VERY IMPORTANT INFORMATION RE 2011 DECLARATIONS

[tinabee]

[quote user="allanb"][quote user="parsnips"][quote]EXEMPLE :

Vous êtes marié sans enfant. En 2010, vous avez perçu :

• en France, un salaire de 30 000 € (après déduction forfaitaire pour frais de 10 %) ;

• en Allemagne, un salaire de 10 000 € (après déduction de 10 %).

Votre revenu global (français + allemand) s'élève à 40 000 €.

L'impôt correspondant pour 2 parts s'élève à 2 922 €.

Le crédit d'impôt correspondant aux revenus de source allemande se calcule comme suit : 2 922 × 10 000 / 40 000 = 731 €. Ce crédit d'impôt s'impute sur l'impôt global."[/quote]

(this is a similar calculation to that for the taux effectif , but used in a different way, the good thing is it seems to give the credit at the "taux effectif" rate --my note)[/quote]If this is indeed how it's computed, I'm not so sure it's a good thing. 

The example implies that the German income was either 11,111€, from which tax of 1,111€ was deducted, or 10,000€, from which tax of 1,000€ was deducted.  I don't think it's clear which is meant, but anyway the poor taxpayer has paid either 1,111€ or 1,000€ in Germany, against which he's getting a credit of only 731€ against his French tax.

Is that your understanding of how it works?

[/quote]

AllanB - it's actually worse! Looking at the figures provided, for UK income which has already been taxed in the UK, the French tax credit is less than a third of the UK tax paid [:'(]

[parsnips]

Hi,

 Neither the new system or the previous one was ever designed to give back any tax paid in the UK. That tax has been taken in accordance with UK tax rules and is presumably correct. Because the income in question is taxable ONLY in the UK, the previous and present systems are designed to prevent that income from being taxed again in France. Because France deems it fair that such income should be "taken into account" to calculate the appropriate rate of french tax for any french taxable income,  they previously (in the "old" treaty), used the mechanism of the "taux effectif", which calculated an "average" rate for the whole income, then applied it only to french taxable income;  they now use the "credit" method , which while not taxing the exempt income, adds it to the french taxable portion  of the income , calculates a total tax bill and then gives a credit equal to the extra FRENCH tax calculated on the exempt portion of the total income.

    It generally works out to the taxpayer's disadvantage, but this is not aimed specifically at UK expats, it merely brings the France / UK DTT, which previously was a very old and one- off arrangement, into line with France's treaties with a large number of other countries including the USA and Germany. 

[tinabee]

[quote user="parsnips"]Hi,
 Neither the new system or the previous one was ever designed to give back any tax paid in the UK. That tax has been taken in accordance with UK tax rules and is presumably correct. Because the income in question is taxable ONLY in the UK, the previous and present systems are designed to prevent that income from being taxed again in France. Because France deems it fair that such income should be "taken into account" to calculate the appropriate rate of french tax for any french taxable income,  they previously (in the "old" treaty), used the mechanism of the "taux effectif", which calculated an "average" rate for the whole income, then applied it only to french taxable income;  they now use the "credit" method , which while not taxing the exempt income, adds it to the french taxable portion  of the income , calculates a total tax bill and then gives a credit equal to the extra FRENCH tax calculated on the exempt portion of the total income.
    It generally works out to the taxpayer's disadvantage, but this is not aimed specifically at UK expats, it merely brings the France / UK DTT, which previously was a very old and one- off arrangement, into line with France's treaties with a large number of other countries including the USA and Germany. 


[/quote]

Hi

Fully understand the process and argument, and the fact that France want to get their share. It's just a bit depressing when the differences between UK tax and French tax are actually quantified in black and white [:(]

[NormanH]

Thanks to everyone who has posted on this informative (and very depressing) topîc.

I have not had my eye on the ball for a while, and wasn't aware of this.

[allanb]

[quote user="parsnips"]First point-the 10% taken off the German income is the fixed 10% deduction allowed in France on all salaries and pensions, any German TAX is ignored so the figure is gross taxable income (after any German charges apart from tax.)[/quote]

Sorry, I jumped to a false conclusion about what the 10% was.

[Gardener]

Up until this year, what percentage was taken off UK taxed incomes (those that were declared at VII and entered at 8TI) ? The difference between the net amount I declared at 8TI and the amount that later showed on my avis d'impot was just over 15%. Is that about right?

[parsnips]

[quote user="Gardener"]Up until this year, what percentage was taken off UK taxed incomes (those that were declared at VII and entered at 8TI) ? The difference between the net amount I declared at 8TI and the amount that later showed on my avis d'impot was just over 15%. Is that about right?[/quote]

Hi,

    For govt. pensions it was gross pension less UK tax (at VII 2047) then after transfer of net pension to 8TI the 10% standard deduction. Maybe your 15% was the sum of tax and 10% deduction?

[Gardener]

My mistake.I can see where I went wrong now.

[parsnips]

Hi,

  Followers of this thread , and those affected by the changes concerning govt. pensions and rents, will be pleased to learn that according to the "tax expert" of the Connexion, nothing has actually happened , as the treaty didn't come into effect last year! He bases this claim on the 09 January 2010 date of the JO entry announcing the change ("change to take effect from the first full year following the "entrée en vigeur").  A careful  reading of the JO entry reveals under the prime minister's name a note saying   " (1) Le présent règlement est entrée en vigeur le 1er décembre 2009"  I emailed the "Connexion" pointing out this misinformation disseminated by them , which could have costly results for some of their readers , and saying that they would ,no doubt, correct it in their next issue.

       I was amazed to see this morning (July Issue) that their "expert" has continued with his line that nothing will happen until next year! I hope those of you who have reason to believe otherwise will write to the "Connexion" to describe your experiences, as they have obviously dismissed me as a crank.

[andyh4]

Ah well

you know the definition of an expert:

from:

 

Ex = something that has been

and

Spurt = a drip under pressure

[Gardener]

The have a facebook page where you can post comments.

[Simon-the-censored]

Connexion = useless

Pretty straightforward really - I was summoned to my local tax office to 'fix' my 2011 declaration.

So for those of you French residents declaring any tax paid salary earned in the UK:

1. Declare the gross salary amounts on your 2047 - box VI

2. Transfer the total to box 8TK on the 2042

3. Enter the gross amounts in boxes 1AJ and 1BJ (as applicable) on the 2042.

Result = status quo. Not sure what all the palava is about?

Simon :-)

[parsnips]

[quote user="Simon-come-lately"]Connexion = useless

Pretty straightforward really - I was summoned to my local tax office to 'fix' my 2011 declaration.

So for those of you French residents declaring any tax paid salary earned in the UK:

1. Declare the gross salary amounts on your 2047 - box VI

2. Transfer the total to box 8TK on the 2042

3. Enter the gross amounts in boxes 1AJ and 1BJ (as applicable) on the 2042.

Result = status quo. Not sure what all the palava is about?

Simon :-)[/quote]

Hi,

       Your summary is succinct and correct.  Any "palava" was caused by the unco-ordinated and inept way the changes were (or in many cases were not) put into effect by tax offices .

[Simon-the-censored]

second that parsnips!

Pretty shambolic system - especially being that many of the people working within in think it is!

You know what - the thing that astounded me was the fact that I received a letter in English (only) - from anywhere within the French administration!

I'm still reeling from the shock!

Simon :-)

[Gardener]

My avis d'imposition has arrived and I can't see any discernible difference (other than the amounts) to last years. Everything is as it was last year,so assuming they haven't got it wrong, what difference should entering the figures in a different place on the tax form have made?

[parsnips]

[quote user="Gardener"]My avis d'imposition has arrived and I can't see any discernible difference (other than the amounts) to last years. Everything is as it was last year,so assuming they haven't got it wrong, what difference should entering the figures in a different place on the tax form have made?[/quote]

Hi,

      Because the new system uses the gross UK income figure (not net of tax as before) it tends to push people towards a higher marginal rate. The actual difference can vary from undetectable to quite considerable , depending on the individual case --proportion of french taxable income to UK income, and total income etc. ---its impossible to say in a general way , but I have a friend (who is very well versed in french tax) who has paid several   100s of € extra on the same income.

      

[NormanH]

Unless I am mistaken with this system those already taxed in the UK on government pensions  then have to pay a second tax in France if they have a French Income, or a OAP from the UK

That is reasonable, but I calculate that the combined taxes are much higher than if all  the total had  been taxed in France, that is to say if it wasn't compulsory to pay the UK tax, but one could opt simply to be taxed in France

Am I wrong?

For example  a single person with a total income of 17,000:

Impôt sur les revenus soumis au barème Tranches Taux Revenus Impôt Jusqu'à 5 963 € 0,00 % 5 963 € 0 € Entre 5 963 € et 11 896 € 5,50 % 5 933 € 326 € Entre 11 896 € et 26 420 € 14,00 % 5 104 € 715 € Total 6,12 % 17 000 € 1 041 €

 In the Uk that person would have paid  around £ 1900 I reckon, but haven't got the same calculation as I can make in France for the UK

THIS IS NOT MY INCOME [:D]

[parsnips]

[quote user="NormanH"]Unless I am mistaken with this system those already taxed in the UK on government pensions  then have to pay a second tax in France if they have a French Income, or a OAP from the UK

That is reasonable, but I calculate that the combined taxes are much higher than if all  the total had  been taxed in France, that is to say if it wasn't compulsory to pay the UK tax, but one could opt simply to be taxed in France

Am I wrong?

For example  a single person with a total income of 17,000:

Impôt sur les revenus soumis au barème Tranches Taux Revenus Impôt Jusqu'à 5 963 € 0,00 % 5 963 € 0 € Entre 5 963 € et 11 896 € 5,50 % 5 933 € 326 € Entre 11 896 € et 26 420 € 14,00 % 5 104 € 715 € Total 6,12 % 17 000 € 1 041 €

 In the Uk that person would have paid  around £ 1900 I reckon, but haven't got the same calculation as I can make in France for the UK

THIS IS NOT MY INCOME [:D]

[/quote]

Hi,

 You are absolutely right , if we government pensioners could be entirely taxed in France we would pay less income tax in total,provided we still retained the E121 CSG exemption. However, if we were treated like french pensioners, we would be paying CSG etc. on our pensions, which would even things up quite a bit.  Anyhow its not an option.  

[idun]

NormanH, not necessarily. If someone has pensions of £17000 in the UK and is retired ie over 65 they will pay about £1450 in income tax. People over the retirement age, get better pre tax allowances.(I use http://listentotaxman.com/index.php to check on income tax)

Remember then people don't have to pay for medicines in the UK when they are over 60, or a mutualist, and there are no further national insurance payments over 65, so about kif-kif really.

[NormanH]

Thanks both of you. I am obviously out of touch with the UK.

I don't know anything about a E121 CSG exemption, but I don't suppose I will get it as I also have a French pension, and I believe the UK don't cover those who have a pension from another state.

This will become increasingly important as more people  who have worked in France and so are entitled to a small French Pension come to retirement age.

At the moment we are few and far between.

[idun]

No we are not exempt from social security payments on a pension from France, but we are CSG exempt and our E121 is from France and that goes to Newcastle.

And I thankyou NormanH as you have got this addled brain working with all these things and I realise that I have forgotten to do something.

[baluth]

As a result of the change I have paid a couple of hundred euros French tax where last year I didn't pay anything. In effect I have now been taxed in both countries on my government pension, which is what the Convention is supposed to avoid!

Article 24, Section 3a of the Convention makes it clear to me that the pension should be entered in section VII of Form 247. The rest of the section seems to be exclusively about British tax already paid - how it will not be simply deducted from French calculations, but compensated for with a credit d'impot. There are two ways of calculating this credit d'impot: pensions are not mentioned so must be included in subsection (i). There is certainly no suggestion of making the whole revenue a 'revenue imposable'.

The brochure pratique issued by the French tax authorities in 2011 ('Declaration des Revenues Encaisses a l'Etranger 2047') treats all revenues in subsection (i) as taxable in France and to be entered in VI of form 247 ('Revenues Imposables...'), and in 8TK of form 242. As regards pensions, this is surely a breach of Article 18 of the Convention. What is more, Britain does not feature  in the list of countries to which this applies! 

[parsnips]

[quote user="baluth"]

As a result of the change I have paid a couple of hundred euros French tax where last year I didn't pay anything. In effect I have now been taxed in both countries on my government pension, which is what the Convention is supposed to avoid!

Article 24, Section 3a of the Convention makes it clear to me that the pension should be entered in section VII of Form 247. The rest of the section seems to be exclusively about British tax already paid - how it will not be simply deducted from French calculations, but compensated for with a credit d'impot. There are two ways of calculating this credit d'impot: pensions are not mentioned so must be included in subsection (i). There is certainly no suggestion of making the whole revenue a 'revenue imposable'.

The brochure pratique issued by the French tax authorities in 2011 ('Declaration des Revenues Encaisses a l'Etranger 2047') treats all revenues in subsection (i) as taxable in France and to be entered in VI of form 247 ('Revenues Imposables...'), and in 8TK of form 242. As regards pensions, this is surely a breach of Article 18 of the Convention. What is more, Britain does not feature  in the list of countries to which this applies!

[/quote]

Hi,

    See my reply on another well known forum. The list on the 2047 will no doubt be updated eventually in the usual efficient french way.

    

[NormanH]

I don my dunce's cap and try to explain this as I 'understand 'it in the hope that someone will either confirm or contradict.

New method of calculating Tax payable in France by those with a UK local  Government pension.

1) Take the total gross income ( UK local  Government pension. + any OAP or French income)

2) Calculate the tax you would have paid in France on this total if it had all been paid here. You can use one of the 'ready reckoners for this)

3)Ignore completely any tax paid in the UK

4) Calculate the tax you would have paid in France on your gross UK local  Government pension. This gives you the' tax'credit' spôken of.

5) The tax payable is the Total in (2) above, minus the tax credit in (4) above.

This will be a little more than in the past, since the tax in France is now calculated on the gross income, not on the nat of UK tax income.

Logically there will always be some tax to pay in France for anyone with a UK local  Government pension, plus either or both a OAP, or a French Income.

If you have been shown as 'non-imposable' it is possibly because of the 'glitch' on the Impôtts website, by which the UK part is sometimes not counted if you declared online ( a known and observed fl:aw in the site)

[parsnips]

[quote user="NormanH"]I don my dunce's cap and try to explain this as I 'understand 'it in the hope that someone will either confirm or contradict.

New method of calculating Tax payable in France by those with a UK local  Government pension.

1) Take the total gross income ( UK local  Government pension. + any OAP or French income)

2) Calculate the tax you would have paid in France on this total if it had all been paid here. You can use one of the 'ready reckoners for this)

3)Ignore completely any tax paid in the UK

4) Calculate the tax you would have paid in France on your gross UK local  Government pension. This gives you the' tax'credit' spôken of.

5) The tax payable is the Total in (2) above, minus the tax credit in (4) above.

This will be a little more than in the past, since the tax in France is now calculated on the gross income, not on the nat of UK tax income.

Logically there will always be some tax to pay in France for anyone with a UK local  Government pension, plus either or both a OAP, or a French Income.

If you have been shown as 'non-imposable' it is possibly because of the 'glitch' on the Impôtts website, by which the UK part is sometimes not counted if you declared online ( a known and observed fl:aw in the site)

[/quote]

Hi,

     You have summed it up well.  Only one thing to be careful of, the credit is not just the tax which you would pay on the govt. pension , it is the extra which would result on all the income including the govt. pension (and can involve a higher tax band); the calculation is as follows;  Tax on total income- minus- ( Tax on total x local govt. pension / total income.)