what do the 1,280 boxes in your tax slip tell you?

Every year, more than 37 million French tax households must complete their tax return. "Illegible", "too complicated", "incomprehensible" ... This document, which was 24 pages and 1280 boxes to complete in 2017, says a lot about the complexity of the French tax system, which gives even the tax professionals. A case study at the time of the "yellow vests", many denounce precisely this millefeuille of regulations.

How many tax loopholes, tax credits and other possible cases are hidden in this document? In an attempt to answer this question, we have peeled the precious sheets from the data available on impots.gouv.fr for the 2017 income statement 2016 (the latest for which detailed data are available). A dive into the meanders of French taxation rich in lessons.

Example of the many boxes that include the income tax return.
Example of the many boxes that include the income tax return.

On average, 23,000 euros of activity income reported per person

The first lessons of this exercise concern the amount of income declared by taxpayers. The data of the website impots.gouv.fr allow, in fact, to know what types of income and what global amounts have been reported by French tax households.

At the top of the sums declared, we thus find nearly 644 billion euros in activity revenues that were declared for the year 2016 by the 28 million workers concerned (counting only the "declarants 1 and 2"), which excludes dependents of a single person or a couple). This corresponds, on average, to an income of 23,000 euros per person per year.

Second source of income for the French: pensions, pensions and annuities, which reach a total of 293 billion euros for the 16 million people concerned. An average of 18,000 euros.

Then come the replacement incomes (unemployment and early retirement benefits, local officials' allowances), which bring in a total of 35 billion euros to 5.8 million people, and land revenues (31 billion to 2.6 million euros). households), in front of a myriad of other sources of income of all kinds.

Although the wealth tax (which was still in force in 2017, before being transformed into a "tax on real estate fortune" in 2018) is the subject of a separate declaration, the total amount of declared wealth. also appears on the tax sheets. It reached nearly 494 billion euros gross for the 251 052 households concerned, or nearly two million euros on average for those households owed ISF.

The most common "tax loopholes" concern families and donations to associations

While the term "tax niche" has a pejorative connotation in the collective imagination, it initially includes all the situations that make it possible to reduce the amount of tax paid. As such, quite ordinary situations such as being in a couple (mainly when income differs greatly within the household), having children or even being handicapped, contribute to lower taxation and can be considered as "tax loopholes" in the broad sense.

By browsing the list of boxes most often filled by French taxpayers in 2017, we were able to analyze these "niches". Here are the ten most common, that is those that concern the most tax households:

  1. Declare at least one minor or disabled child (24% of tax households). These give rights to half-shares or additional tax shares, which significantly reduce the income tax, although the benefit is capped.

  2. Income from shares and shares in companies entitled to an allowance (23%). Income from these assets is favored in the calculation of income tax, since a portion is not taxed.

  3. The actual costs (16%). It is possible for taxpayers who feel they have significant professional expenses (travel, food ...) to declare them, justifying them. These expenses are then deducted from the taxable income.

  4. Donations to associations of general interest (11%). They entitle you to a tax reduction of 66% within the limit of 20% of taxable income.

  5. Dependent children continuing their education (11%). It is possible to deduct from his taxes an amount ranging from 61 euros per child in college to 183 euros per child in higher education.

  6. Widows and widowers (11%). After the death of the spouse, the deceased may benefit from an additional half tax share, which reduces the amount of his income tax (this benefit is, however, capped at 950 euros).

  7. The absence of television (9%). Declaring that there is no TV allows to be exempted from the contribution to public broadcasting, a fee of 139 euros levied with the housing tax.

  8. Home care expenses for retirees (6%). Half of the amounts paid to personal services employees can be deducted up to an expenditure of 12,000 euros (and up to 20,000 in special cases).

  9. Childcare costs for children under 6 (6%). Half of the amounts paid to nursery assistants, crèches or nurseries are deducted from taxes up to a maximum of 2,300 euros per child.

  10. Donations to people in difficulty (5%). It is possible to deduct 75% of the sums paid to associations providing food, housing or free medical aid (Eating heart, Red Cross, Rescue People ...) within the limit of 531 euros, then 66% for the higher amounts.

These examples show that the tax benefits that affect the most households are family support and, second, those related to associations. But other categories of tax loopholes may cost the state more, even if they involve a smaller number of people.

This is, for example, the case of tax niches in the real estate sector. The Duflot and Pinel laws, which aim to encourage rental investment, have allowed a little over 103,000 households to reduce their taxes by 351 million euros in 2017, according to the state accounts, or about 3,400 per beneficiary and per year on average (for a maximum of 12 years).

Almost six out of ten cases involve fewer than 1,000 people

With a main income tax return (2042) and six other complementary (2042 pro, 2042C, 2042IOM ...), it is in total not less than 1 280 boxes that the taxpayer is potentially required to provide.

This tax labyrinth actually concerns very few taxfilers: only 40 fields were filled by more than one million households, out of 37 million declarations. There are mainly the main sources of income of the French (wages, pensions and annuities) as well as elements relating to the composition of households (family situation, number of children ...).

In total, only 172 fields (13% of the total) were filled at least 37,000 times, that is, by more than one household per thousand. This shows that most of the boxes on the tax sheet concern only an ultra-minority of tax filers. Thus, 479 fields, more than one third, concern less than 100 registrants. It contains both tax provisions specific to industrial and commercial profits (BIC) and non-commercial (BNC), old real estate investment schemes such as the remains of the law Scellier, provisions of the law Pinel in the DOM / TOM ...

Part of this complexity can be explained by certain specific provisions, at the top of which are those related to overseas investments. A specific declaration, Form 2042 IOM, is dedicated to this, giving rise to specific tax cuts in the sectors of renewable energy, hotel renovation and submarine cables. This document alone contains 215 boxes, of which 127 have been completed by less than ten persons.

A tote of special rules

The fact that many of the boxes are little or not used does not mean that none of them has any interest. But this observation shows that the calculation of the income tax is based on an impressive catch-all special rules that apply to various situations such as master restaurateurs, childminders or journalists.

Scaffolding all the more complex as all these tax loopholes are not based on the same types of calculations: some grant a fixed tax reduction, others correspond to only partially taxed income, others reduce the base taxable income, etc. What feed a form of misunderstanding of the tax system, which can itself feed the famous "fed up".

Anne-Aël Durand , Adrien Sénécat and Maxime Ferrer

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