A Polish tax resident who obtained income in France under an employment contract must take into account the need to settle tax on that remuneration in France. This should be done using French tax rules specyfing, among others, tax rates, appropriate tax returns etc. Polish regulations don’t apply here.
1. Polish-French double taxation convention
In order to determine the place of tax payment, reference shall be made to the notion of “tax residence”. A natural person has tax residence in the country where the centre of his/her life interests is located or where he/she stays for at least 183 days in a tax year. Thus, he/she should pay tax in this State.
There are possible situations where an individual has tax residence in one country but earned income in another one. In such a case, the provisions of double taxation conventions apply here. The provisions of the agreement between the Government of the Polish People’s Republic and the Government of the French Republic for the prevention of double taxation with respect to taxes on income and on assets (Official Journal of 1977, No. 1, item 5, as amended), hereinafter referred to as the agreement, apply to relations between Poland and France.
It results from the provison of Article 15(1) of the agreement that remuneration for an activity as an employed person is taxed in the country where the work is performed (remuneration obtained in Poland is subject to tax in Poland, that one earned in France is taxed in France). This principle isn’t absolute. Remuneration for paid employment carried out in the second State is taxable in the taxpayer’s country of residence if all of the following conditions are cumulatively fulfilled:
a) the taxpayer stays in the country where the work is performed during one or more periods, not exceeding a total of 183 days in a given tax year,
b) wages are paid by the employer or on behalf of the employer who doesn’t have a place of residence or a head office in the country of the performance of work,
c) remunerations aren’t borne by an establishment or a permanent site which the employer has in the country where the work is carried out (Article 15(2) of the Agreement).
In conclusion. An individual having Polish tax residence, but performing work in France will be required to pay tax in France on income earned in that country. Only exceptionally, if the conditions are cumulatively fulfilled, tax on income obtained in France can be paid in Poland.
2. Tax rates and reliefs concerning settlement of tax
The minimum rate of income tax in France is 20%. However, it has been reduced in relation to income from the French Overseas Departments (the so-called DOM) and is 14.4%. The minimum rate applies to incomes below the set treshold. In 2020, this was €25,710. If the amount of income is higher than the established treshold, the tax rate is 30%, and in relation to income coming from the French Overseas Departments, it is 20%.
As a general rule, non-residents are taxed at the minimum rate. However, when submitting a tax return, a non-resident may apply for tax settement according to average rate. In such a case, the declaration must include all income that the taxpayer obtained in a given tax year, including foreign one, as well as indicate all reliefs applied. The taxpayer should also be able to document all information provided in the return. It’s extremely important as the averaging rate is determined on the basis of a progressive scale which concerns income received worldwide.
The average rate can only be applied in the event that it’s more favourable to the non-resident than the minimum one.
It should be noted here that a person without the status of tax resident in France isn’t entitled to benefit from tax reliefs and tax deductions. However, this rule doesn’t apply to State employees, local authorities or civil and hospital services posted to work in France. They are entitled to settle their taxes on the same basis as French residents.
3. Tax declaration
In order to settle income tax in France, a declaration 2042 shall be sumbitted. It’s accompanied by an annex 2041-e.
Form 2042 is submitted by both residents and non-residents. However, non-residents settle only tax on income obtained in France in the 2042 return.
The declaration is pre-filled by the tax authority. In doing so, the tax authority relies on the information in its possession, e.g. concerning the amount of salary, pension or allowances, family situation. In the event that the tax authority hasn’t pre-filled the return, the taxpayer must complete it himself/herself.
4. Forms of submitting declarations
As a rule, tax settlement should be done online via an individual profile. A profile is created for each taxpayer and is used for communication with tax authorities. The profile contains a tax return – both pre-filled and requiring the taxpayer to complete it himself/herself. It also allows to submit the declaration of income obtained in France.
It’s also possible to submit the declaration in the traditional form, i.e. on paper. The condition for using this form is the inability to settle taxes online (e.g. no Internet access, no individual profile, no fiscal number or when making the first return).
5. What to do with the pre-filled declaration?
It’s necessary to check the pre-filled declaration carefully. Indeed, it may happen that the return contains incomplete or outdated data. For this purpose, it’s possible to use, for example, a “note d’information” (this is an information note containing summary information on income received, number of days spent abroad, amounts of tax paid).
If all the data in the declaration is correct, it shouldn’t be modified or corrected. On the other hand, if it appears that the data needs to be modified or completed, it’s necessary to apply the appropriate changes. Only after making them, the return can be approved and sent.
6. Deadline for submitting the declaration
The return is to be sumbitted in the second quarter of the year following that one which it concerns (most often the months of May to June). However, the deadline for making the declaration depends on the form in which it is presented. For example: the deadline for submitting the return for 2020 was:
- for non-residents filing a declaration using a taxpayer’s profile – 26 May 2021 at 23:59;
- for non-residents submitting a declaration in paper form – 20 May 2021 at midnight.
7. Avis d’impot
A taxpayer who has submitted a tax return in France should wait for the “Avis d’impot”. The letter in question constitutes the tax authorities’ response to the declaration made by the taxpayer. It contains information concerning the tax amount, including that one relating to a possible tax refund or failure to pay the tax in full. “Avis d’impot” also contains information on spreading the payment of overdue tax in installments. Indeed, it’s worth mentioning that tax authorities very often, on their own initiative, divide the repayment of overdue tax into installments.
Data from the avis d’impot are necessary to create an individual profile on the website: www.impots.gouv.fr
Taxpayers filing their returns using the individual profile shoud receive the avis d’impot in the summer. On the other hand, these ones who took advantage of the option of submitting their declarations in paper form can expect the avis d’impot in early September.
8. Legal notice
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