Income Tax on IB

[Grecian]

I have to admit to being a whimp now, and have employed an accountant to fill in our first year's tax return, just too many boxes to contemplate filling this year.

She has returned our completed tax form to us for submission to the authorities, and has not declared IB for tax purposes on the form, as she reckons that the benefit is classed as a social benefit here in France, and not liable to income tax. I understand that there are no social charges to pay on IB if in receipt of an E121, but is it correct that there is also no income tax to pay on the benefit?

 

 

 

[ali-cat]

Hi Grecian.

I can't guarantee that this is the correct procedure but :

When we first moved over our IB was taxed in the UK.  Rather than taxed directly the UK revenue reduced our tax free allowance which meant more income tax paid on occupational pensions.

We subsequently applied to have IB not taxed in the UK on the assumption that the French tax system is more progressive which is even more likely now that the UK 10% rate has been abolished.  IB is entered against Pensions, retraites, rentes on form 2047K and carried over to box AS on form 2042K.  Only our civil service pensions are exempted from French tax under the double taxation treaty.

You are correct that possession of an E121 exempts you from (the minimal) social charges.  The form of words we use is : "Titulaire de formulaire E121, donc je ne suis pas a la charge de l'assurance maladie". 

More than happy to be corrected.

Mr Cat

 

 

 

 

[Grecian]

Thanks for the reply Mr Cat, unfortunately that is what I thought. I telephoned her this afternoon and she was still adamant that IB is not declared, which to me is wrong. I assume that DLA and CA will be declared in the AS/BS boxes as well.

Nothing like another panic to cope with over here in France, I guess I will have to complete another set of forms, and battle it out with the accountant over her fee, so much for taking the easy way out in completing our first tax return.

 

[5-element]

Grecian, I have pm'd you.

[Grecian]

The plot thickens, having spoken to my accountant again, she has been in contact with our local tax office, and they informed her that UK benefits do not have to be declared on our French tax return. This leaves me in a bit of a dilema, as people who have posted on here in receipt of UK benefits are obviously paying tax on them. It does seem a bit of a lottery over here when declaring in different departments, as to how they view various elelments of the return and how they are treated, even down to the individual who answers the query. So I guess this year I will go with the tax office's advice.