TLDR: In France, tax residents must declare all income, including foreign currency earnings, converted into euros. Non-residents only declare French-source income, even in foreign currency, with a minimum tax rate of 20%.
Declaration Obligations for Tax Residents
Individuals tax-domiciled in France must declare all income, including earnings received in foreign currency. This includes salaries, pensions, property income, and financial income. Conversion to euros must be done using the exchange rate on the receipt date or the annual average rate of the relevant currency.
Declaration Obligations for Non-Tax Residents
Non-tax residents in France are only required to declare income from French sources, even if received in foreign currency. Such income is subject to a minimum tax rate of 20% (or 14.4% for overseas departments), unless proof of a lower global average rate is provided.
Conversion of Foreign Currency Income
Income in foreign currency must be converted to euros for declaration purposes. Conversion can be done at the exchange rate on the receipt date or using the currency’s annual average rate. For income not converted to euros in accounting records, the declaration must show zero in the "Debit" and "Credit" fields, with the original amount in the "Montantdevise" field.
Supporting Documents to Provide
Taxpayers must provide supporting documents for foreign currency income, such as certified copies of tax returns from their country of residence, bank statements, salary or pension certificates, and rental agreements.
Effective Tax Rate and Tax Credits
Non-residents may request the application of the effective tax rate, which is the average tax rate resulting from applying the progressive scale to all their French and foreign-source income. This can prevent excessive taxation when French income represents only part of their global earnings. Tax credits for taxes paid abroad may also be applied to avoid double taxation.
Penalties and Audits
Failure to declare or incorrect declaration of foreign currency income may result in penalties and tax audits. Compliance with reporting obligations is essential to avoid sanctions.