Do you own real estate abroad (an apartment, a house, or shares in a company comparable to a French SCI) and let it out? If you are a French tax resident, the rent must in principle also be declared in France.
This obligation is not widely known, and my clients are often surprised that they also have to declare their foreign rental income in France, when they already declare it in the country where the property is located.
Declaring does not necessarily mean paying: in some cases, the tax treaty between France and the country where the property is located may prevent this income from being taxed a second time in France, which only an analysis of the situation by a lawyer can confirm or rule out. It may, however, increase the tax rate on the household’s other income (the effective rate rule).
In brief
- A French tax resident in principle declares their foreign rental income every year.
- Without a tax treaty, it is in principle taxed in France like French rental income, with a risk of double taxation.
- With a treaty, it may, in some cases, not be taxed in France (to be checked by a lawyer), but it is still declared, in different boxes depending on the method provided for: boxes 4EA or 4EB for an exemption with the effective rate rule; form 2047, boxes 4BK or 4BL and 8TK for a tax credit equal to French tax.
- Bank accounts opened abroad are in principle also declared, on form 3916-3916-bis.
Contents
- Foreign Rental Income Is in Principle Declared in France
- Case 1: The Country Where the Property Is Located Has No Tax Treaty with France
- Case 2: The Country Where the Property Is Located Has a Tax Treaty with France
- Foreign Income and Bank Accounts Abroad
- What Happens When the Foreign Property Is Sold?
- What I see in my cases
- FAQ
Foreign Rental Income Is in Principle Declared in France
This obligation concerns French tax residents, who are in principle taxable on all of their income, French and foreign.
The return follows the usual process, most often with an additional form, form 2047. Depending on the case, foreign rental income appears on the 2047 and on the 2044 (or the 2042 for micro-foncier), like French rental income, or only on the 2042 C where it is exempt in France but taken into account to calculate the effective rate:
| Situation | Forms and boxes (in principle) | Tax in France |
|---|---|---|
| No tax treaty | 2047 (section 4), then 2044 (actual regime) or 2042 (micro-foncier); 2042 C PRO for furnished lettings | In principle, taxed like French rental income |
| Treaty: exemption with the effective rate rule | 2042 C, box 4EA (actual regime) or 4EB (micro-foncier), without the 2047 | No tax on this rent if the exemption applies (to be analysed by a lawyer), but the rate on other income may rise |
| Treaty: tax credit equal to French tax | 2044 or 2042 (boxes 4BK or 4BL), 2047 (sections 4 and 6), box 8TK | French tax may be offset by the credit (a lawyer’s analysis is needed); the rate on other income may rise |
Case 1: The Country Where the Property Is Located Has No Tax Treaty with France
The list of tax treaties makes it possible to check whether the country where the property is located has signed one with France.
In the absence of a treaty, the rent is in principle entered in section 4 of form 2047, then declared like French rental income: on return 2044 under the actual regime, or directly on the 2042 under the micro-foncier regime. A furnished letting in principle falls under return 2042 C PRO.
The income is then in principle taxed in France like French rental income. The drawback is the risk of double taxation: if tax has already been paid abroad on this rent, tax in France may in principle be added to it.
As France has signed many tax treaties, these situations remain relatively rare.
Case 2: The Country Where the Property Is Located Has a Tax Treaty with France
The situation is a little more technical. In principle, foreign rental income is declared, but it may, in some cases, give rise to no tax, or almost none, in France; it is necessary to have one’s case analysed by a lawyer to find out whether or not the treaty allows this.
How it is declared nevertheless depends on the method provided for by the treaty: exemption in France, or a tax credit in France. In both cases, French tax on this rent may, where applicable, be eliminated or offset (a lawyer’s analysis is needed), but the boxes involved differ.
a. The Treaty Provides for an Exemption of the Rental Income in France
Exempt rent is not, in principle, declared on form 2047.
It in principle appears on return 2042 C, in box 4EA (actual regime) or 4EB (micro-foncier), to calculate the effective rate.
b. The Treaty Provides for a Tax Credit in France
The income is in principle declared on the 2044 (actual regime), on the 2042 (micro-foncier) or on the 2042 C PRO (furnished letting). For rental income, this rent also appears, in principle, in box 4BK (micro-foncier) or 4BL (actual regime) of return 2042, which in particular means it is not subject to the withholding-at-source instalment.
It also appears, in principle:
- on form 2047, in section 4 “Revenus fonciers imposables en France” (rental income taxable in France) and in section 6 “Revenus imposables ouvrant droit à un crédit d’impôt égal à l’impôt français” (taxable income giving entitlement to a tax credit equal to French tax);
- on return 2042 C, in box 8TK.
Foreign Income and Bank Accounts Abroad
Where income is received abroad, a bank account is often opened there. Accounts opened abroad must in principle be declared every year, on form 3916-3916-bis.
The French tax authorities are increasingly informed every year of the existence of accounts held abroad, with detailed information such as the balance or the amount of income received.
What Happens When the Foreign Property Is Sold?
On a sale, form 2048 IMM is in principle filed within one month of the sale.
Depending on the case, the tax treaty may mean that no tax is due in France, which needs to be checked by a lawyer; the gain is then in principle only reported on form 2047.
There are also exemptions, subject to conditions, for example for the first sale of a dwelling other than the main residence where the proceeds are reinvested in acquiring the main residence. As each situation is different, it is advisable to have it analysed by a lawyer before taking any step.
What I see in my cases
My clients are often surprised to have to declare in France rents that they already declare in the country where the property is located. The error I then come across most often is confusing the tax credit and the exemption with the effective rate rule, or applying a method other than the one provided for by the treaty. For the real estate wealth tax (IFI), I also see properties located abroad being undervalued, for example when a cadastral value is used instead of the market value.
FAQ
Is rent already taxed abroad declared in France?
In principle yes, for a French tax resident. Depending on the tax treaty, this rent may, however, not be taxed a second time in France, if a lawyer’s analysis of the situation confirms this; it is then declared to calculate the effective rate or the tax credit.
Can foreign rent increase the tax on other income?
Yes, it can: even where it is not taxed in France, foreign rental income is in principle taken into account to determine the tax rate applicable to the household’s other income (effective rate).
