“In love, you don’t count,” says the popular adage. However, this is what Bercy does, when you declare your taxes, to calculate your withholding tax rate. While now specifying: “In order to take into account possible differences in income levels within the couple, the spouses can, if they wish, opt for an individualized deduction rate based on their respective incomes.” Indeed, the conjugality of taxation being at the basis of our tax system, the discussion still remains of a private nature. It is up to everyone to look after their own interests.
To make the right decision between a rate common to the couple or individualized, you must first know that this choice has no impact on the overall amount of tax. “A tax rate common to two civil partners, or to two married people, does not lead to any tax optimization at the household level, confirms Géraldine Métifeux, managing partner of the wealth management firm Alter Egale. It simply serves to align with the default marital regime of community property.”
The personalized rate will be offered by default next year
The rate is therefore only a simple distribution key. Keeping the pooled rate makes good sense if expenses and resources are pooled. However, the regime of community of property, even within the framework of marriage, is becoming increasingly rare. To follow this societal development, and to be less discriminatory towards women, who often have the lowest income, the personalized rate will be offered by default from next year.
“Even with an individualized rate, the wealthier spouse remains fundamentally the winner,” notes Lise Chatain, professor at the University of Burgundy, where she co-directs the master’s degree in tax law. Regardless of the option chosen, the household tax base is pooled for the calculation of tax. The more unequal the income between spouses, the more tax advantageous it is to be in a couple for the one who earns the most… even with an individualized rate.
“There are also other inequalities of which couples are rarely aware, continues Lise Chatain. Thus, property income, even if the property is only held by one of the two spouses, is divided in two when calculating this personalized rate.” If the establishment of an individualized rate by default next year is a step forward which has the merit of existing, it does not put an end to the debate on money and taxation within couples.