Counting your shares

On 80 000 € of net taxable income, a couple with one child would pay 6 760 € of gross tax where the same couple without a child pays 10 208 €. The 3 448 € difference comes from no relief and no credit: it comes from half a share, that is, from a simple division. The cap keeps only 1 807 € of it, and the couple pays 8 401 €. The division makes the advantage and a limit bounds it: this course follows the two movements in that order.

Two numbers, and a division between them

The family quotient is not a tax advantage in the usual sense. It is a method of calculation: the household's taxable income is divided by a number of shares, the scale is applied to the result, then the tax obtained is multiplied by that same number.

Because the scale rises in steps, dividing before applying the rate drops the income into lower steps. That mechanism, and nothing else, produces the reduction in tax. No amount is subtracted anywhere along the way.

The starting point comes down to two figures. A single person has one share. A married couple or civil partners taxed jointly have two. Everything else consists of increases added to that base, never of substitutions for it.

The word couple is understood here in a strict tax sense. Marriage and civil partnership open joint taxation and therefore two shares; cohabitation, however long-standing, leaves each person with their own return and their single share.

That boundary has opposite consequences from one tax to another. For income tax, cohabiting partners are two separate households; for the property wealth tax, they form only one. The same family situation therefore produces two different perimeters.

Increases for dependent children

The rule for children in principal or exclusive care contains a deliberate break. Each of the first two children opens half a share. From the third onwards, each child opens a full share, that is, twice what the earlier ones brought.

That progression explains why the arrival of a third child produces a markedly greater effect than the second. The step is not linear, and a household forecasting its tax from the second child systematically underestimates the effect of the next one.

Counted as dependants are minor children and unmarried adult children attached to the household. An adult child who files separately drops out of the share count, which may be offset by deducting maintenance, but never combined with it.

Shared residence and special situations

Where a child lives alternately with both parents, the increase is split. Each parent receives half of what they would have obtained had the child been in their principal care: a quarter share for each of the first two, half a share from the third.

• A quarter share per parent for each of the first two children in shared residence
• Half a share per parent from the third child in shared residence
• No deductible maintenance may be added for the same child
• One extra full share for each disabled dependant in the household

Other increases relate to personal circumstances rather than to dependants: disability of the filer, veteran status, single-parent status. Each follows its own conditions and its own separate ceilings, which makes it impossible to treat them as one group.

The number of shares is assessed on the first of January of the tax year, with one notable exception in the taxpayer's favour: a birth or an adoption occurring during the year is taken into account for the whole of that year.

The year of a marriage, a divorce or a death calls for particular care. The household changes composition midway, and filing rules differ according to the event. Relying on the previous year's share count is then the most ordinary source of error.

One last point saves a good deal of correspondence. Attaching an adult child is an annual option, to be weighed each year rather than settled once. What was favourable during their studies may cease to be so as soon as they earn an income.