Alternatively, you can declare the
dividends under the ‘prelevement forfaitaire liberatoire’
(Changes to Dividends ) scheme in France.
This means that you have to complete
a form (2778-DIV) which has to be submitted 15 days after receiving
the dividend along with any payment due to your relative tax office.
This uses the gross amount and does not award any deduction. On
the gross amount, you are taxed 21% AND social contributions in
addition at 15.5%.
This payment made is taken into account
when completing the annual income tax declaration and the dividend
amount is included BUT it will not be subject to further income
taxation but used to give a global overview of your income received
to determine the RFR (Revenu Fiscal de Réference) which
determines any reductions and credits you could benefit from depending
upon your household (foyer fiscal) and overall taxable income.
There has been some discussion that
the PFL option was obligatory IF your RFR was 50.000 € for
a single person or 75.000 € for a married couple BUT this
is not the case as if your dividend is from a foreign (European
source) then this rule does not apply to you and you can opt for
either scheme, whichever being the most beneficial to you.
The main point is to determine, upon
receiving the dividend whether to declare it immediately (within
15 days) under the PFL taxation method OR if it should be declared
solely on the income tax return and benefit from the 40% reduction,
reliant upon which is the most beneficial taxation scheme for
As previously stated, this ruling
is not widely used for foreign dividends and in France every tax
office varies in its interpretation of the rules, especially when
foreign income is involved.
Based on the information received
and researched to date, it would be possible to give an approximation
of tax to pay either:
As a global overview of income
tax and social contribution liability based on annual income
from all sources, including the dividends imply the dividend
to compare with the PFL scheme.
Upon a certain dividend sum being
received and the question of whether you would pay more tax
under declaring the monies under the annual return or the PFL
and which option to take.
I have provided two examples based
on a gross dividend being received of 50 000.00 € and you
can see that there is not a huge difference.
The advantage of the PFL is that you
would have already paid tax on it upon completion of the income
tax return so your overall imposition could be lowered, but the
disadvantage is that you would have to pay the tax immediately
upon completion of the PFL.
If you are concerned by this issue
and the taxation of foreign dividends then please don’t
hesitate to contact me and I cano discuss your options with you
to find out the best way to proceed, remembering that if you opt
for the PFL, there is only a 15 day period before the form has
to be completed and payment made.
‘Please note that this information is based and interpreted
on the understanding on the current French laws and from information
provided by the tax office. These rules are subject to change/interpretation
and therefore ‘Your French Matters’
cannot accept any responsibility for any decision made from this
document. This document is intended for information/guide purposes