February 29, 2024

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Find out more about the tax reduction

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WHAT IS INCOME TAX?

Any person domiciled in France for tax purposes is liable for income tax or corporation tax (IS) for companies, as are persons domiciled abroad for tax purposes but receiving income from French sources.

Levied directly by the State, so- called direct income tax is calculated on the sums collected by the tax household . The tax household can be made up in several ways: a single person, a married couple, a married couple with dependent children, etc. It will be calculated on the salaries and all the sums received by the natural persons who make up the household (salaries , rents collected, pensions, dividends, etc.). It is a progressive tax : the marginal tax rate is linked to the taxable income, the higher it is, the more the rate increases between 0% for the lowest and 45% for the highest. For the calculation of the tax also enter into account the composition of the hearth according to the number of parts which compose it.

In France, as in many countries, income from work is not the only one to be subject to tax. Heritage, such as real estate or income from capital are also subject to tax. However, the taxation applied differs.

The flat tax

Income from capital, generated by financial investments, is, since 2019, subject to the ”  flat tax “, also called Unique Flat Tax. This income must also be declared to the tax authorities each year and is taken into account in the calculation of income tax.

The IFI

Another still different tax system: the Real Estate Wealth Tax (IFI) . Coming to replace the ISF (wealth tax), the IFI follows a different logic. This tax applies to taxpayers whose property assets exceed a certain threshold. It is added to the income tax.

Personal taxation and corporate taxation

To know how to reduce your income tax, it is essential to understand the intricacies of personal and business taxation . Selexium makes its knowledge in this area available to its customers.

What is the difference between tax reduction, tax deduction and tax credit?

A tax reduction

The tax reduction is a sum whose amount will be deducted from the amount of your taxes. It obviously only applies when the taxpayer has an amount of tax to pay to the tax authorities.

A tax deduction

The tax deduction corresponds to an amount that will be removed from the amount of the taxpayer’s tax. Again, it will only be applied if the taxpayer is taxable.

A tax credit

The tax credit is also an amount that will be subtracted from the total amount of tax to be paid by the taxpayer, obtained for example following the costs generated by the care of a child under 6 years old. Unlike the tax reduction and deduction, even if the taxpayer is not taxable, he will still be reimbursed for the amount in question.

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