The end is close for France’s highly disfavored taxe d’habitation, or residence tax. The Macron administration announced in June 2021 that, by 2023, no household will pay this tax on its main residence. The gradual phasing out of the outdated 1970s system was announced in 2018. Early tax relief was given to certain households depending on their income and composition. Currently, approximately 20% of households pay this tax; they are predominantly the wealthy and highly paid. Most expatriates who have a housing rental allowance from their employer would still fall in this category.
Taxe d’habitation is determined by the local commune, or council. The tax is collected by the central government tax authority. The calculation of the appropriate tax is notoriously complex. In simple terms, it is based on the rent that the property might be expected to achieve in the open market, with solid consideration given to the condition, size, and location of the property. AIRINC still accounts for taxe d’habitation in its rental housing data for all French locations. The Housing Team at AIRINC will continue to monitor the latest developments to French housing tax and its implications for rental allowances.