Millions of households either overpaid or underpaid income tax in France last year, so each autumn a tax reconciliation takes place.

At the end of last month all households in France began to receive their tax notice for income earned in 2020, based on their tax declaration made earlier this year.

Those notices will show whether you paid too much in income tax, when you will then be entitled to a refund, or whether you did not pay enough, when you need to pay the amount owed.

The amount of regularisation to take place is not insubstantial.

Figures released by the French government show that nearly 13 million households overpaid income tax last year, whilst 11 million did not pay enough.

The difference is explained by the fact that all payments of tax in the year are based on estimated income, which may vary from actual income received. Family circumstances may also have changed (births, deaths, divorce and marriage), which will affect the amount of tax payable. 

Although it is possible to adjust your ‘on-account’ payments during the year to reflect changes in income or family circumstances, many households choose not to do so. One disincentive to doing so is that if you underestimate your income you risk having to pay a small tax penalty on underpaid tax.

In September the tax authority will automatically adjust your on-account payments to take account of changes in your income.

If you have underpaid your taxes it will be deducted directly from the bank account, either as a one-off payment if the sum is under €300, or, if a larger amount, by monthly instalment between September and December 2021.

Conversely, if you paid too much in the year, you should have received a refund by no later than 6th August. The refund is made either by direct transfer into your bank account or by a cheque if you have not provided the tax office with your bank details.

Refunds of tax may be made not only to a fall income in the year, but also due to tax reductions or credits from childcare, home help, charity donations etc, after deduction of the 60% advance already paid in January 2021.