Having paid or contested it (as many S1 holders have successfully done in respect of the social tax or prélèvements sociaux – see Exemption from French social charges with S1 form), one’s mind is concentrated between now and the end of the year in reducing the next bill.
Here are some tips:
Pension Planning: for those who are still working, there is plenty of encouragement from the French government to ease the State burden by topping up your pension provision with a tax-efficient pension plan. The self-employed have the disposition of the Loi Madelin, while employed people can use the PERP; both programmes offer a handsome degree of tax deductibility whereby premiums paid are deducted from taxable income.
Property Investments: under the Loi Pinel, one can invest up to €300,000 in a new build project giving an annual reduction in your tax bill of €5,500 for 12 years. The property must be rented out on a permanent basis with government-decreed guidelines on the maximum amount of rent you can receive. The advantage, therefore, is not so much in rental income but in the tax deductibility.
Home Improvements: anything that can save energy is looked upon with a favourable eye by the tax office; up to 30% of your energy-saving home improvements give rise to a tax credit, up to a maximum ceiling of €8,000 for a single person, €16,000 for a married couple. Lots of items are eligible, from double-glazing to heating to roof insulation to hot water heaters. Be warned, however, the work must be carried out by a qualified professional and it’s only the material that gives rise to the tax credit, not the labour.
Donations: we all give a few hundred euros a year to the Red Cross or Médecins sans Frontières, but few people see the tax efficiency of this. Effectively, 75% of your donation is tax deductible up to €529 a year. So well worth doing, for lots of good reasons!
Investing in Small Business: any business with less than 50 employees and an annual turnover of less than €10,000,000 is eligible and you can invest up to €50,000 as a single person or €100,000 as a couple with a tax deduction of 18% of the money invested. The only condition is that you need to hold onto your shares for a minimum of 5 years. Many Business Angel platforms can guide you to worthy causes!
Be careful not to get too carried away, as some of the above measures come under an overall cap of €10,000 of deductibility and obviously there are only a few months left of 2015 to reap the benefit in next year’s tax return. Allez, hop!