Rules for taxation and concubinage: a breakdown
Living Together and Tax Obligations: What You Need to Know
Embrace the reality of being a cohabiting couple and understand the tax implications that come with it. Here's what you should know about filing taxes when you're living together without marriage or a civil partnership (PACS).
© Delmaine Donson / Getty Images By Léa Boluze Web Editor Updated on
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Contents
- Is cohabitation taxed differently?
- Free union vs. Notorious cohabitation - What's the difference?
- Is it mandatory to report cohabitation to tax authorities?
- Advantages of declaring cohabitation for tax purposes
- Impact of cohabitation on income tax
- Wealth Tax and cohabitation
- Housing Tax and cohabitation
- Land Tax and cohabitation
- How to declare cohabitation for tax purposes?
- Can you benefit from reductions or tax credits in a cohabiting relationship?
Is cohabitation taxed differently?
Cohabitation defined
In legal terms, a cohabiting couple consists of two individuals living together, whether heterosexual or homosexual, without marriage or a civil partnership (PACS). Cohabitation is lawfully defined as a free union marked by a stable and continuous existence together. This term is established by Article 515-8 of the French Civil Code.
Full Legal and Financial Independence
Compared to married couples or those in a civil partnership, cohabiting partners maintain their full legal and financial independence, with no particular legal status created between them unless they willingly enter into commitments (such as shared property ownership).
Single tax payers
Cohabiting couples are regarded as individual taxpayers from a fiscal perspective. The absence of joint taxation means each partner submits a separate income tax return and pays taxes individually.
Free union vs. Notorious cohabitation - What's the difference?
Though often used synonymously, the free union represents a general and informal concept that denotes two individuals residing together, while cohabitation refers to a legal classification that assumes a stable and continuous life together recognized by law.
Is it mandatory to report cohabitation to tax authorities?
No Mandatory Reporting
There is no obligation to inform the tax authorities about a cohabiting relationship. Each cohabiting partner is liable as an individual taxpayer, declaring their income and filing their taxes separately.
Conditions for social benefits and specific tax sections
However, when a cohabiting partner is eligible for specific tax or social benefits (activity bonuses, family allowances, RSA), or when completing certain sections in their tax return (e.g., attachment of children, dependent person declaration), they must disclose their cohabiting status and partner's information.
Advantages of declaring cohabitation for tax purposes
Income tax reductions
By disclosing their cohabiting status, partners may gain access to tax reductions for low-income taxpayers who were subjected to excessive taxation before these reductions. The lower tax rates allow them to pay less tax, which can be a significant advantage, particularly for couples with modest incomes.
Deductions and tax credits
Cohabiting couples who share expenses or have children may benefit from deductions or tax credits available for such conditions. Each partner may deduct eligible expenses up to an annual limit of €10,000 per person, for a total of €20,000 per couple, maximizing their tax reductions.
Social support and benefits
Despite separate taxable income declarations, cohabiting partners can continue to benefit from housing benefits, family allowances, and certain pensions, like maintenance payments or survivor's pension.
Impact of cohabitation on income tax
No joint income tax declaration
In a cohabiting relationship, each partner declares their independent income and uses their own share of the family quotient to reduce their tax rate. In comparison, married or civil partnerships benefit from joint taxation, allowing them to split their taxable income effectively.
Declaring dependents in a cohabiting relationship
Cohabiting partners with children can declare all minors or dependent children under 21 or students under 25 on one tax return, or split them between the two partners, with each taking responsibility for a child, depending on their individual circumstances.
Real estate wealth tax and cohabitation
Unlike the rules governing income tax and gift tax, the IFI (Real Estate Wealth Tax) considers cohabiting couples as a single taxation unit for the purposes of property valuation. If their combined properties exceed the total value of €1.3 million, they must submit a joint declaration.
Housing Tax and cohabitation
End of property tax on primary residences
Since 2023, no tax is collected on primary residence properties for any French resident, as part of a broader tax reform to ease financial burdens. However, certain municipalities may levy increased property taxes on secondary properties to combat housing shortages.
Property tax on secondary properties
Today, only owners of secondary properties are responsible for property tax. For calculation purposes, each property is taxed individually, and only one property tax is levied per property. Thus, if a property is occupied by a cohabiting couple, it will receive a single property tax bill in the name of one occupant, with the tax payment split between the couple.
Property Tax and cohabitation
Property owned by an individual
Each owner of a property is individually responsible for property tax on their personally-owned properties as of January 1 of the tax year. Since cohabiting partners are considered separate taxpayers, they are taxed separately for the properties they own individually.
Properties owned jointly
If cohabiting partners own joint properties, a property tax bill is generated by the tax authorities in the names of both partners. In this case, they share joint and several liability for the payment of property tax, meaning they are responsible for the full amount in the event of non-payment, regardless of their share of ownership.
How to declare cohabitation for tax purposes?
Income tax declaration
For income tax purposes, there is no need to make a specific cohabitation declaration. Each partner files their individual tax return, entering only their personal income and deductible expenses.
Can you benefit from reductions or tax credits in a cohabiting relationship?
Individual benefits
Generally, the availability of tax reductions and credits depends on the specific eligibility criteria for each benefit. In most cases, these benefits are not readily available to cohabiting couples, who are considered separate taxpayers, in contrast to married or civilly-partnered couples who share benefits using joint taxation.
Shared expenses and deductions
Cohabiting partners may potentially benefit from deductions or credits when they can demonstrate evidence proving their financial contributions to shared expenses (e.g., home renovation, shared childcare costs). However, each partner can only deduct their proportionate share of the expense on their individual tax returns.
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More on: Income Tax Tax Return Revenue Statement Property Tax IFI
- Cohabiting partners, even in a stable and continuous union, maintain their full legal and financial independence as individual taxpayers, with no joint taxation.
- Each cohabiting partner is responsible for declaring their income and filing their taxes separately, and there is no obligation to inform the tax authorities about the cohabiting relationship unless certain social benefits or specific tax sections require it.
- By disclosing their cohabiting status, partners may gain access to tax reductions, deductions, and tax credits for low-income taxpayers, deductions for shared expenses, and certain pensions.
- Regardless of their cohabiting status, cohabiting partners share joint and several liability for property tax on joint properties, and are each individually responsible for property tax on the properties they own individually.
