Understanding Tax Income Reference

Understanding Tax Income Reference


purely “Franco-French” investment, the reference tax income (RFR) is increasingly becoming the only “key element” representative of taxpayers’ financial capacities.

Increasingly requested by a multitude of organizations for the purpose of allocating or not granting aid (social for example), the Fisc also uses it to accept or refuse a right to reduce taxes or credits. taxes on certain expenses, all other conditions of deductibility being met.

It also uses it to allow or not to a self-entrepreneur to opt for the levy of tax on income, etc., etc. From here to soon or already besides, to serve as only “variable of adjustment” deemed reliable by the government, there is only a step. This “RFR”, dear reader, has probably already been asked at least once, even on several occasions.

It could or may already allow the services of Bercy to calculate overall and quickly the financial implications of such and such change in the tax regulations and the application of the tax law in general.

Tax Income Reference, not to be confused with Global Gross Income

For a long time, for the attribution of such benefit or allowance, reference was made to the “gross global income” of the taxpayers who applied for it. This “Gross Global Income” is neither more nor less than the sum of the only income of the tax home (children and other dependents included) imposed in France, before all deductions and tax cuts.

to make tax progressivity work; it is the application of the rule of the “effective tax rate” or, as the case may be, of the tax credit imputed to the tax due in France on world income, a credit calculated on foreign income according to the French tax schedule.

Examples abound of situations in which this “RFR” is fully penalizing .

Thus we can have for example the case of a couple benefiting from 2 shares of family quotient, declaring as the only taxable income in France 25 000 euros, and having collected 20 000 euros of income from foreign source, non-taxable in France by the international tax convention which is related, but integrable by the French tax in the calculation of the “effective tax rate” (ie a double calculation, first on the only taxable income in France, then on “global or global income” or imputation (tax credit). The “RFR” will be 25,000 + 20,000, or 45,000 euros.

However, this couple had invested (for example) under Article 200 Quater A of the General Tax Code, in some “expenditure on equipment for the frail and dependent persons”, intended to grant them a tax credit “d assistance to the person “equal to 25% of the price inclusive of all equipment including installation, invoices in support, and for expenses fully meeting the standards set by administrative instruction BOI-IR-RICI-290 . They expected a tax credit (in their case refundable, since not taxable otherwise, on their only income of 20,000 euros), 1,300 euros.

That nena , because having financed this expenditure by a “loan with zero rate”, this couple will simply have “forgotten” that its “RFR” of the year N-2 should not exceed a certain threshold, determined by the law!  He will not be entitled to this tax credit for this reason alone! …

Nor can opt for the levy of discharge of his tax, and therefore for the corresponding scheme, the self-contractor whose “RFR” of the year N-2 will exceed the limit set by article 151-0 of the aforementioned code !

Examples like these are very numerous. It can be added that the “RFR” is decisive for the attribution (or not) of the “premium for employment”, and that it can also play on certain exemptions from social security contributions on pensions.

The “RFR” variable “easy” (for Bercy), adjustment, forecasts, calculations or even basis of new taxes?

It is permissible to wonder whether Bercy (and its forecasting departments) do not have a formidable, unstoppable and choice criterion for a multitude of possible uses! They can quickly and easily recover in their files the Taxation Income Reference of everyone, and the family quotient associated, and from there, embark on all conceivable futures!

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