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Quick tax on interest question..


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Hello all.. A quick question if I may..

I am permanently resident in the UK and pay tax here. Upon selling up our holiday home in France we paid the capital gains tax in France as per usual via the Notaire.

There has now been some interest earned on the proceeds from the sale into a French bank account, and it appears to be gross. I intend to declare this here in the UK and would prefer to keep things simple this way. Am I OK doing this or does the French tax system become involved?

Many thanks for any thoughts..

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[quote user="BJSLIV"]Strictly speaking you should declare it in both France and the UK, in the same way as the CGT . IE with France taking the first dib, which is credited against any UK liability.[/quote]

I don't think that's correct.  If you are resident in the UK and not in France, then interest arising in France is taxable only in the UK  (Article 12 of the current treaty).

If you were required to file a tax return in France, then it's true that you'd have to declare the interest, taxable or not.  If you are not resident in France, and have no income taxable in France, I don't see why you would have to file a French return - but this may depend on other circumstances.  

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