Council Tax

by | Dec 20, 2023 | Definition | 0 comments

Council tax

When it comes to the taxes levied on taxpayers in France, the taxe d’habitation (council tax) occupies a significant place in discussions and household budgets. This local tax, often at the heart of political debate and public concern, has undergone numerous reforms in recent years. Understanding its contours and developments is essential for any taxpayer wishing to manage their budget and anticipate their tax obligations.

What is taxe d’habitation?

The taxe d’habitation is a French local tax levied annually. It is payable by anyone who has furnished accommodation at their disposal on January 1st of the tax year, whether as owner, tenant or free occupant. The amount varies according to the location of the home, its cadastral rental value, the taxpayer’s personal situation and the characteristics of the household.

Tax calculation and payment

Calculation bases

The calculation of the taxe d’habitation is based on the cadastral rental value of the dwelling, which corresponds to an estimated amount of annual rent that the property could generate. This value is then adjusted by various allowances based on income, household composition or any disabilities of the occupants.

Terms of payment

In general, the tax must be paid at the end of the year, although it is possible to pay monthly. Payment facilities or exemptions may be granted under income conditions or for certain categories of people (students, the elderly, etc.).

Exemptions and reforms

Exemptions and rebates

In recent years, several reforms have been introduced to reduce or even eliminate the taxe d’habitation for a majority of households. In addition, certain people may be exempt from council tax, notably because of low income or special conditions (age, disability).

Recent reforms

The gradual abolition of the taxe d’habitation on main residences for 80% of tax households marked a milestone in local taxation in France. This change is part of the government’s drive to reduce citizens’ direct taxes. However, the wealthiest 20% of households continue to pay it, with prospects of a reduction by 2023.

Implications for local authorities

Financing public services

Revenues from taxe d’habitation make a significant contribution to the budgets of communes and intercommunalités, enabling them to finance local public services such as education, roads, culture and social services. Equalization funds also help to rebalance resources between wealthier and less wealthy communities.

State compensation

With the reduction in revenues from the taxe d’habitation, the French government has undertaken to compensate local authorities for this shortfall. This compensation is provided by other sources, such as a share of the property tax or VAT, thus guaranteeing the continuity of local public services.

Frequently asked questions

Here is a list of frequently asked questions about the taxe d’habitation :

Will the taxe d’habitation be completely abolished?

Council tax on main residences will be completely abolished for all households by 2023, after a period of degressivity for the wealthiest 20%. However, it remains payable for second homes and vacant dwellings.

How is the housing tax exemption calculated?

Exemption from council tax depends on income, family situation and specific criteria such as disability. The income thresholds for exemption are updated annually.

What happens if payment is late?

Penalties may apply in the event of late payment. It is possible to contact the tax authorities to request additional payment deadlines, or to ask for payment in instalments.

What about student accommodation?

Student accommodation may be exempt from property tax under certain conditions, notably if it is part of a university residence managed by the CROUS, or if the student has limited resources.

How will communes be compensated for the loss of revenue?

The reform provides for local authorities to be fully compensated for loss of income. This compensation will be financed by a restructuring of the property tax and by a share of national VAT revenue. These measures are designed to preserve the financial autonomy of local authorities.

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