Not in the tax system

[bixy]

Friends, who have been living here for some years, have foolishly failed to register for tax. They are now trying to sell their house and I suspect there will be a comeuppance of some kind, but exactly what I am not sure. Is the sale of the house likely to attract the attention of the taxman?

Patrick

[Rose (& Greyman)]

Oooooh yes ! Cue one large capital gains tax bill. Some may say foolish, others ................

[Val_2]

Yes cos if they never submitted any tax returns to the french fisc then they are not known here legally and their property will be treated as a holiday home. They may get repercussions from the UK side too. There is nothing to be gained by not registering for tax here, the authorities know all your business and movements and quite often you can get benefits to help you. How on earth do they cope health-wise because the CPAM would be part of that greater intelligence web here.

[bixy]

Thanks for those replies. Oddly they are part of the French health system and they have immatriculated their cars [unlike several other Brits I know] but, no, never got involved with the tax system. I think they have had their house for about five years - what consequence does that have in terms of capital gains tax?

Patrick

[Rose (& Greyman)]

The damage will depend on how much 'profit' they make over and above the purchase price. I'm no expert but my gut feeling would be that they should jump in their car first thing Monday morning and come clean to the taxman in the hope of at least getting registered for 2007 income. Do you think they would have any French tax liability that they have avoided or is it all taxed at source in UK and they just assumed they didn't need to declare it here (erroneously) ?

[BJSLIV]

If they have held the house for less than five years they will be required to pay 16% of the gain as tax in France. If the house is sold for more than 150,000 euros they will also incur the cost of a "Fiscal Guarantor" who will charge them 1% of the sale price to handle the tax implications of the sale.

For each full year beyond the first five, the tax liability in France reduces by 10%. However this will be probably be of no real benefit as it mayl simply increase their liability for CGT in the UK.

 

[mint]

[quote user="bixy"]Thanks for those replies. Oddly they are part of the French health system and they have immatriculated their cars [unlike several other Brits I know] but, no, never got involved with the tax system. I think they have had their house for about five years - what consequence does that have in terms of capital gains tax?

Patrick
[/quote]

Patrick, here is the scenario of 2 couples that I know about in Dept 16.

Once they decided to sell up and "go home" they filled in a tax form and then sold their houses.  No tax liability in either case and both the couples had lived in France for under 5 years.  One couple lied about having a UK property in addition to the French one.

Fortunately, they are not my friends but are friends of friends who I do know and who are thinking about doing the same thing.

It seems to be perfectly possible for UK retirees to get their status sorted with CPAM but not the impot people.  Don't ask me how because we ourselves are abiding by the rules.

However, I note from a recent post from Sunday Driver that says that information from next year is going to be shared between CPAM and the Tax Authorities.

Far be it for me to encourage any illegal activities (forbidden by the Forum rules anyway), perhaps they had better put their property on the market straightaway and hope that it sells toute de suite![:)]

[Rose (& Greyman)]

[quote user="sweet 17"]

Once they decided to sell up and "go home" they filled in a tax form and then sold their houses.  [/quote]

I think what may have happened here Sweet is that your friends of friends in fact regularised their position before selling, by filling in a tax form. They then became eligible for the exemption on their main home, assuming they were French residents, so hence no tax. This may be a less stressful way to not pay the tax than wait for the Notaire to ask the question !

[bixy]

I tend to agree with the thrust of the posts. They should file a tax return next May for 2008. I think they are unlikely to sell before then. I don't think they are cheats - their income is taxed in the UK - I think they are just fazed by the French tax system. Having done my first tax return this year I know how they feel.

Incidentally, I wonder if anyone can answer this: when should we receive our avis d'impots, and should we worry if it's late?

Patrick

[Clair]

[quote user="bixy"]when should we receive our avis d'impots, and should we worry if it's late?[/quote]

These are the posting dates for 2008:

Avis d'impôt sur le revenu

• 1er envoi par La Poste, à partir du 07/08/08 visible online on 01/08/2008
• 2ème envoi par La Poste,à partir du 13/08/08 visible online on 12/08/2008
• 3ème envoi par La Poste, à partir du 06/10/08 visible online on 02/10/2008

Avis des contributions sociales

• envoi par La Poste, à partir du 29/09/08 visible online on 02/10/2008

Avis de taxe d'habitation / TV

• 1er envoi par La Poste, à partir du 06/10/08 visible online on 02/10/2008
• 2ème envoi par La Poste, à partir du 29/10/08 visible online on 06/11/2008

Avis de taxe d'habitation sur les locaux vacants et de taxe sur les locaux vacants

• envoi par La Poste, à partir du 10/11/08 visible online on 06/11/2008

Avis de taxe foncière

• 1er envoi par La Poste, à partir du 27/08/08 visible online on 01/09/2008
• 2ème envoi par La Poste, date à fixer visible online on 02/10/2008

I received the Avis de taxe foncière today!

[AnOther]

I have some friends who are possibly in a similar situation. Retired, no UK property, and been here for about 4 years, DIY renovated a property so enhanced it's value considerably and now selling, both have CV's but have never submitted a tax return.

Whilst casually discussing such matters one evening over a glass or two he asserted that his UK accountant sorted that all out for him. I asked if he himself had ever seen or signed any French tax forms and he said no, his UK accountant did everything. He said he had never had any direct contact with the French tax man at all, neither had he ever had a demand for, or paid, any tax.

Having done my first tax forms this year and recently received a demand showing nil tax due this doesn't seem right to me.

I cannot believe that all this can be handled by proxy by a UK accountant, even with a power of attorney (I don't know that he has this BTW), and anyway, surely the eventual tax demand would go to the tax payers French address and if they wanted to pass it on to their accountant well that's their business. If he has, as he says, had no direct contact in France then I cannot really see how he has been declaring here.

I'm wondering if I should alert them that they could possibly have a big unpleasant surprise coming [blink]

[mint]

No, Erns, don't alert them.  Otherwise you would be depriving them of their surprise![6]

[AnOther]

Not much point anyway sweets as what is done is done and it's probably too late now to take any meaningful steps to mitigate the probable tax bill.

Plus I don't want to get involved, making beds and laying in them I think covers it [;-)]

[bixy]

The more people I speak to and the more I look at this forum, the more I realise that there are a lot of people in this situation. Talking to a Dutch couple the other day, permanently settled in France, they assured me that you can 'choose' where you are taxed and they have 'chosen' to be taxed in Holland. I tried to explain to them, without making the news too devastating, that this was not the case. Oh no, they told me, the French tax people had told them that this was so. Another couple, British, he on a very considerable income, told me categorically that since his income originates from the UK, then that's where he is taxed. I didn't bother arguing with him.

Clair - thanks for the impots posting dates.

Patrick

[AnOther]

[quote user="bixy"]Another couple, British, he on a very considerable income, told me categorically that since his income originates from the UK, then that's where he is taxed.[/quote]This is quite possibly true but does not exonerate him from completing a French tax return.

It echoes my situation (but with a small C in considerable [:$]) where my salary is UK taxed but is allowed for by the dual tax agreement hence my recent tax demand for NIL.

You meet refuseniks and ostriches on an almost daily basis and I guess you have to just give up trying to point out the error of their ways.

[giantpanda]

Hi!

In order to tell you what to do, it would be interesting to know, how long they have owned the house?

Many Expats seem to think that because they do not get tax forms, and when they pay taxes in their home land, that they do not need to declare in France.

The French system is strange in as much as the " registering process " is done by making your first income tax return, where this is an obligation, and there are fines, and late tax payment increases.

Unfortunately there have been cases, where tax people have told ex-pats that they need not make a income tax return ( however nothing in writing ), whereby that showed how poor their professional knowledge was.

Yours,

pomhorn

[AnOther]

About 4 years as I said but I don't think I'm going to get further involved or tell them anything for the reasons in my last post.

[jondeau]

It's all very interesting.......but, and I may be in a minority here, does it really matter ?

 

16% of the profit made goes to tax.......it's a piffling sum and I would have thought a small price to pay for living somewhere you love.

[Rose (& Greyman)]

Am I right in thinking that it is 16% tax + 11% contributions, so 27% in total. That could amount to a five figure sum, not a small price if it could easily be avoided by complying with the rules.

[Will]

You are indeed right greyman. Only French residents selling second homes pay the 11% contributions though, so if you are English tax resident and selling a holiday home you just pay the 16%. However, if you are a non-EU resident the rate of tax is 33.3%. Complicated or what?

[mint]

I agree, jondeau, and let's not forget that you don't pay unless you make a profit!  So, what's the agonising for?

[Quillan]

I thought that you had to send a copy of your French tax return (the bit you get back from them) with your renewal form for CPAM every year along with loads of other stuff as well. If that is true how can people be CPAM members if they are not registered for tax in France? Could it be their E106 has not run out or that they are on an E121? If they are not on either of them how do they manage to renew their CPAM membership with no tax form ?

[ams]

Make the 11%, 12% soon and the possibility of adding another 8% for the CMU de base.

 

ams

[Ron Avery]

[quote user="Quillan"]I thought that you had to send a copy of your French tax return (the bit you get back from them) with your renewal form for CPAM every year along with loads of other stuff as well. If that is true how can people be CPAM members if they are not registered for tax in France? Could it be their E106 has not run out or that they are on an E121? If they are not on either of them how do they manage to renew their CPAM membership with no tax form ?[/quote]

Because some people have been told that they do not need to do a return if taxed in the UK and CPAM have never told them that isn't the case.  Some without E106s or only one year 106s have go to CPAM before they have done a tax return and CPAM accepts a signed attestation of income, sometimes backed up by P60s etc.  This attestation acceptance in lieu of a tax advice has been going on for years and it was only the tighten up in September 2007 (not the chucking out) that revealed the scale of the problem with loads of people being in CPAM without ever having completed a French tax return.  Coops once told of when she went to Le Mans to give in her tax return as evidence of income , they told it was UNUSUAL for Brits to have this!!

I know of people who were in the CMU for three years and when they were forced to submit a tax return in September last to stay in the CMU, they were asked to back pay three years contributions so they just resigned without any follow up by CPAM or URSSAF.

Given that CPAM have been able to see if a tax return has been completed for a few years now  but have not done so, I really do not share SDs optimism that they will actually join up the systems and ensure all CMU members are really paying the right amount and are actually entitled to be in the CMU.  IE are really running businesses and should be a) registered and b) paying the right cotisations.

[Quillan]

So Ron, those that are not registered for tax this year and have no E106 or E121 either separately or conjoint but are drawing a company pension back in the UK and transferring it over to France still won't have to complete a tax return and hand in a copy of their  'Avis D'Import' (got the right name now) with their CPAM form this year and they can carry on using the French system?

Are these the same people who are often heard complaining about immigrants in the UK and that these immigrants pay little or nothing to the NHS yet get free use of the health system there? I rather suspect that they forget that they are now the immigrants and it's them that are paying little or nothing in to the French system whilst the rest of us pay for them (as a tax and contestation payer I thought I could justifiably take the moral high ground [;-)] )

[:D].