Prélevements sociaux on UK Rental / Dividend Income...

[chocolatefish]

I think this is similar to what many people seem to be reporting... apologies if I am going over a well trodden path, it's new to us.

We declared UK rental income & dividends for the first time this year, with advice from the very helpful people on this site.

We've just had our Avis d'Impot and while the impot looks about the same as last year, we have been charged around 1700euros of social charges...

Am I right to think that we should not have been charged this?

The Impot lists our UK income as Revenus des locations meublées, non-profess., micro regime and gives us a 50% abattement on the total. It then lists our dividend income as Revenus de capitaux mobilier declarés at imposables, and totals all these up with our French salary etc. We then receive a Credit d'Impot, presumably for the UK income already declared to the UK tax authorities. The tax payable at this point is pretty much the same as previous years.

The Prélevement Sociaux part of the Avis indicates that all our UK rental income (Revenue de capitaux mobiliers) and dividend income (Revenus professions non salariées) have been subject to social charges. This pretty much doubles our overall tax bill.

Where now? Down to the tax office with a copy of the European Court judgement and our HMRC tax return to prove that all this income has already been completely and utterly declared for tax in the UK?

Also, while we are waiting to try and sort this out, do we have to pay up in the meantime and try to claim it back. We are living on one salary, and this is a big hit to our budget.

Thanks as always for any words of wisdom.

[Hereford]

One thing:  The Court judement is concerning Social charges for those UK (or other) nationals whose health care is paid for by their home countries, i.e. those with a form S1, msotly those with an OAP. From what you say you are not the holder of an S1.

Others will be along about double taxation.

[parsnips]

Hi,

You certainly should not be charged income tax or social charges on UK rental income as this is exempted by article2 ,6 and 24 of the double tax treaty , see here;

http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_5835/fichedescriptive_5835.pdf

 Regarding dividends  these are taxable in France , with an allowance for UK tax paid (see the table in 2047); however , only S1 holders -not affiliated to the french social security -, are exempted under the recent ruling from social charges on investment income.

Something that some tax offices miss is that under art.24 any credit for UK tax on dividends which is left over after setting against income tax , should be set against the CSG on those dividends.

[Chancer]

What about savings interest from the UK?

 

Stupidly I did not keep a copy of my déclarations but I do have the figures that I submitted (although dont know what columns they were put under) and have my subsequent avis d'import.

 

It differs from the above because they have given me an abattement of 71% against my locations meublées non proffessional, the 29% net income was subjected to social charges totalling 15.5% but I see no mention anywhere on my avis of the savings income that I declared of £961 and I certainly havnt paid any charges on it.

 

Have they perhaps missed the figure completely? Should I have paid charges on it? Should it not appear somewhere to at least be included in my revenue de reference?

[parsnips]

Hi,

    I believe that you are not yet an S1 holder?    In that case , if you are in the french health system your UK savings including bank / building society interest etc, are taxable only in France (and subject to social charges - even under the new ruling)  and any tax paid in the UK should be reclaimed from HMRC.

[Quillan]

[quote user="Chancer"]

What about savings interest from the UK?

 

Stupidly I did not keep a copy of my déclarations but I do have the figures that I submitted (although dont know what columns they were put under) and have my subsequent avis d'import.

 

It differs from the above because they have given me an abattement of 71% against my locations meublées non proffessional, the 29% net income was subjected to social charges totalling 15.5% but I see no mention anywhere on my avis of the savings income that I declared of £961 and I certainly havnt paid any charges on it.

 

Have they perhaps missed the figure completely? Should I have paid charges on it? Should it not appear somewhere to at least be included in my revenue de reference?

[/quote]

 

So what happens when you get an S1? Do you still get the 71% abattement but pay no social charges of 15.5%?

[chocolatefish]

Just coming back to say thanks, to parsnips especially, for the advice.

We're using a professional French / British accountant to sort it out for us, it was just too complicated for us. So far he's uncovered a number of mistakes we made in our return (thanks to advice from so-called interntational tax / property lawyer) plus a major error on the part of the Fisc (that our household was 2 rather than 3 'parts') and as a result has reduced our tax bill by nearly half. It's still a lot more than we'd like to be paying on income that's already been declared in the UK, but it's been really useful to follow his explanations and calculations, and the mindset of the French tax authorities, and hopefully we'll be able to do it ourselves next year.

Cheers again

[Quillan]

[quote user="chocolatefish"]It's still a lot more than we'd like to be paying on income that's already been declared in the UK, [/quote]

 

I am probably being a bit thick here but when you say 'declared' do you mean you have paid tax on it in the UK. If so under the dual taxation agreement you can only pay tax in one country and not in both.

[chocolatefish]

Well, you would think so, and I too in my ignorance assumed that this was the case.

However, it seems to be down to the semantics... the French tax authorities do not directly levy taxes on UK income that has already been declared in the UK; thanks to the DTT... But they do 'take into account' such income when calculating our global income (with various abattement and tax credits to allow for the fact that it has been declared in the UK already blah blah).

Our total global wealth (thus boosted by the UK income) is then used to identify which tax brackets our income falls into, and the % tax we pay on the income falling into each category of the bareme. So although we are not directly being taxed on the UK income... it all goes in the pot and pushes more of our global income into a higher tax bracket... savvy? So we end up paying more income tax as a result.

He also explained the issue with social charges, the ongoing court battles etc, which I understand when I read it but cannot remember the details. Suffice to say, a lot of tax offices seem to be making policy / proceedures up on the hoof.

But the real things that needed sorted were quite basic - the Fisc erroneously calculating for 2 rather than 3 parts in our household, and some errors in the totals on our part due to poor advice were the main reasons for our higher tax bill.

Next year we will be wiser. It's an expensive business, living in a socialist country with a vast gaping hole where its social fund should be... it's another instance where I've had to accept that TiF baby, TiF.

*TiF = This is France