HELP! Is child maintenance from France sent to UK resident taxable in France?

[Kirstie303]

Hi, my ex pays child maintenance for our 2 children, and gets a tax rebate on it in France, where he lives and works. In the UK child maintenance is non taxable, but in France it is. It looks like I might have to declare all my earnings in the UK to France for taxation reasons even tho I and the children haven't lived there for 5 years, simply because he's supporting his children. Can anyone help? Been searching the net for hours and found nothing on this topic, thankyou for any help, Kirstie

[Ron Avery]

"It looks like I might have to declare all my earnings in the UK to France for taxation reasons even tho I and the children haven't lived there for 5 years, simply because he's supporting his children" 

Why do you think you should pay tax in France if you are resident in the UK?

AFAIK, you have no tax liability at all in France if you do not live here even although your ex  O/H might be able to claim back tax for maintenance that should not affect you.  But don't take my word for it, phone the UK tax office for non residents on 0845 300 3939 and ask them to confirm your tax status. 

[Kirstie303]

Because my ex's tax office has advised him that I should be taxable in France as it's counted as income earned in France, that I should therefore pay tax on it in France. Many thanks for the number, will ring them tomorrow :-) Oh, and they're also demanding my address in the UK :(

[Kirstie303]

Ok, the UK tax office say that they have no idea, and that they can't get involved. Under normal circumstances income earned in France is taxable in the UK for a UK resident, but maintenance payments are not taxable. Because they are taxable in France and not the UK, they say I have to enter into an agreement with the French tax office!!

Anyone had any experience of this? Kirstie

[BJSLIV]

OK. So the money is paid for your children. Hence they may have a theoretical tax liability, the size of which will depend on the wealth/generosity of your ex.

They will each be entitled to the normal earned income allowances, as maintenace payments are treated as earned income.

That being the case do you think there would be any tax to pay?

 

 

[Russethouse]

Because my ex's tax office has advised him that I should be taxable in France as it's counted as income earned in France, that I should therefore pay tax on it in France

Why don't you tell your husband that you will deal this directly and that he should give the French tax office your address ?  When you have a letter from them in front of you, you'll know what you are dealing with and act accordingly (come back here for advice)

Maybe your ex's concern (understandably) is not losing his tax credit, that may not be the same as your priority no matter how amicable the separation. Hope thats not too harsh.

 

[Ron Avery]

"Ok, the UK tax office say that they have no idea, and that they can't get involved."

What???  Unless you are not telling the full story here, how can the UK tax office have no idea if you, as a UK resident, have a tax liability in a country that you no longer live in or have any property in...........  or do you???  Ask to speak to a supervisor, not the work experience kid!!

[BJSLIV]

Can / Does the UK Revenue ever give advice on foreign tax matters?

[andyh4]

Ron

I think your wrath is misplaced.  I expect the UK tax office to be versed in UK tax and not liabilities for every nationality in every other nation.  Frankly they struggle to do the first task, to be experts in world taxation they would need to gear up a lot.

 

I think the sound advice has already been given.  Get it in writing from the French tax office, and don't worry about it because the likelyhood of the OP crossing the tax threshhold is small unless the husband is an investment banker or the like.

[PeterG]

[quote user="BJSLIV"]

OK. So the money is paid for your children. Hence they may have a theoretical tax liability,[/quote]

I think this says it all..... The money is for your children, not you. Therfore, you should have no tax liability whatsoever.

[Kirstie303]

Have since had advice from an international tax specialist, who says that the maintenance is counted as my income as the children are minors. So it's a flat rate of 20% on it all as non-resident income (not covered by treaty between UK-France). Backdated a couple of years. Nice! She said I could possibly get round it by declaring global income in France proving tax already paid in the UK and be assessed on the taux effectif like those who are resident. What a palaver! She also said I should employ an accountant in  France to do this, am a single mother with 2 kids and no the ex is not wealthy lol, so I think that's out.

A general accountant said the tax office won't help as it's not a UK taxation issue. And as maintenance is non taxable in the UK I can't claim the 20% back as tax relief. Thanks for all your comments, but looks like there's no real way out of this one! Kirstie

[Russethouse]

The international tax specialist may be correct, but I would still do as I suggested first : make the French tax people contact you directly.

who says that the maintenance is counted as my income as the children are minors

But for what reason is anyone who is not resident in France liable to pay tax to the French authorities? (It's not as if you have property there  is it ?) This seems all to c**k to me and personally speaking firstly I would be suggesting to the French authorities that they reclaim the money from your ex. In the nicest posible way.... 

Maybe you should try your MEP or the British embassy in Paris for more info.... 

Why has this come to light now ?

[BJSLIV]

But for what reason is anyone who is not resident in France liable to pay tax to the French authorities? (It's not as if you have property there  is it ?)

But she has income in France.

This seems all to c**k to me and personally speaking firstly I would be suggesting to the French authorities that they reclaim the money from your ex. In the nicest possible way.... 

But they can't collect one persons tax from somebody else.

1 I think there is scope for French children's income to be assessed separately.

2 If that isn't the case there is scope to pay a lower rate of tax than the fixed 20%, but that does require submission of details of worldwide income so that the actual marginal rate of tax can be computed. Presumably its this route that brought into play employing a French accountant.

[Russethouse]

 I can understand the French authorities being miffed at giving a tax credit to someone for children who are not resident in France, but as I said 'personally' it feels 'wrong' which is why I would wait for a letter from the French tax man and then very thoroughly investigate. And if push came to shove I'd be asking for payments to be made over a period so as not to cause hardship etc......

Could the ex husband stop claiming the tax credit ? 

Is there a level of income under which no tax would be payable ?

[Kirstie303]

Hi, the reason it has all come up now is because we finally got divorced, with a court order for maintenance and financial separation (deemed necessary by the french state or they wouldn't recognise the divorce, but thats another story) in nov 07. Tax being worked out the way it is in France, the ex has only just declared his pension alimentaire payments for his tax rebate for the year 2008. They immediately demanded my address off him, so I started checking why and started this whole can of worms. And I'd rather be prepared for when they do catch up with me. The 'pension' is deemed my income, no matter what it is for, ie the children. And yes, the accountant was advised to help me with all the forms about worldwide income. It feels very 'wrong' to find out that maintenance, paid by an ex to support his children is classed as taxable revenue.. but having lived in France for 10 years this does not surprise me. What makes me mad, is that with my income+maintenance, in my circumstances, I'd be taxed about 1000E annually in France (great the impots simulation en-ligne :)). I pay a lot more than that here on PAYE and am going to be taxed a hellofalot more on top! Am feeling very much like shouting it's not fair lol. Husband is not about to stop claiming his rebates, with new twins, new wife and new house he needs every penny he can get. Saying that he's 'thinking' about giving an old address for me, and the tax office/accountants here said they'd never heard of the french tax office taking a non resident to court over this kind of thing if it's unpaid.... But I don't work that way. Am going to wait for contact from les impots and then see which forms they advise. Will try going it alone at that point, I used to do our tax forms in France and it can't be that much different. Has been v interesting reading your comments tho :). Oh - and in response to a previous post, there was a marital home and it was sold, and there is a slight chance there will be a capital gains tax claim there as I was living in UK (renting) and the house in france was therefore my maison secondaire, oh joy!

K

Update: There is a slight light of hope, despite what the international tax specialist said:

"ARTICLE 22 (of the french/uk treaty)

(1) Items of income beneficially owned by a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention (couldn't find mention of maintenance anywhere!) shall be taxable only in that State.

(2) The provisions of paragraph (1) shall not apply to income, other than income from immovable property as referred to in Article 5, if the beneficial owner of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent professional activities from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Articles 6 or 14, as the case may be, shall apply."