Le Conciliateur Fiscal-- clears up some issues.

[parsnips]

Hi,

 I have recently obtained a ruling from the "Conciliateur Fiscal" for our department, which answers some questions raised on this forum in the recent past.

 The situation was that a friend with a govt. pension , UK rents , and a wife's french taxable pension had been sent a totally erroneous avis where the taux effectif had been calculated using his GROSS pension , and his rents had been TAXED.

   I wrote first to his tax office , and received no reply, then to the "Conciliateur", the gist of my arguments (fully backed with extracts from the DTT and from form 2041 GG, and a copy of a "les echos" piece on "microfoncier" on foreign rents) were as follows:

   1. Govt pension should first have the UK tax deducted , then have the NET transferred to the 2042 box TI, and then be given the 10% standard deduction before being used for the calculation of the taux effectif----this the Conciliateur agreed fully.

    2; UK rents , of course should not be taxed in France, but also I argued that as the rents were within the limits they should be given the benefit "en plein droit" of the microfoncier regime, but that the tax paid in the UK should be regarded as covered by the 30% standard deduction (as a charge). This the Conciliateur also agreed fully.

   As a result my friend's tax bill has been reduced by about 200€ , but ,more importantly, his CMU cotisation (based on his "revenu fiscal de référence") will reduce by about 500€ per yr. 

[Ron Avery]

Sounds like common sense prevailed in this case.  Did you get a ruling on whether the CMU payments could be entered as a legitimate expense against revenue on the tax form for inactifs?  Did the man from the Charente ever get a ruling, or the Connexion explain why it was wrong in their opinion?

[Un autre Gallois]

Ron - Several years ago I legimately set my payments for CMU against revenue without any objection from the fisc. If anyone is interested I think I could retrieve the relevant entries/boxes. The files are archived because I have moved on, as they say (older &  maybe wiser!) 

UAG

[Gardian]

[quote user="parsnips"]

   1. Govt pension should first have the UK tax deducted , then have the NET transferred to the 2042 box TI, and then be given the 10% standard deduction before being used for the calculation of the taux effectif----this the Conciliateur agreed fully.
    [/quote]

Parsnips .............

That's more than helpful and the 1st time that I've really understood how govt pensions are dealt with here.

I can feel an appeal coming on!

Thanks.  

[parsnips]

[quote user="Ron Avery"]Sounds like common sense prevailed in this case.  Did you get a ruling on whether the CMU payments could be entered as a legitimate expense against revenue on the tax form for inactifs?  Did the man from the Charente ever get a ruling, or the Connexion explain why it was wrong in their opinion?[/quote]

Hi,

      The person I helped has been claiming CMU payments (giving the appropriate CGI references), and has had them allowed. There has been no "ruling" as such, as there has been no dispute over them. As I said , I always claimed without dispute, but now no longer pay CMU as I am on E121.

[Sunday Driver]

A couple of quick questions....

1. Govt pension should first have the UK tax deducted , then have the NET transferred to the 2042 box TI, and then be given the 10% standard deduction before being used for the calculation of the taux effectif----this the Conciliateur agreed fully.

The 2047 instructs you to deduct the UK tax before transferring the net amount to the 2042 box TI, so no change there.  However, box TI does not differentiate pension income which may be subject to the standard 10% allowance, so how did the concilliateur suggest this deduction be applied to this specific tranche of income?  

    2; UK rents , of course should not be taxed in France, but also I argued that as the rents were within the limits they should be given the benefit "en plein droit" of the microfoncier regime, but that the tax paid in the UK should be regarded as covered by the 30% standard deduction (as a charge). This the Conciliateur also agreed fully.

UK rents are also declared net of UK tax in box TI so why would the tax paid need to be covered by the 30% standard deduction?  Again, how would the standard deduction be applied in practice to this income?

 

 

[allanb]

[quote user="Sunday Driver"]The 2047 instructs you to deduct the UK tax before transferring the net amount to the 2042 box TI, so no change there.  However, box TI does not differentiate pension income which may be subject to the standard 10% allowance, so how did the concilliateur suggest this deduction be applied to this specific tranche of income?  

[/quote]

I suggest the answer is that it doesn't need to be.

The taux effectif is calculated by doing two separate tax computations: one using income taxable only in France, and one using global income.  The tax on the global income is calculated "notionally" as though it was all taxable in France.  So in that "notional" calculation, any deductions - including the 10% - are applied just as they would be if the relevant income were purely French.  They don't need to be calculated for specific bits of income.

So I think item 1 in Parsnips' answer is correct, although it might be better to clarify that these calculations are done by the tax office, not by the taxpayer.  The 10% has no effect on the numbers reported on forms 2047 or 2042.

I don't have any experience with rental income, although I suspect that a similar principle would apply to any deductions.

[parsnips]

Hi,

     Re point one, allanb has explained that very well; As for the rent , under microbic there is a 30% allowance against the gross rent, where this is greater than the UK tax deducted ,it is only fair that this 30%  is taken INSTEAD of the UK tax as this tax can be regarded as part of the charges covered by the 30%.        For entering on the 2047 (VII) I suggest that after subtracting the UK tax paid from the 30% , the balance be entered in col.6 "charges afferentes" --- you then only need to enter into discussion of the appropriateness of the microbic if the entry is challenged.    As we all know different tax offices have their own, sometimes erroneous, takes on the legislation and long-drawn-out correspondences ,such as I engaged in, are best avoided , if possible, but this case has established a precedent, at least for me, and in this department.

[Sunday Driver]

[quote user="allanb"][quote user="Sunday Driver"]The 2047 instructs you to deduct the UK tax before transferring the net amount to the 2042 box TI, so no change there.  However, box TI does not differentiate pension income which may be subject to the standard 10% allowance, so how did the concilliateur suggest this deduction be applied to this specific tranche of income?  

[/quote]

I suggest the answer is that it doesn't need to be.

The taux effectif is calculated by doing two separate tax computations: one using income taxable only in France, and one using global income.  The tax on the global income is calculated "notionally" as though it was all taxable in France.  So in that "notional" calculation, any deductions - including the 10% - are applied just as they would be if the relevant income were purely French.  They don't need to be calculated for specific bits of income.

So I think item 1 in Parsnips' answer is correct, although it might be better to clarify that these calculations are done by the tax office, not by the taxpayer.  The 10% has no effect on the numbers reported on forms 2047 or 2042.

I don't have any experience with rental income, although I suspect that a similar principle would apply to any deductions.

[/quote]

My point was how would the system identify whether or not an amount entered in box TI actually related to pension income and therefore apply the 10% deduction within the "notional" calculation?    The system recognises amounts entered in boxes AS and BS as being pension income and does the necessary allowance calculation, but I don't see how this can happen with box TI because it's not a pension specific field.  If the box TI total comprised more than one income source and included non-pension income, then how would the system know how much of that total to apply the 10% pension allowance to?

Bear in mind also that the on-line system is designed to process declarations automatically without any tax office intervention....

 

 

 

[parsnips]

[quote user="Sunday Driver"][quote user="allanb"][quote user="Sunday Driver"]The 2047 instructs you to deduct the UK tax before transferring the net amount to the 2042 box TI, so no change there.  However, box TI does not differentiate pension income which may be subject to the standard 10% allowance, so how did the concilliateur suggest this deduction be applied to this specific tranche of income?  

[/quote]

I suggest the answer is that it doesn't need to be.

The taux effectif is calculated by doing two separate tax computations: one using income taxable only in France, and one using global income.  The tax on the global income is calculated "notionally" as though it was all taxable in France.  So in that "notional" calculation, any deductions - including the 10% - are applied just as they would be if the relevant income were purely French.  They don't need to be calculated for specific bits of income.

So I think item 1 in Parsnips' answer is correct, although it might be better to clarify that these calculations are done by the tax office, not by the taxpayer.  The 10% has no effect on the numbers reported on forms 2047 or 2042.

I don't have any experience with rental income, although I suspect that a similar principle would apply to any deductions.

[/quote]

My point was how would the system identify whether or not an amount entered in box TI actually related to pension income and therefore apply the 10% deduction within the "notional" calculation?    The system recognises amounts entered in boxes AS and BS as being pension income and does the necessary allowance calculation, but I don't see how this can happen with box TI because it's not a pension specific field.  If the box TI total comprised more than one income source and included non-pension income, then how would the system know how much of that total to apply the 10% pension allowance to?

Bear in mind also that the on-line system is designed to process declarations automatically without any tax office intervention....

 

 

 

[/quote]

Hi,

     My Avis for 2007 certainly gave the 10% , admittedly I only entered one source on 2047(VII) --my pension.  But as 2047 (VII) asks for separate details of (say) rental income, then it is down to the tax office to use the 2047 information to make their calculations (otherwise, what is the point of the 2047 except as a sort of aide-memoire -worksheet, and if that is all it is, why do we have to submit it?)

     I would suggest that anyone with a complex declaration avoids the online system and submits a detailed written declaration, and ,if, as is quite likely , the taux effectif is wrongly calculated (some tax agents,at least, don't seem to understand the system) they should dispute it.

    I agree with SD about the difficulty of properly declaring on 2042 TI, but that is a fault in the design of the form, which we should not allow to deprive us of a fair tax assessment.

[NormanH]

[quote user="parsnips"]

   1. Govt pension should first have the UK tax deducted , then have the NET transferred to the 2042 box TI, and then be given the 10% standard deduction before being used for the calculation of the taux effectif----this the Conciliateur agreed fully.

    . 

[/quote]

What standard deduction?

I thought you put the gross, the tax paid, and then put the net in 2042 box TI.

What  is this 10% deduction achieving? You have already paid the tax on the gross.

[Sunday Driver]

Retirement pensions are subject to a 10% abattement before calculation of tax.

 

 

[Maricopa]

[quote user="NormanH"]I thought you put the gross, the tax paid, and then put the net in 2042 box TI.
[/quote]

You do, the Impôts do the calculation

 

[quote user="NormanH"]What standard deduction?
What  is this 10% deduction achieving? [/quote]

This 10% reduction.

[NormanH]

[quote user="Maricopa"]

[quote user="NormanH"]I thought you put the gross, the tax paid, and then put the net in 2042 box TI.

[/quote]

You do, the Impôts do the calculation

 

[quote user="NormanH"]What standard deduction?

What  is this 10% deduction achieving? [/quote]

This 10% reduction.

[/quote]

but that link is to

'Pensions et rentes imposables'

by definition box T1 is for revenus 'éxonorés'

As tax has already been paid in the UK there is nothing to pay, so it can't be reduced by 10%...

The only thing it could change is the final global ' revenu fiscale de référence' which  is useful to have if you need a credit, but in that case yu need it to be as high as possible[:)]

[Maricopa]

[quote user="NormanH"]but that link is to

'Pensions et rentes imposables'
by definition box T1 is for revenus 'éxonorés'

As tax has already been paid in the UK there is nothing to pay, so it can't be reduced by 10%...

The only thing it could change is the final global ' revenu fiscale de référence' which  is useful to have if you need a credit, but in that case yu need it to be as high as possible[:)]

[/quote]

The point is, the Impôts have to try to treat your income the same as any resident.  Therefore, if you in addition to UK pension income had French source income, then this French source income has to be taxed at the correct rate.  Therefore, although for many people it probably wouldn't make a difference, the 10% deduction is applied so that any other income is taxed at the correct rate.  This also sets your RFR at the correct level so that (for instance) those who contribute 8% of their RFR for their CMU contributions aren't overpaying.