Confused about tax for multiple incomes

[ladymaybe]

Hello

We are moving to France in the new year and are really confused about what taxes we will pay over the first few years.

We plan to have the following approx incomes once we are established:

UK rental income: 12,000 EUR

Gite income: 15,000 - 25,000 EUR

Additional income (my husband as a carpenter): 15,000 -20,000 EUR

We have two children so I believe this means that our tax share will be 3 parts but how is this applied?

I've read that we may be entitled to register as an Auto Entrepeneur for the gite business (with a turnover limit of 32,000 EUR) but can we still be an Auto Entrepeneur with our two additional incomes (ie. Uk rent and my husband as a carpenter?).

It's all getting a bit confusing. Can anyone shed any light on what our Social Charges and Income Tax might be and what system would be best for us to join. To add further confusion I'll be still on maternity leave initially so I won't be able to register as a French resident until the end of 2011, will this make any difference to our tax for 2011 given that we aren't likely to be earning in France until 2012?

[Panda]

Your UK rental income will be taxed in the UK and declrared on your french tax return as income taxed abroad, nothing needs to be registered as a buinses for that in france.

Your gite business can be just additional non professional income under micro-bic, this means you pay tax but no social charges (the big killer as far as paying out goes).  This is dependant on it not being your main source of income, you quote a very high figure for income from this so I'm assuming more than one gite or if one it's huge, where does this number come from, is it from the books of the previous owner?

Your OH's business would then be your main income and can be an AE, pretty straight forward.

The last bit about maternity is a bit odd in my opinion, you cant live here and just not be declared as resident, that sounds like the main area of potential problems for me... confused.

[cooperlola]

If you run the gite and your husband does the carpentry, then that could work as far as the AE was concerned - you can each be one!

Tax on the UK rental income is paid in the UK, but is taken into account when assessing the tax band you will be in in France (you declare it on your tax return here, as well as in the UK, but only pay tax on it over there).  The rest is payable here.

You get, as you say, 3 parts between the four of you.  All your income is added up and divided by three, and each third taxed as if it were for an individual (unlike the UK where if one of you earned a packet and the other a lot less - each partner would be assessed independently and the kids not brought into the equation at all.) 

Now you need somebody (Will is best at this, or Sunday Driver) who knows the tax bands, who can come along and tell you roughly what you'd pay - I really can't help because I know nosssing about the tax implications of running a businsess.  Indeed, as you look to have several sources of income and various options open to you, you might even consider professional help from a French accountant to get the best deal - at least for the first couple of years whilst you get sorted.

You become resident the moment you move here - maternity leave notwithstanding - so, afaik, your maternity pay would be taxed here from the moment you move in.

EDIT : Panda and I posted together but as far as I can see, we at least haven't contradicted one another![:)]

[parsnips]

Hi,

     On last years tax figures and taking gite income as 20 000€  and husband's AE earnings as 20 000 and not opting for the tax forfaitaire but being assessed under microBIC you would pay no tax .

       The calculation is as follows ;

           Gite:20 000€   allowance 71% ............... taxable 5800€

           AE Carpentry 20 000€ allowance 50%  taxable 10 000€                                                                                                                                                      

            Total taxable in France .....................................15 800€                                        UK rent (net of UK tax ...but I have taken 12 000€) taken into account ............                                                                                                                                                                                                                                                .

                                                                                     15 800 + 12 000 = 27 800 x0,055-969,38*=notional tax due 560/27 800x100=rate 2,014%

                                                                                     15 800x2,014%=318      Decote = 433-(318/2)=274                                                  

                                            Tax due 318 - (decote) 274 =44€ tax due ......this is not collected as it is below the "seuil de mise en recouvrement of 61€, so no tax (on the figures given.....any bank interest etc would increase the tax bill .    

               CSG (contrbution social  generalisée) will be taken at 12,3 % on the taxable gite income 5 800 x 12,3% =713€**

               The AE will be subject to social contribution of 21,3 on the gross ...20 000x21,3% =4260€

              Total social contributions 4973€...................  any bank interest, dividends etc would also be subject to 12,3% CSG

             * I have used a ready reckoner which takes into account the 3 parts. 

             ** if set up as AE this would ,I believe, be at 21,3 % , but would accrue pension rights etc.                                                                                                                                                                                                          

[cooperlola]

[quote user="cooperlola"]

Now you need somebody (Will is best at this, or Sunday Driver) who knows the tax bands,[/quote]...or Parsnips.  Sorry, chuck.[:$]

[Will]

I would certainly not disagree with what Parsnips has calculated, at least as a basic figure. In fact I'm surprised to see that the tax comes out at such a low figure; maybe that's the benefits from breeding that Howard Flyte (or Lord whatever he is now) was talking about the other day.

One additional thing you need to be aware of is the CFE, which is replacing the former 'taxe professionelle'. There's a lot of confusion about how this is going to work, but it looks as if it could add quite a significant cost to the autoentrepreneur business regime after the first year (or three years if you are able to set up that way) of exoneration. I don't know if you would get hit twice if you had two AE businesses - that might well be the case.