Rather than pass the ring on, some opt for legal cohabitation, the implications of which seem less restrictive, a sort of light wedding after all. However, the fiscal and social impact is not negligible.
Legal cohabitation: fiscal and social impact
Joint tax declaration
Legal cohabitants complete a joint tax declaration from the year following the year of the declaration of legal cohabitation.
Examples: Concretely, if the husband and the wife make a declaration of legal cohabitation on February 19, 2013, they will enter a separate tax declaration in June 2013 (for 2012 income). However, their tax declaration will be joint in June 2014 (for 2013 income).
Separate joint taxation
From 2014, as for married couples, the husband and the wife will be taxed jointly. They will not pay more taxes since everyone’s income is not accumulated. The tax administration will then calculate the amount of tax payable for each. There is therefore a separate taxation, even if a common role extract warning is sent to them.
Application of the marital quotient
As for married couples, the tax authorities apply the marital quotient to legal cohabitants. This measure makes it possible, under certain conditions, to reduce the tax burden by distributing part of the income over the heads of the two legal cohabitants. Thus, the legal cohabitant who has significant income can virtually grant part of his income to his partner (the latter must still earn less than 30% of the income than his cohabitant). It then falls into a lower tax category and the couple pays less tax. Using the estimate tax return is important there.
Other tax advantages
Legal cohabitants also benefit from a series of tax deductions that are not available to those who simply live together. They have the possibility of freely distributing the mortgage loan repayment between them. They can deduct alimony paid to a former legal cohabitant or ex-spouse, etc.
Solidarity for tax debts
As the legal cohabitants are jointly taxed, they are united in paying their taxes. Each is required to pay all of the couple’s taxes. The tax administration can sue the two legal cohabitants to repay the tax debt. In other words, if one of them cannot pay his share of taxes, the other must pay it for him. This solidarity also exists for married couples.
Inheritance
Cohabitants are assimilated to married couples. If one of the cohabitants dies, his partner will have to pay between 1% and 30% inheritance tax depending on the size of the inheritance. On the other hand, couples who live in a common-law union must pay a much higher rate (from 30% to 80% inheritance tax depending on the size of the inheritance and the region. Indeed, they are not considered. as legal heirs).
Social allowances
In terms of social security, there are very few differences between married couples, legal cohabitants and cohabiting partners. What matters is living together under the same roof and sometimes pooling household expenses. It all depends on the definition of “de facto cohabitation” adopted in each social legislation.
