Exchange rate for 2008 tax return

[cooperlola]

[:D]No I don't set the alarm for midnight and check the rate.  There are several websites in existance (including the Financial Times) which will give you rates in retrospect if you just enter a time and date.

However, Sweets I take your point, we do have this interminable discussion every year and it gets no less complicated nor less heated as it ages!  My own feeling is and always has been that just so long as you can justify the rate you used and have the proof (and I'm not sure that an article in an expat mag would qualify) in writing, then you will be fine as long as you don't attempt fraudulent behaviour.  My only worry with using a single overall rate is this: If you get a large amount of money in  one hit and the rate on the date it was received is wildly differnent from the "average" one (which with currencies fluctuating so much is a real possibility) then the diffenence could represent hundreds of euros for the exchequer here.  In that case an audit may well decide against you.  But as I have no evidence for this (anecdotal or real) then it's just guesswork.  If your conscience is happy with the method you use then that's probably the best anybody could ask.

Edit : After I had posted I saw that this thread is next on the list to "let's see how long we can keep this thread going".  Are the subjects interchangeable by any chance?[Www]

[Complikate]

[quote user="Ron Avery"]

[quote user="woolybanana"]Last year, my tax office refused to accept a monthly exchange rate calculation for monthly investment income as they only recognize annual payments so I had to use their rate of 31th December, which had been fixed by Paris.[/quote]

You pay tax WB?  I thought you had all the pickle millions stashed away in a banana republic[:D][:P].

 Coops and Allen are spot on about the rate to use,  its really not hard to note the rate that you got is it?  If anyone who gets regular income rrom the UK wants to use the Connexions figure go ahead, I know who will pay more tax and its not us who will use the actual rate received.[:-))]

[/quote]

 

Having quoted Ron, I will requote what I quoted to Clair earlier on "..I do believe that there are some Brits who do avoid paying their due.."

As I have already said, I do not trust the figures in the Connexion, since they cannot have figures the French fisc do not have themselves, so I will wait for the official figure.

The Code Generales des Impôts makes it very clear that the rate set by French fisc must be used and most tax offices and staff therein will only accept this rate and no other. Thus to create your own exchange rate or use the rate exchanged (unless the money is "paid" in Euros as discussed earlier) is breaking the  law, it really is that simple. I have said it and I will not go back and forth on this point, as the decision as to how honest we are is up to every one of us and how much respect to we wish to offer our hosts and their laws. Ron and Allanb have made their decision as to their level of integrity and the consequences are theirs and theirs alone, however, I am considering people that are new to France, but wish to be honest and do the right thing, not avoiding paying their dues and do not wish to risk having issues with the French tax authorities.

Tax returns in France work on a faith system and they do not ask for evidence of your income or how you arrived at your figures, since there is not the man power to check every one. The control system is one of spot checks, i.e. they pull a file and send you a little post card asking you to attend a meeting at the tax office and to bring supporting documentation for your return. On average 1 in 14,000 is checked this way, though this figure is much higher for Brits (according to a statement released by the tax office about 18 months ago). The fact that a tax return is "accepted" does not mean it is correct, it means it looks ok, but they have not checked its integrity. Thus, someone who has completed a tax return incorrectly for many years, assuming all is well, can find themselves in hot water or at least that they have been overpaying.

Make no mistake that if you are not using the figures for the exchange rate provided by the tax office, they will demand that you complete new tax returns from anything from the last 3 up to 10 years and they will apply penalties from 10-30% and you will be black marked as someone to watch and will be subjected to more regular checks.

I generally find that good people follow the system and are relaxed about it and people who break the laws shout loudly about how they are getting away with it ... until they get caught!

Kate

[suein56]

[quote user="Complikate"]

Make no mistake that if you are not using the figures for the exchange rate provided by the tax office ...

[/quote]

But I did ...  last year I asked my - very large - tax office for the official rate for 2007 for income sourced from abroad and was informed, in writing, of the rule re the exchange rate on the day of each credit to my UK bank account. I was also told, again in writing, that I could use an average of the two figures for the official rate on 1st Jan 2007 and that of 31st December 2007. This  'contrôleur principal' of the tax department also said that the rate for 1st Jan 2008 for ISF was 1.3636.

<<Monsieur, je vous communique les taux de change de la banque de France

au

1/1/2007 et au 31/12/2007 :

Au 1/1/2007 : 1 € = 0,6715 ou 1 livre

sterling = 1,4892 €

Au 31/12/2007 : 1 € = 0,7333 ou 1 livre sterling = 1,3636

€

Je vous précise que lorsque les revenus sont encaissés à l'étranger

en

monnaie d'un Etat extérieur à la zone euro, ils doivent être convertis

en

euros d'après le cours de l'euro à la date d'encaissement.

[ à

défaut, et si vous êtes dans l'impossibilité de convertir avec

précision les

sommes encaissées en livres sterling, et si les sommes

encaissées sont

régulières, vous pouvez utiliser, en faisant le détail de

conversion sur un

courrier joint à votre déclaration de revenus, les

éléments communiqués

ci-dessus, en faisant la moyenne des cours au

1/1/2007 et au 31/12/2007, soit

1 livre sterling = 1,4264 € ] >>

No way was I going to argue with him!

Sue [:)]

[Complikate]

No problems for you Sue, you have it in writing so rest easy. It is very apparent that different tax offices seem to have different views, but you have clearly done the only thing you can, which is following the guidance you received in writing and I agree I would not dream of arguing with the "Contrôleur principal" of your tax office. The issue is that the fisc can and do alter each year how they calculate the figure, thus tax offices say well, they do it this way one year and another way the next, thus both must be acceptable; not strcitly true accoring to the Paris tax office, but there you go.

[woolybanana]

[quote user="Ron Avery"]

[quote user="woolybanana"]Last year, my tax office refused to accept a monthly exchange rate calculation for monthly investment income as they only recognize annual payments so I had to use their rate of 31th December, which had been fixed by Paris.[/quote]

You pay tax WB?  I thought you had all the pickle millions stashed away in a banana republic[:D][:P].

 Coops and Allen are spot on about the rate to use,  its really not hard to note the rate that you got is it?  If anyone who gets regular income rrom the UK wants to use the Connexions figure go ahead, I know who will pay more tax and its not us who will use the actual rate received.[:-))]

[/quote]

Bless you Ron, you are a sweet old thing, really. Unfortunately we do pay tax like everyone else. For us it is a banana skin tax which means slippery and dangerous when left in pubic places[:$]

(Before anyone points out a spelling error, that is the correct spelling of the word in the Banana kingdom.)

[allanb]

[quote user="Complikate"]The Code Général des Impôts makes it very clear that the rate set by French fisc must be used...[/quote]No, it doesn't.  Here is what it says:

Si les revenus ou bénéfices en cause ont été encaissés en monnaie étrangère, ils doivent être déclarés pour leur contre-valeur en euros, calculée d'après le cours du change à Paris au jour de l'encaissement (réception en espèces, inscription au crédit d'un compte, etc.)

This has been quoted several times before.  If you know of something else in the law that contradicts it, please quote it.

I don't think you've grasped the point: the various figures provided by the tax offices are not in strict compliance with the law.  They are approximations which the inspector is willing to accept "à titre de mesure de simplification" (a quotation from the bulletin you referenced).

In any case, can we please have no snidey remarks about other people's integrity?  The method I use, and the method described by Cooperlola (which is slightly different), are both closer to the legal requirement than either the year-end rate, or the beginning-and-end average which was suggested in the letter quoted by Sue.  And the letter did not insist on that rate; it was offered as a possible alternative to the method required by the law.  You should read it again.   

I don't think Ron has told us what method he uses, so how you can cast doubt on his integrity is beyond me.

[Ron Avery]

Not a problem Allen, my method is totally legal, honest and as usual for me above reproach.  I really do not know where this new poster gets off telling people who have been here for years how to calculate their income "so as to not to mislead newbies", I suggest he or she goes back a few years of April/May postings of this Forum and sees the amount of patient help given by people posting here to newbies including one who has posted on this thread, on compiling tax returns before uttering rubbish about integrity.

 My method?  Pension is paid direct in euros, so no problem there although I could in theory claim for the cost of the transfer. Savings, what is left of them is paid monthly in £s and the rate at the month end date that I would have received in euros noted.  If that is not an open and honest way to declare income I don't know what is!!  Using the end of year rate as some French tax offices suggest for my return is not appropriate for such income and would understate it, that cannot be honest or right,[blink] so I prefer to declare a more accurate figure.

[dragonrouge]

Dear Ron have sent you a pm

[Ron Avery]

Mr D the info you want is in a PM just sent. HTH

[POB]

[quote user="Ron Avery"]

 My method?  Pension is paid direct in euros, so no problem

Just so I am totally clear doesn't one need the exchange rate to Gross up the net receipt for the gross figure to be entered on the return?

[/quote]

[POB]

Sorry I obviously do not understand how to use the quote facility.  But that aside isn't the exchange rate required to gross up the net pension recieved in Euros to the gross figure required? on the tax return?

[Maricopa]

Not if you receive your pension gross[I]

[Ron Avery]

My pension is paid gross in euros as are most private pensions and that is declared in France,  However, if you have a "service pension" taxed in the UK, that is paid net to you,  you do need to gross it up for the 2047 form.  The applicable  exchange rate can be found here  http://www.x-rates.com/cgi-bin/hlookup.cgi

[POB]

 Yes, of course. I forgot that the majority of pensions are paid gross.  Thank you for the clarification.  I use the exchange rate at which my net pension is paid each month and gross up at that rate.  This seems to be reasonable and last year resulted in my declaring more than had I used the official rate!

[allanb]

[quote user="Ron Avery"]...if you have a "service pension" taxed in the UK, that is paid net to you,  you do need to gross it up for the 2047 form.  The applicable  exchange rate can be found here...[/quote]May I suggest that a better way is to gross up the euro amount pro-rata?  For instance, if your pension was £500 gross, less £140 tax, £360 net, and you actually received €402, then the gross amount in euros is (500 x 402 ÷ 360) = €558.33.

In other words, the actual exchange rate you got was 402 ÷ 360.  Nobody can argue with that. 

PS: I see that this was four minutes too late to be of any use.  Sorry.

[dragonrouge]

Hi it is not my intention here to enter into an argument as to what rate of exchange to use in the calculation of £ income into euros.  AllenB  quoted from the French earlier in this piece and my Accountant has now written to me confirming the view of AllenB.  Essentially and in simplistic terms you should in theory account for the income on a monthly basis.  That is not to say that 'you' have to it is what he intends to do with our income.  So in broad brush terms the rate for 2008 remained around 1.22 for most of the year before dipping in December to 1.05.  This should be viewed against the rate for 2007 which was about 1.33 for most of the year. Thus sterling dropped by some % points.

Of course the way is open and forward for those who wish to to utilise 1.05 and obviously then when compared to 2007 your tax should drop.

However I have a feeling that the tax guys are now geared up to look more closely at our returns for they too need the cash.

I may be wrong and I am not an angel but I have a fear of these tax guys and will be following my accountants advice.  However every legitimate and allowable expense will be thrown at my tax bill.

 

[cooperlola]

I think that's the point, d/r.  It's not a case of arguing a point of view.  AllanB has quoted the law.  Any other interpretation which one cares to put on this matter is between the individual and their conscience/ability to defend their position in the event of an audit.

[John frobisher]

I don't see why there is all this fuss every year !

The law says that the conversion rate to be used is that on the day that the income is banked. For proof - get hold of a copy of the 2047 tax form notes booklet that comes with the 2047 tax form, and look at page 2, note II, you'll see that it says it there as well. (The 2047 form is the one for income earned from outside of France).

Whilst the Connexion may get their information from Mr. Annett, as the tax offices only deal with local FRENCH issues and not international issues, I think its far wiser to ignore their comments, especially as the person giving the information is probably not appropriately qualified. If you read the answers in the financial section of the Connexion you'll have seen also how many times tax office comments are proven to to be wrong. The same thing happens in the UK anyway, call the local tax office and they'll tell you one thing about international stuff, then call the Nottingham NR office and they'll tell you something else.

You may also have noted if you have bought the tax guide thing from the Connexion that they say the tax offices are prepared to accept an average exchange rate as they don't have the time to check all exchange rates used by all foreigners. Seems logical.

But someone tells me that the tax authorities may be issuing their own annual average conversion rates to cut fiscal fraud and people using different rates. That would end all problems ! Except that the rate will probably be to the tax office's advantage !!!

[Ron Avery]

Welcome to the Forum.  If that is your first post I hope we look forward to more of the same.  I think you will find that much of what you have posted has been said above by myself, SD, Allen, Coops etc and nobody would dispute an iota of what you say except those who seek to use information from various ill informed sources like the Connexion to their short term gain. 

[krusty]

[quote user="John frobisher"] But someone tells me that the tax authorities may be issuing their own annual average conversion rates to cut fiscal fraud and people using different rates. That would end all problems ! Except that the rate will probably be to the tax office's advantage !!![/quote]

And who is that "someone" ?   And when will the tax office get round to doing it ?

[Ron Avery]

To go back to where we started, the French like the UK HMRC publish an "average" exchange rate that is designed to be used for a specific purposes and that is for income where there is an annual accrual.  Anything else then the rate on the day applies.

[allanb]

[quote user="Ron Avery"]To go back to where we started, the French like the UK HMRC publish an "average" exchange rate...[/quote]You mean there's a national, official, published rate together with a statement of what it can be used for? That would be useful; can you tell us where it's published?

[Sunday Driver]

The impots publish an official information bulletin setting out the exchange rate concession.  Complikate gave a link to last year's version on page one of this thread.

When this year's bulletin eventually comes out, you will find it on the impots website under the 'documentation' section.

 

 

[krusty]

[quote user="allanb"]You mean there's a national, official, published rate together with a statement of what it can be used for? That would be useful; can you tell us where it's published?[/quote]

"So, at the end of the year, irrespective of what you actually transferred from the UK to France, you take your UK sterling pension and then convert it into euros at the average exchange rate given by the French inland revenue (Le fisc), in mid-January (£1=€1.25968 for 2008). "

From Connexion , I told you months ago but no one is listening. [;-)]

[Ron Avery]

Oh we are listening Krusty, but as with most of the edicts from that source completely ignoring it and doing what is right.

Have they ever posted a retraction to the great "you don't have to re-register your UK car" edict yet?  They have such a good reputation for well researched information and impeccable sources how could anybody doubt a word that they print[Www].