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Exchange rate for tax.


David
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Here we are trying to be scrupulously honest in dealing with the taxman; meanwhile I know at least five couples who live permanently in France, never pay a penny in tax here [and probably nowhere else], and drive around in UK registered cars. How come they never get caught? How I would like to see them nobbled - schadenfreude doesn't come into it!

Patrick

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Hi!

Basically the law specifies the rate the day the income was received. That is quite clear. And if you use these rates, they can not contest.

For practical purposes, they have accepted one rate for the year in past years.

It could well be that the local tax office, considering the number of requests they have had, have passed on  this year the question to Head Office, because of the impact.

Yours,

giantpanda

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I can see how Parsnips and Bixy feel though.  Whilst checking the exchange rates for the 13 times in the year when my o/h's pension is paid in the UK, I often wonder why one bothers to be an honest and upright citizen whilst others just think of a number and halve it, if they bother to pay tax at all.  But it's the way I am, and I sleep well at night.  What others do is up to them.
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Oh no! I fear another run-in here with French bureaucracy. Having been here nearly 4 months now, we have finally managed to register our car, after a hard slog, but are still waiting to hear from CPAM regarding our attestions and CVs, now people start to talk about exchange rates for tax purposes. Help!

Can anybody please explain to me how we will stand at the moment. If I understand the situation correctly, we will have to pay French tax from when we 'officially landed' in France, 17th September until the end of December 2008, for the current French tax year. At this moment in time we have not converted any sterling into euros, apart from the house purchase, and still have all our income paid into The Nationwide, and then draw any money we need to live on, out of the Credit Agricole ATMs, so does this mean I will have to trace back the exchange rate for every euro I have drawn out this way? Please say no. [blink]

Also what happens when we come to fill in the dreaded first tax form, what rate will we use for any interest etc accrued in the UK? I assume this must be a standard rate for all concerned.

 

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[quote user="cooperlola"]...checking the exchange rates for the 13 times in the year when my o/h's pension is paid in the UK...[/quote]

Two pensions for the O/H in our case (25 separate dates) and two pensions for me (another 24 separate dates), plus various (small) amounts of interest on 5 bank accounts all usually on separate dates.  That's 109 exchange rates to determine, and 109 possibilities for error.

For the two declarations so far I have just written the rate given to me by the tax office in inch high letters at the top of the form, with yellow highlighting.  If they have a problem with this for our 2008 income I'm sure they will either just recalculate with the 'correct' rate and send me the bill, or, as Parsnips mentioned, send me an aimiable letter and invite me to correct it.

Fingers crossed... [:D]

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Grecian.  Yes you are correct.  You should make a tax declaration this year for the months you lived in France in '08. 

No, it is not the rate on the day you changed the money into Euros.  It is the rate on the date you were paid the money (in sterling, yen, maltese pounds or whatever!)

Phil and Pat, this is why some tax offices will allow you to use a specific rate for the year - it's obvious that for some, converting every payment and checking the rates is a nightmare.  I think that most tax auditors are very likely to treat you well if you have tried your best.  In my case we have two pensions.  One is paid direct into our French account in Euros, 13 times a year.  I therefore just add up the total Euros paid and declare them.  Simple.  The other pension is paid 13 times a year into a UK account.  On each "pay day" I check the exchange rate, convert the amount and write it in my diary.  When it comes time to fill in my tax form, I add up all the payments and declare them.  Job done.

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[quote user="cooperlola"]

Grecian.  Yes you are correct.  You should make a tax declaration this year for the months you lived in France in '08. 

[/quote]

I'm sure that you are correct, however on visiting the tax office with our first return we were told to forget the part year's residence and to submit a return for the first full year only.

I suspect it depends on the local interpretation, as with so many things here in France.

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Spectateur, strictly your tax office is giving bad advice but as they are the final arbiters then I guess that's OK.  However, in general one pays rather less income tax here than in the UK.  Also, two part years -  by their very nature - attract less tax than a full year in either country.  Thus if you declare partial years (as correctly you should, as the law stands), then you will pay less.  So financially if for no other reason, this is an occasion when doing it correctly puts money in your pocket!  Unless of course you are on a public sector pension from the UK when you have to pay tax over there so it would make less difference and certainly be less hassle.
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Thank you for all your replies.

Just to clarify the situation, do you need to include with your tax form, a list of all the exchange rates used to calculate your worth in euros, when all income etc was received?

Benjamin thanks for the info regarding the collection of our first tax form, something to look forward to in April!

 

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[quote user="Grecian"]

Thank you for all your replies.

Just to clarify the situation, do you need to include with your tax form, a list of all the exchange rates used to calculate your worth in euros, when all income etc was received?

Benjamin thanks for the info regarding the collection of our first tax form, something to look forward to in April!

 

[/quote]

Hi, As I have posted elsewhere, in 16 yrs I have never declared any rates, I just work out the € value using either the rate on the day of receipt, or the year-end rate as appropriate, and put just the € value on the forms. I have never been questioned on this, but you should of course , keep your calculations handy, just in case.

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[quote user="Graham Brenda"]If you declare online there is no facility for quoting the exchange rate anyway.[/quote]

When declaring online I quoted the exchange rate I had used and the email from my tax office indicating how I should calculate this rate in the box  where you add any relevant information.

Sue

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Actually, Grecian, if one were obliged to include proof with the tax return, we probably wouldn't have to have this debate every year.[:D]

Edit  :I do concur with Parsnips though.  Hang on to your calculations in case you are audited, then it will be evident as to how you did your sums.

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  • 1 month later...
Last year the Connexion posted the exchange rate at 1.35 and I used this for my tax forms. As it was mt first year of tax I took my forms to Nontron tax office and had them checked. The man asked what exchange rate I had used, I told him and he sent me packing with a new set of forms and told me to use 1.42 [8-)]
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[quote user="krusty"]Would you not think it would be easy to find the definitive answer?[/quote]

You would, but it's not, because there isn't one.  I'm not joking.

This subject has been done to death on this forum and others, but as briefly as possible: 

The law contains what looks like a clear answer but really isn't (it refers to "the" exchange rate on the day of each transaction, but on a given day there are hundreds of exchange rates for any pair of currencies).  In any case, for most people it's not reasonable to ask them to do all the calculations that would be needed. 

It appears that many tax offices sensibly recognize this and publish a specific rate which they will accept in practice, to avoid time-wasting computation.  As far as I know, this is not done at the national level; judging by what various people have reported, the different offices don't all publish the same rate.  Some have even said that they accept a year-end rate, which makes no sense; but that's fine if the rate suits you, as long as you get it in writing.

But in any case there is nothing to prevent the taxpayer from using his own rate if he is prepared to justify it by reference to the law.

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Hi,

I checked a website fxtop.com and their estimation for 2008 was 1.257€ , so I then checked my Nationwide statements for the year which give you the exchange rate each time you withdraw cash........1.256€. So that's what I shall use.

tuppence

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Our nice Monsieur Gay, who wears an old cardy and slippers at the Hotel des Impots (who knows - perhaps a bowler and pin-stripes at home) - asked where we had got our exchange rate from.  We said it was the official one, but he shuffled off and came back with a much better one (for us, I mean).

We are on kissing terms with Receptionist, we've been there so often, and they are now experts on our (tax) affairs.  M. Gay pulls down the "Bible" when he sees us coming - perhaps an Armagnac will be next, or, more likely, a mug of cocoa.

And it's a big Impots in a large suburb of Toulouse, too!

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