Tax Form 2047 - interest on savings - confused !

[Nell]

Year 2 of filing French tax forms....

I am a bit confused about the interest on savings.. as to whether i should be using the Net interest figure or the Gross interest figure

Page 2 of the form section B (Autres revenus de valeurs.....) Column 5 is where I put the total of my interest earned (This then transfers to TS on my 2042 form). The heading is "montant net encaisse en euros" This plainly states "NET" and when I went to the tax office last year the man pointed out "Net" and even circled it in pen to make sure I used net figures here. Well to be honest I used net figures for 1 savings account because I knew what the net figure was, but for another one I used the gross figure (This was an ISA that I had no net figure for) as I did not know how to calculate a net figure.

This time round I need to ensure I get it right, so can someone tell me whether I should use gross or net? If the answer is net, do I just take 20% of the total as that is what the UK tax man takes?? Help!!!!

Also I know there is lots of discussion on the forum about using the exchange rate each month when your pension hits your French bank account, but as I don't transfer my money on a monthly basis, I think I am best using an average annual figure. The last I seem to have read on here is 1.25. Has anyone got any updates on this?? Last year I used 1.3636  as supplied by the French News paper, but when I got to the Nontron tax office, I was asked to go home and recalculate everything using 1.42

Cheers

[mint]

Now I'm confused as well.  I thought you use the gross figure and claim back the interest from the UK taxman.

[milkeybar kid]

Not my words, but I saved this Q & A info to file as it sounded important!but I think this is what u are referring to-Tried really hard to get this straight from previous postings and the ever helpful FAQ's, but can someone explain again the correct way to enter UK savings interest? The FAQs say enter Gross amount in column 5 of. 2 - REVENUS DES VALEURS MOBILIÈRES ÉTRANGÈRES ET REVENUS ASSIMILÉS (2047) but this column is headed NET. Do you make any adjustmnets to this figure before carrying it over to the TS box on the 2042?

NO. The figure that goes onto the 2042 is the gross interest.

Remember the 2047 is just a calculation sheet and is not just for the English to use, some income from some countries is subject to calculations and % adjustments and that is what the net figure means, not net of tax.

[allanb]

Sweet 17 is right; if you are resident in France, UK interest is taxable in France, and if UK tax was deducted from it you will have to reclaim the tax from the UK - France won't give you any credit for it.

"Net" doesn't necessarily mean "net of tax". Referring to income paid into a French account, I think it means the euro amount net of bank charges, exchange commission, etc.

[cooperlola]

imo, MBK and AllanB have it right.  It does not mean net of tax.  S/D's instructions in the FAQs are correct - as you would expect!

[Araucaria]

For what it's worth, the ISA interest mentioned by the Nell will be same gross as net, since ISAs are tax free (if you stick to the rules). The banks don't deduct tax at source from them.

And as far as I remember, the discussion on the forum about the exchange rate to use for foreign (=UK) income didn't suggest using the rate for the day when the income hits your French bank account. Instead you use the rate on the day you receive it in your UK bank, even if you never bring it to France at all.

[cooperlola]

Araucaria, as I read Nell's post that was indeed true for the second amount.  However, I believe she also declared a seperate amount (non isa) net of tax, which it's important for her to know was not correct.  But I may have read this wrongly.

As to the exchange rate question then yes, I agree but I hope that discussion stays on the original thread and doesn't spill over on to this or poor Nell really will be confused.[:-))]

[Nell]

I've got it now - Gross for everything, which actually makes sense to me. It was the tax guy in Nontron, who changed one of the figures to net, when I took my tax forms in to be checked over..... I was really puzzled at the time, but as the tax implication was going down not up, I didn't argue too much [blink].

As for the uk/euro rate, If possible I would rather use an average annual exchange rate as I get one pension paid at the end of each month, but O/H has payments from three different sources on three different days of the month.... Work that out and it would be trying to calculate at least 52 lots of payment, plus any interest from bank accounts etc.... The very thought makes my head hurt [8-)]

Thanks for all replies [kiss]

[audio]

From this very useful website:

http://www.annett-consultancy.com/article_filling_in_your_French_tax_form.html#UKinterest

For declaring interest etc, they quote:

‘These are declared in total, jointly, for both spouses, and it is the net figure of interest actually received, not the gross pre-tax income figure that is declared. Add together all of the net (after the deduction of tax, the amount actually received) and interest for both spouses, from all sources, by country of origin.’

To my thoughts, this is an advantage. I have a small amount of cash in a UK savings account and any interest earned (not much these days) I declare as outlined above, then quite legally I think, the tax paid on this interest in the UK can be claimed back on UK Gov. form R43 if this sum is below your personal allowance.

[parsnips]

[quote user="audio"]

From this very useful website:

http://www.annett-consultancy.com/article_filling_in_your_French_tax_form.html#UKinterest

For declaring interest etc, they quote:

‘These are declared in total, jointly, for both spouses, and it is the net figure of interest actually received, not the gross pre-tax income figure that is declared. Add together all of the net (after the deduction of tax, the amount actually received) and interest for both spouses, from all sources, by country of origin.’

To my thoughts, this is an advantage. I have a small amount of cash in a UK savings account and any interest earned (not much these days) I declare as outlined above, then quite legally I think, the tax paid on this interest in the UK can be claimed back on UK Gov. form R43 if this sum is below your personal allowance.

[/quote]

Hi,

     It may seem presumptuous of me but the Annett Consultancy are WRONG. If you are french resident your interest is taxable ONLY in France. You are entitled to have it paid gross in the UK, or to reclaim any tax paid there,and should do so. See the current DTT art. 11 "interest" para (1)."interest arising in a contracting state (UK), and paid to a resident of the other contracting state (France), shall be taxable only in that other state(France) if that resident  is the beneficial owner of the interest. "

[audio]

Thank you Parsnips but Barclays Bank for one, insists on charging tax for which the saver has to reclaim if an overseas resident.

I have argued considerably with Barclays about this matter but they will not pay interest tax free.

[parsnips]

[quote user="audio"]

Thank you Parsnips but Barclays Bank for one, insists on charging tax for which the saver has to reclaim if an overseas resident.

I have argued considerably with Barclays about this matter but they will not pay interest tax free.

[/quote]

Hi,

    Most UK banks are the same, that's why you should contact HMRC to obtain the necessary form to claim the UK tax back. This you will have to do at the end of each UK tax year. The fact that your bank is wrongly deducting tax, (because they can't be bothered with the extra paperwork), does not entitle you to reduce your legal liability in France, you must declare the gross, and set about reclaiming the UK tax. (If you want to be absolutely legal.)

[dragonrouge]

Dear Parsnips the obligations here are with the banks and the terms of HMG are onerous and costly. Our BS absolutely refuse to pay gross. So every May I reclaim the tax deducted then wait six months for the money back and then send it back to the BS

It is madness

The sums are not huge but it drives me mad.

[audio]

Dear Parsnips,

 

Explications générales form 2047 states;

 

’De la déclaration sont déterminés par rapport au revenu net de l’impôt étranger perçu’.

 

Is this not the same as what Annett Consultancy are saying which you say is wrong?

 

[parsnips]

[quote user="audio"]

Dear Parsnips,

 

Explications générales form 2047 states;

 

’De la déclaration sont déterminés par rapport au revenu net de l’impôt étranger perçu’.

 

Is this not the same as what Annett Consultancy are saying which you say is wrong?

 

[/quote]

Hi again,

       The 2047 is for all foreign income (not just UK) and the way it is treated depends on the various double taxation treaties which France has with many different jurisdictions. Many of these provide for France to tax the interest after giving a tax credit for tax paid in the country of origin; this is why in section B page 2 "interest" columns 5,6, and 7, there is provision for deduction of a percentage "credit" calculated in accordance with a percentage set out in the table on page 3, which gives various % for different countries .

        In the case of the UK /France treaty however, it is laid down that ONLY FRANCE is entitled to tax the interest which is exempt in the UK. That is why the "credits" table shows no %  and if you look at the indicated note "8" in the table, on page 2 note 8 , it says (my translation) "these dividends ,interests, and the like, are taxable EXCLUSIVELY in the country of residence of the beneficiary. In consequence they give no right to a tax credit.

[allanb]

[quote user="audio"]

Explications générales form 2047 states

’De la déclaration sont déterminés par rapport au revenu net de l’impôt étranger perçu’.

 Is this not the same as what Annett Consultancy are saying which you say is wrong? [/quote]

Unfortunately your quotation is incomplete; the whole sentence is

Les pourcentages portés dans les colonnes du tableau situés page 3 de la déclaration sont déterminés par rapport au revenu net de  l’impôt étranger perçu. 

It only refers to the method of calculating the tax credit (which doesn't apply to UK interest anyway).

FWIW, I also think Annett Consultancy is wrong - unless they're being somehow quoted out of context.

[LesLauriers]

[quote user="allanb"][quote user="audio"]

Explications générales form 2047 states

’De la déclaration sont déterminés par rapport au revenu net de l’impôt étranger perçu’.

 Is this not the same as what Annett Consultancy are saying which you say is wrong? [/quote]

Unfortunately your quotation is incomplete; the whole sentence is

Les pourcentages portés dans les colonnes du tableau situés page 3 de la déclaration sont déterminés par rapport au revenu net de  l’impôt étranger perçu. 

It only refers to the method of calculating the tax credit (which doesn't apply to UK interest anyway).

FWIW, I also think Annett Consultancy is wrong - unless they're being somehow quoted out of context.

[/quote]

If you were to credit Annett Consultancy with knowing what they are doing then perhaps they mean "declare the interest received after tax (net) then reclaim the tax and declare that when received"

However, like yourself and a few others, I believe they are wrong, interest is not taxable in UK but is taxable in France and should be declared gross. The fact that the Banks / BS are not prepared to pay interest free of UK tax has no impact on what is due and where.

[parsnips]

Hi allanb,

     Re yr email, I replied yesterday but it wasn't delivered, I have now PMed you.