Complikate

No problems for you Sue, you have it in writing so rest easy. It is very apparent that different tax offices seem to have different views, but you have clearly done the only thing you can, which is following the guidance you received in writing and I agree I would not dream of arguing with the "Contrôleur principal" of your tax office. The issue is that the fisc can and do alter each year how they calculate the figure, thus tax offices say well, they do it this way one year and another way the next, thus both must be acceptable; not strcitly true accoring to the Paris tax office, but there you go.

[quote user="Ron Avery"] [quote user="woolybanana"]Last year, my tax office refused to accept a monthly exchange rate calculation for monthly investment income as they only recognize annual payments so I had to use their rate of 31th December, which had been fixed by Paris.[/quote] You pay tax WB?  I thought you had all the pickle millions stashed away in a banana republic[:D][:P].  Coops and Allen are spot on about the rate to use,  its really not hard to note the rate that you got is it?  If anyone who gets regular income rrom the UK wants to use the Connexions figure go ahead, I know who will pay more tax and its not us who will use the actual rate received.[:-))] [/quote]   Having quoted Ron, I will requote what I quoted to Clair earlier on "..I do believe that there are some Brits who do avoid paying their due.." As I have already said, I do not trust the figures in the Connexion, since they cannot have figures the French fisc do not have themselves, so I will wait for the official figure. The Code Generales des Impôts makes it very clear that the rate set by French fisc must be used and most tax offices and staff therein will only accept this rate and no other. Thus to create your own exchange rate or use the rate exchanged (unless the money is "paid" in Euros as discussed earlier) is breaking the  law, it really is that simple. I have said it and I will not go back and forth on this point, as the decision as to how honest we are is up to every one of us and how much respect to we wish to offer our hosts and their laws. Ron and Allanb have made their decision as to their level of integrity and the consequences are theirs and theirs alone, however, I am considering people that are new to France, but wish to be honest and do the right thing, not avoiding paying their dues and do not wish to risk having issues with the French tax authorities. Tax returns in France work on a faith system and they do not ask for evidence of your income or how you arrived at your figures, since there is not the man power to check every one. The control system is one of spot checks, i.e. they pull a file and send you a little post card asking you to attend a meeting at the tax office and to bring supporting documentation for your return. On average 1 in 14,000 is checked this way, though this figure is much higher for Brits (according to a statement released by the tax office about 18 months ago). The fact that a tax return is "accepted" does not mean it is correct, it means it looks ok, but they have not checked its integrity. Thus, someone who has completed a tax return incorrectly for many years, assuming all is well, can find themselves in hot water or at least that they have been overpaying. Make no mistake that if you are not using the figures for the exchange rate provided by the tax office, they will demand that you complete new tax returns from anything from the last 3 up to 10 years and they will apply penalties from 10-30% and you will be black marked as someone to watch and will be subjected to more regular checks. I generally find that good people follow the system and are relaxed about it and people who break the laws shout loudly about how they are getting away with it ... until they get caught! Kate

[quote user="Antonia"]I'm somewhat loathed to wade into this subject when there are people on the forum far more knowlegable than me but my understanding is that the "rate" given by the french authorities refers to those people who pay ISF and therefore have to calculate their total worth on the 31st of December. Before filling on our first return we paid a visit to our local tax authorities and were told to use the exchange rate applicable on each day we received funds (income) in the UK. Not when we remitted it into France. [/quote] Yes, there is a rate for ISF and it may be different or the same as the rate for income tax. As for using the exchange rate when you received the funds into a UK account, thats a new one for me and I have heard many variations now. There are many local tax offices in France, each with their own view and it depends who you talk to, however, the official line of the Paris tax office is the best guide I think. I have even had people who have been to the tax office and been sent away telling them they don't need to pay tax in France, just pay it in England, so there is no accounting for the knowledge of all staff in all offices (note to Clair: this is not an attempt to insult French tax office workers, most are very competent and very helpful so don't go there please.) Kate

[quote user="Clair"][quote user="Complikate"]As to what French people believe, I could not imagine...[/quote] Yet you seem certain enough to state that "the French ... want to find a way to get their pound of flesh from us..." when I believe you possibly mean the French tax authorities. [/quote] Oh Clair Clair Clair, this is just the great British sense of humour (well, or at least mine at any rate!) Anyway my follow up comment was "its reasonable that the fisc want to make sure they do" (as in get what they are due), so it was obviously not a serious comment. I am not exactly a Francophobe, I am married, as I said, to a French person, my son is half French and I live in France. However, if my humour is off the mark and caused you offence I am sorry for the comment and retract it forthwith, though I hope this does not preclude me from having a sense of humour on future posts.

[quote user="cooperlola"]Sorry, anyway, but this is not what the law states.  Look at S/D's post in the thread I quoted much earlier.  It's the rate when we receive the money.  Use that and you are legal.  No right-thinking person of any nationality can argue with sticking to the letter (as opposed to the imagined thinking behind) the law. I concur with Sweet 17 - it will be interesting to see this so called "official" rate when it's published.  Not that I will use it myself - I noted the rate at midnight on each pay day (when the credit is received in my UK account) and worked each one out on the day I was paid.  All I have to do now is add all 13 payments up and bung them in the right box.  Job done.  Easy-peasy.  Don't know what all the fuss is about....[Www] [/quote] Indeed you are right cooperlola, if you are "paid" into your French bank account, however, NOT if you are transferring to you French account from a UK account. If, for example, you have your pension paid directly to your French bank account, then you can add up what you receive in the year in the currency you receive it, i.e. the euro, so no exchange rate is required, since the income has been recived in euros. If the same pension was paid into a UK account in Sterling and the money was subsequently  transferred into France, the rate you transfer it at is not considered and you must use the rate set by the French fisc. If you only have pension income that is paid directly into your French account this exchange rate information will not be significant for you. If you transfer money from the UK then  it is very important.  Kate

I think we are at cross purposes. Your quote was "It sometimes looks like the British look for a way of avoiding paying their due..." I agreed with this comment, as I do believe that there are some Brits who do avoid paying their due, so my response was "Sadly I would say that this is a highly accurate generalisation ...", thus this comment is in reference to Brits and is my sentiment. This was in reply to your question "How do you feel about the generalisation?" Thus you asked the question and I answered it, I thought it was clear. As to what French people believe, I could not imagine, though I could ask the person I'm married to who is French, but they are only one person, so hardly a thorough survey, though my other half is somewhat touchy! Anyway, for those that care (getting back on topic), when I get the (confirmed) exchange rate I will put it here. Kate  

[quote user="Clair"][quote user="Complikate"]... the French do not like the idea of using this rate and want to find a way to get their pound of flesh from us [/quote] Writing as a French person, it makes no odds to me, but then again, I don't work for the French tax authorities. It sometimes looks like the British look for a way of avoiding paying their due... How do you feel about the generalisation? [:@] [/quote] Sadly I would say that this is a highly accurate generalisation and I'm ashamed to say so, thus its reasonable that the fisc want to make sure they do.

No problem, as soon as I know more I will put it here first. Incidentally, the issue is that the rate used is normally as of 31st December and this is the time when huge fluctuations in the currency market began. The week before this, as we know, the pound fell almost 20 cents, thus the French do not like the idea of using this rate and want to find a way to get their pound of flesh from us, which is taking time!   Kate 

Its very interesting to try and work out what is going on this year with the exchange rate. Last year the official rate was released in February. This, as it always does, was released in a Bulletin from the tax office, see http://www.lexisnexis.fr/pdf/DO/BOI_5_F-6-08.pdf. The rate is shown under Royaume Uni and equates to the 1.3636 used last year. Searching for the same bulletin this year, it is nowhere to be found, so I called the local and then the Paris tax office. Both said that the bulletin is late and has yet to be released, thus there is no rate, but it will be out soon. I commented that the Connexion has the rate and they insisted that this was impossible, since they themeselves have not yet set the rate. It appears that the annett consultancy is the supplier of the information to the Connexion and I have very little confidence in the detail if the tax office is denying the rate has been published.

I used Robert Kent at Kentingtons www.kentingtons.com,  or 04 94 37 29 40, who puts up well with my relentless questionning. He came highly recommended and I am happy to recommend him. Kate

Maricopa is right. If you have not paid the social charges, then you will need to do so. This aside all forms of income must be declared in France, thus you will need to complete the 2049 as well as the 2042. Kate

A French contract in France, has the same advantage, i.e. it gives the same benefits for inheritance tax, though by using a non French contract you can avoid wealth tax on it (if this is an issue for you) for the first five years. I considered you may want an offshore investment just to be able to invest in Sterling and not use Euros just yet, which as far as I know can only be achieved outside France. Barclays France is fine, Lombard is not fine, even though owned by Friends Provident (steer well clear), Friends Provident International is outside the European Union (Isle of Man) so avoid, as this will cause you nightmares. La Mondale Europartner is a very good option, as it is legal in the UK and France (I have one of these, so consider it a recommendation) and Cortal Consors are fine. Find a good adviser who is happy to give you a good discount as this is often more cost effective than going direct (an adviser may sacrifice his commission to reduce the cost). Make sure they are legal to give advice in France, check http://www.amf-france.org/bio/rech_CIF.aspx?lang=en&Id_Tab=0 type in name of person or company (either will do) in the "nom de CIF" box If they do not come up, stay clear of them too! If you would like a recommendation, let me know. My adviser put all this detail in a written report for me, which is how I appear to be an insatiable know it all!! I hope this helps Kate

If you affect a European based assurance vie, prior to moving to France, the allowances as per code 990-I of the Code General des Impôts cannot be applied under a European ruling and as outlined in the JO 7 K-1-00. My concern for you regarding this product is that it may not be compliant. I would always advise taking a compliant investment as a future French resident for tax efficiency reasons and ease of administration (a non compliant product can cause real headaches with the tax authorities). What company has been recommended to you?   Kate

Hi Parsnips,   Not wishing to be cast as the uppity wench on the forum (which I probably am!) I fail to see the confusion. The solution, as in many cases, is to read the law. The letter is a little confusing, but on analysis is not incorrect, merely not well put. However, the letter is completely irrelevant, since the law was published 11 days after the law was ratified it, so just throw it in the bin and focus on what’s new and what’s ratified as the law.   This in mind, my first reply details category 1 as detailed in law 1407 blah blah blah (read above). As mentioned previously, article 50-0 deals with this, but to avoid any confusion, here it is (or at least the first paragraph):   Article 50-0 Modifié par Ordonnance n° 2009-112 du 30 janvier 2009 - art. 10 1.       Les entreprises dont le chiffre d'affaires annuel, ajusté s'il y a lieu au prorata du temps d'exploitation au cours de l'année civile, n'excède pas 80 000 euros (1) hors taxes s'il s'agit d'entreprises dont le commerce principal est de vendre des marchandises, objets, fournitures et denrées à emporter ou à consommer sur place, ou de fournir le logement, à l'exclusion de la location directe ou indirecte de locaux d'habitation meublés ou destinés à être loués meublés, autres que ceux mentionnés aux 1° à 3° du III de l'article 1407, ou 32 000 euros (1) hors taxes s'il s'agit d'autres entreprises, sont soumises au régime défini au présent article pour l'imposition de leurs bénéfices.   Note the bold, italic and underlined bit and this connects with my first post. I repeat, this all happened AFTER the letter, thus this is, quite literally, the letter of the law!   Kate

[quote user="parsnips"] Hi,     I think the reductions were part of the loi de finances  which still had not been "signed off" by the senate. A friend of mine who runs gites (not gites de france) today showed me a letter dated 18/02/09 from the finance ministry inviting him to switch to the AE regime and quoting the limit of 80000€ for sales etc; including fourniture de logement, and 32000€ for commerce and artisans, so it may be that as a part of Sarko's relance the reductions have been reversed. There is no mention of the tax allowance but it would be logical that this was reversed also. [/quote] This law was ratified by the senate 30th January Ordannance No 2009-112 30th January and can be found in the Code Generale des Impôts under artcile 50-0. Article 1407 is referred to as the definition of categories in both .1 and .5 of said article. The "invite" was most likely to invite them to alter their status to receive the more generous allowance under catgory 1; however if they remain in category 2, they will be subject to the €32,000 limit and 50% allowance.   Kate

You say "Gîte" income, but if you are a "Gîte de France" this is not the case; the new €80,000 limit and 71%, as before apply. The detail of what receives the more generous allowance is outlined in article 1407 III of the Code General des Impôts as follows: III. - Dans les zones de revitalisation rurale mentionnées à l'article 1465 A, les communes peuvent, par une délibération de portée générale prise dans les conditions prévues au I de l'article 1639 A bis, exonérer : 1° Les locaux mis en location à titre de gîte rural ; 2° Les locaux mis en location en qualité de meublés de tourisme au sens de l'arrêté du 28 décembre 1976 relatif à la répartition catégorielle des meublés de tourisme et des gîtes de France ; 3° Les chambres d'hôtes au sens de l'article L. 324-3 du code du tourisme. La délibération prise par la commune produit ses effets pour la détermination de la part de la taxe d'habitation afférente à ces locaux revenant à chaque collectivité territoriale et établissement public de coopération intercommunale doté d'une fiscalité propre. Elle peut concerner une ou plusieurs catégories de locaux. Pour bénéficier de cette exonération, le redevable de la taxe d'habitation adresse au service des impôts du lieu de situation du bien, avant le 1er janvier de chaque année au titre de laquelle l'exonération est applicable, une déclaration accompagnée de tous les éléments justifiant de l'affectation des locaux. If you are any of these, you are category 2 and you can breath easily. Kate

My responses are the ones in Italic, just so its clear! (the whole quote thing doesn't do too well on Google Chrome).   To Parsnips and Complikate: I certainly didn't realize that the name fonds en euros implies that it's a guaranteed-capital fund, so thank you for putting me right on that.   Glad to be of service, as is Parsnips, I’m sure. In any case, I don't think I'm failing to understand. "The guaranteed ? fund has no UK equivalent" ? Except for the currency, it has a very close equivalent.  As far as the investment principle is concerned, I think that what I said about the UK model applies equally to the French one. Most of the investor's money goes into a bond (or bonds), with maturities matching the investors' contract dates (how else could they guarantee that the amount invested would be available on those dates?) That provides the bread-and-butter; the remainder of the money goes into something more adventurous, in the hope of providing some jam. I accept your statement that French fund managers may prefer less risky investments for the "jam" part - equities rather than derivatives, for example - but the basic principle is the same.   The nearest equivalent to a “fonds en euros” in the UK is a with profit bond. Similarities are that they use bonds (as well as shares, but in larger proportions than the fonds en euros.) Gains are locked in (subject to market conditions). The “with profit” provider makes no guarantees for the investor, that they will not get out less than they paid in. The “with profit” fund may have (in adverse market conditions) an Market Value Adjuster or MVA applied, which means they may revalue the units to any of those withdrawing, thus it is very possible (as is happening to many suffering investors right now as market conditions are most certainly adverse). The “fonds en euros” does not do this and the provider guarantees the return. I know of no “generic” UK product that means the provider takes the risk itself, only a guarantee in as far as the structure is concerned. Incidentally, I believe that in the small print of all these "guaranteed" proposals you'll find a warning that if you withdraw money on any date other than the contract maturity, the guarantee doesn't apply.   Allanb; I am about to amaze you and congratulate you on being totally correct… IF YOU ARE IN THE FORTUNEO PRODUCT! I was amazed to read the terms on this contract. The term is 8 years (no other “fonds en euros” I have seen has an obligatory term, though most “suggest” 8 years for tax reasons). If you want to pull out during this term, then they will charge you 3% for it! (Partial and income withdrawals are free, thankfully!)   It gets worse … they only pay out where the money has been invested for the entire year. Thus, if you draw it out in any one year, you are penalized the entire year. This means, for example, if the return declared is 5% for a year and you pull out of the contract during that year, even say, December, the loss to you is the 5% plus the 3%, so a whopping 8%!! Well they have to make their money somewhere!!   I think this confirms my view that the whole guarantee deal depends on a match between contract maturities and bond maturities - under both the UK and French models.    Read the above for the response on that parsnips wrote:The investor does not have a potential loss on the maturity of the bonds as this is borne by the company.  If you are talking about loss because of market fluctuations, the can't be a loss on maturity - that's the whole point of using bonds.   Naturally a bond can “trade short” and a manager may wish to do this if he sees trouble ahead. This is rare for “fonds en euros” as they tend to use high quality debt only, as it is “their” risk! If you're talking about what happens if the bond defaults, i.e. the proceeds fail to arrive, then I don't know what happens. Do you mean that Fortuneo would absorb the loss? (Actually if the investment is restricted to government bonds, as you say, this is academic. But if you know the answer, I would be interested.)    A bond is a debt. The proceeds do not just “fail to arrive”; it is as a result of non-payment from the bond issuer. This means a bond has come to term and is due payment and the bond issuer says “empty pockets I’m afraid” and don’t pay up. That, of course, would result in a loss for the investor. With the “fonds en euros” this is not the loss of the individual, but the loss of the “fonds en euro” provider. So to answer your question, Fortuneo would absorb the loss, if they had a guaranteed minimum (which they don’t)! All money put into the fund is guaranteed to be returned to the investor together with the annual gains which are locked in every year. I agree, if by "locked in" you mean the actual gains are reinvested. Here again, this is no different from the UK model.   Well, again, I’ve covered this above. They are “locked in” unless there is an MVA, so not much of a guarantee. The “fonds en euros” guarantee is real as there is no clause for adverse market conditions. However, you did say in an earlier post "in addition there is a minimum guaranteed return which is published at the start of each fiscal year". If so, this is certainly interesting, but I couldn't find it on the Fortuneo site: can you quote it?   They do not have one, as I said earlier. Fortuneo is the only “fonds en euros” contract I have ever come across with no TMG (Taux Minimum Garanti), which really is very poor indeed.   Overall, I would suggest that the product has a free entry for a reason.   But I don't know why Complikate objects to the name 'fonds en euros à capital garanti' - it is in fact accurate and descriptive. The fund is denominated in euros, and the capital is guaranteed.   I can’t do this anymore, I think if the car name thing worked for my young son, it should work for you. Read my last posting again and think on it for a bit (two different investments with overlapping names etc etc...no nothing? … never mind!)   I’m off for some Prozac!

I was trying to piece together a reply to Allanb when Parsnips’ response came up, which covered it perfectly, so not much more to add to the description of the fond en euros, just a big thank to Parsnips for saving me the effort. As far as the name is concerned, saying “fonds en euros à capital garanti” is no different to saying “a car that has wheels”! Most people know a car has wheels, but this name is for people who do not know what a “fonds en euros” is (i.e. that it is guaranteed). Fortuneo is clearly aimed at a wide market, so including people who are investing for the first time and need to have the difference explained to them. For this reason this is a very good name, as it helps the layman understand what it is.  The problem is that it can be (as it obviously is being) confused with the “Les fonds à capital garanti”, which, as discussed, is not the same thing at all. I would not generally labour so much over something as simple as a name, but if people are going to not take professional advice and use services such as Fotuneo, it needs to be clear what things are called, in order to avoid future problems.  

Indeed so, but this is a commercial name chosen by Symphonis Vie. Other firms have other names, such as "Actif Guarantee" and "securité". "fonds en euros à capital garanti" is not a generic name, which I am pointing out to avoid confusion, as indeed this name does lend itself to a great deal of confusion.

Lots of confusion here brought about by the vocabulary. There is no 'fonds en euros à capital garanti', but there are two separate investment styles: 1) Les fonds à capital garanti 2) Les fonds en euros As far as les fonds à capital garanti are concerned, Allanb explained them very well. Only the capital is guaranteed. Generally around 80% is placed on deposit earning a rate which will achieve enough to re-obtain the original capital and 20% is placed in more risky investment, such a market tracker or whatever the fund offers. Worst case scenario the 20% makes nothing and the 80% has earned enough interest to repay your original capital. The fonds en euros are exactly as described by parsnips. Allanb is not correct in his assumption that the original capital cannot be guaranteed, however it is only guaranteed as far as the provider can guarantee it, as the guarantee is offered by the provider under the terms of the contract. Thus if you want a guaranteed fund, ensure that you’re using a very stable provider the guarantee is worthless. The second reason Allanb cannot be right is that there is not generally a huge risk for the provider since fonds en euros are rarely share based and invest in bonds that are kept to fruition. If you buy a bond at €100 and sell it in the interim, it may be worth more or less than €100. However, if it is kept to fruition a loss is not possible unless there is a default. The providers tend to use high quality debt, thus the lower return than is possible, thus a default is highly unlikely. Kate

Thank you Parsnips, It is indeed very interesting and it obviously depends whom you speak to, since I have not yet come across a notaire who has held this view; however I do understand it... "C’est logique!"  I have often said to people that they can shop around for the answer they want, within reason. I met a couple who had affected a partial marriage regime whilst not resident and they wanted to extend it to a full marriage regime, as they were moving to France. They were told that they had made one change under the Hague convention and could not do another, so their children would be informed under French law. However, they did not want their children informed of their marriage regime change and were advised, by their notaire, to change their regime back to séparation des biens, leave it six months and then change it to a full CU, so it could be done under the Hague Convention, thus no child contact. The idea was that because the change was being made from a UK regime to a French one, they could use the Hague Convention again and they considered that child contact was not required if using the Hague Convention. A view often taken is that the UK marriage regime of separation is wrong, since, in the UK we are used to automatic accrual. Only CU gives us this, so it should be that the default regime should be CU and not separation of goods.   Kate  

[quote user="bigears"]hi just read the article and it has re-inforced what I have always believed i.e. 183 days isn't the overriding factor.  I remember having discussions about this in the past and people were banging on about it being the overriding indicator.  I'm actually soaking the sun up in nz at the moment after a most satisfying days work in about 30 degrees.  This year I will probably stray over the 183 days in france but will not be worried about it, probably will not even count the days.  We will only become french tax resident when my wife is able to obtain an e121 and then we can sell the house as our main residence, quite legitimately and move on to pastures new.  [/quote] Lucky you bigears; I just spent the last few days in old blighty and it's pretty nasty. Just to say you are playing a dangerous game if you do not count your days in France. It shows that people see what they want to see, beacuse to me it is made very clear that the double tax treaty says if you spend more time in France than anywhere else you are resident. If it is agreed in law by both countries, you will get sympathy from neither. Note that it is not for the French fisc to prove that you were in France more time than anywhere else, it is for you to prove that you were not. All the French fisc has to do is point the finger and make the accustation. If you do not count your days and evidence your travel, you could find yourself in trouble. Kate  

If you're going to talk to an adviser, make sure they are qualified and regulated to offer advice in France. It is very easy to check this; just go to the AMF website and type in the name of the person or company in the "Nom du CIF" box. If they are not listed, they are best avoided. Kate

Hi Parsnips, If you're right I will bow to your superior knowledge. If you have any links or articles where you got this information I would be very grateful indeed. I have tried to look this up and I can only find alterations on that date that refer to French law. The Hague Convention is international law and it is article 6 of this convention that gives the right to change the regime. This has been incorporated into the civil code under article 1526 and on looking at the law, it has not been altered. Kate

As I understand it, it is incorrect that your notaire must contact your children, unless you have previously made a change to your marriage regime in the past (even a partial one), which is probably why he did not mention it. You are entitled to one change under The Hague convention. The rules of this convention have been incorporated into the French civil code. The fact that you can do it does not mean you should, as complications may arise later. If you use the Hague Convention, it is then on death that the children must be contacted. This is not a good scenario, since if the children are found; they will have a juicy cheque or property dangled under their nose by the notaire. If the children are not found, it means waiting while the search goes on for anything to happen with the estate, causing anxiety at an already difficult time. A tontine clause is an option, however, if you have already purchased the property, this becomes an expensive option, as it is generally inserted (at no cost) in the purchase contract. Altering your contract after the purchase requires a notarial act and comes at a cost. There are many complex ways of getting around the property problem, but clearly your notaire is not discussing them with you. If you own the property 50/50, then €1,200 is very expensive for a marriage regime change. You should expect to pay no more than €600. If you do not own the property 50/50 then a recalibration of ownership is required before the marriage regime can be put in place and this increases the cost. Then €1,200 would be very reasonable. My suggestion is that if you do own the property 50/50 then you find another notaire since this one is not advising you properly and he is overcharging you for it. Kate