Advantage of the RAS (retenue à la source) in France for non-residents

Why is this system attractive for non-residents?

One of the main reasons this system is attractive for non-residents is its relatively low tax rates. Below are the tax rates for 2024:

*Note: The French tax authority can optionally calculate the tax that a French resident would pay on the portion of income within the 20% bracket. If the average tax rate is lower, this reduced rate is applied.

Comparison with French residents

French residents, however, are subject to the prélèvement à la source (PAS), which is a progressive tax with higher rates than those for non-residents. Below are the rates for 2023 income:

It is clear that the maximum rate for residents is significantly higher than that for non-residents. An additional advantage of the RAS is that it often serves as the final tax. This applies if the salary falls within the first two brackets of 0% and 12%. These brackets are considered final, meaning no further tax is due. For higher earners, however, an additional tax may still be required.

Example

Below is an example that demonstrates how advantageous the RAS can be compared to the tax for French residents, without considering local taxes.

Suppose: Someone earns an annual income of € 50,000. Both residents and non-residents are subject to a flat-rate cost deduction of 10%, resulting in a taxable income of € 45,000.%

• For non-residents (single, without children): The income tax, under the RAS, amounts to € 3,382, which corresponds to an effective tax rate of 6.76%.

• For French residents (single, without children): The tax would be € 6,786.23, which corresponds to a tax rate of 15.08%.

This is more than double the tax paid by a non-resident.

Need help?

Do you need assistance with filing your personal income tax return in France? Or do you have further questions about the RAS or other tax matters? Our colleagues at Vandelanotte France are happy to assist you.