taxe d’habitation is usually payable by the vendor.

How is my taxe d’habitation rate calculated?

Similar to the taxe foncière, the tax is based on the cadastral ‘rental’ value of the property. This value is reduced by certain abatements when the property concerned is the main residence of the taxpayer. Rates are set at commune level so vary depending on where the property is situated. Taxe d’habitation demands are normally sent out in August/September, and are payable in October/November. It is possible to choose to pay the tax due in monthly instalments.

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The government has declared that 80% of households won’t pay taxe d’habitation from 2020 – does this include me?

In 2017 the French government announced reforms to taxe d’habiation which are expected to benefit 80% of households. The reforms are being phased in over three years so that eligible households will see a 30% reduction in their taxe d’habitation bill in 2018, a 65% reduction in 2019 and a 100% reduction in 2020. 

To qualify for the reductions a single person must have a maximum income of less than €27,000 (after tax), a couple with no children must have an income of less than €43,000 (after tax) and this increases by €6,000 for each dependent (child) in the household. TV licences are still payable and these reforms don’t apply to second homes (see below). 

In May 2018 the government published a report on reforming local taxes which stated that taxe d’habitation would be completely abolished by 2021.

Who is exempt from taxe d’habitation?

People who are resident in France may be exempt from paying the taxe d’habitation due in relation to their main residence in any of the following situations:

1. They are in receipt of any of these state benefits: allocation supplémentaire d’invalidité (supplementary disability benefit); allocation de solidarité aux personnes agées (solidarity allowance for the elderly); allocation aux adultes handicaps (disabled adults’ allowance) and their income falls below certain thresholds;

2. They are over 60 years old and not liable to French wealth tax and their income falls below certain thresholds;

3. Widows and widowers of any age, who are not liable to French wealth tax and their income falls below certain thresholds;

4. They are handicapped or infirm and unable to support themselves through work and their income falls below certain thresholds.

There may be other exemptions or reductions that apply, depending on the commune and what resolutions have been passed (for instance the commune can resolve to exempt meublés de tourisme in areas which are classified as zones rurales de revitalisation). You should speak to your local tax office to obtain further details.

Who receives partial relief from taxe d’habitation?

When the above does not apply, the taxe d’habitation can still be reduced for those on low incomes, in relation to their main residence only. The reduction is calculated as the fraction of the taxe d’habitation charge which exceeds 3.44% of the taxpayer’s income (the RFR less an abatement which varies depending on the number of family shares).

The above should be carried out automatically by the French tax office, but if it has not been, you can request that they apply this.

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What are the thresholds?

The income threshold is reviewed by reference to the revenu fiscal de reference (RFR) of the household (net income as shown on the annual French income tax demand) and the threshold varies depending on the number of family shares of the household. For a single person with one family share, the threshold is €10,815 (2017 income, for the 2018 taxe foncière/taxe d’habitation). This is increased by €2,888 for each additional half share, which means that a married couple with no dependants who benefit from two family shares would need to have an RFR of less than €16,590 (2017 income, for the 2018 taxe foncière/taxe d’habitation) to benefit from the exoneration.

Increase in taxe d’habitation for second homes

In a bid to clamp down on second homes that are empty for much of the year or are used for Airbnb-style short-term lets, the French government has authorised a steep increase in taxe d’habitation in towns where the demand for houseing outstrips supply – called ‘zones tendues’. Councils will be able to increase the tax by up to 60% in 1,151 towns and cities in these ‘tension zones’. Thes decision was left to individual préfectures but many are expected to leap at the opportunity to make up the gap left by scrapping the taxe d’habitation for 80% of households across France. Paris and Nice have already imposed the maximum 60% increase while St-Jean-de-Luz has imposed a 40% hike and Bordeaux a 50% increase. Other places eligible to impose the increase in taxe d’habitation for second homes are Nantes, Montpellier, Marseille, La Rochelle, Aix-en-Provence and Archachon. You can find out if your town is included on www.service-public.fr/simulateur/calcul/zones-tendues.

Written by Kate Brehaut, owner of La Belle Vie (Guernsey) Limited in 2017, updated in April 2018.

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