First tax declaration - Q1, income encashed overseas (form 2047)

[Rob G]

Hi,

We've been in France since end 2005, I started a business in mid 06 so am now doing my first tax return - well, trying to... I speak fluent French, but it's not helping me understand what I need to declare in which box! My wife and I have both spent considerable time trawling the forum and other sites, but have not found a clear answer to our questions. Hence this post and another one to follow.

My business was under the "micro" regime for 2006, so it's covered by the normal 2042 form plus a 2042-C "déclaration compléméntaire". I'm a translator and consultant, and have some UK customers who pay me via a UK bank account. In theory, this means I have to fill in form 2047, "Déclaration des revenus encaissés à l'étranger".

Here's what's confusing me. On the 2047 it says that you should detail income received overseas in the relevant box (in my case this is section V - "Bénéfices des professions non commerciales"), then add this if applicable to the relevant corresponding total that you have entered on the 2042-C - so in my case I would add this to to the amount of income received in France in box HQ. However, the main 2042 form also has a section 8 which relates to "persons resident in France receiving income overseas". So do I need to show the amount I've included on the 2047 in this section on the 2042, as well as including in my total professional income on the 2042-C?

I hope this makes sense to someone and you can give ma some clarity!

Thanks in advance,

Rob

[Sunday Driver]

Section 8 of the 2042 allows you to enter foreign earnings which are taxed at source under the applicable dual taxation treaty, eg UK government pensions, and which give rise to a French tax credit to offset the tax already paid.  Whilst not taxable in France, these sums entered are taken into account in calculating your overall revenu fiscale de reference. Certain incomes already declared in the previous sections which (if it was French income) would normally be subject to CRDS at source, are also "re-entered" in Section 8 to generate the charge.

 

[Rob G]

Thanks, SD, for your very helpful reply. If I understand correctly, then, I ignore section 8 on the 2042 and just add my overseas business income to the French business income on the 2042-C.

Rob

[allanb]

[quote user="Sunday Driver"]Section 8 of the 2042 allows you to enter foreign earnings which are taxed at source under the applicable dual taxation treaty, eg UK government pensions, and which give rise to a French tax credit to offset the tax already paid.[/quote]SD: can you shed more light on this?  I believe that a UK government pension (i.e. a pension for government employment) is taxable in the UK - full stop. (Whether it is taxed at source or taxed later is another matter.)  I don't understand your reference to a "French tax credit".[quote]Whilst not taxable in France, these sums entered are taken into account in calculating your overall revenu fiscale de référence.[/quote]I agree with this bit, except that it's your revenu global, not your revenu fiscal de référence.

[cooperlola]

Allan, I think that SD is right (this is the norm!).  They have to be included in your RFR (rather than RG) because this is the base sum which is used when calculating your health contributions, non?

[Ron Avery]

Allan

AFAIK if you have income taxed in the UK it is taken into account when calculating the tax to be paid on other income not taxed in the UK and liable for tax in France.  Say you had 3,000€ income in France, on top of a civil service pension taxed in the UK, you would pay tax on that at the appropriate rate it would not be treated as being part of your free pay.  In France, what is used for payment and assessment purposes for health charges for example is the revenu fiscale de référence.

[allanb]

Cooperlola: Thank you for straightening me out.  Actually I when I said

revenu global I meant to say revenu mondial.  But I got it wrong anyway.

So far as the "credit" is concerned:

[quote user="Ron Avery"]AFAIK if you have income taxed in the UK it is taken into account when calculating the tax to be paid on other income not taxed in the UK and liable for tax in France.  Say you had 3,000€ income in France, on top of a civil service pension taxed in the UK, you would pay tax on that at the appropriate rate it would not be treated as being part of your free pay.  In France, what is used for payment and assessment purposes for health charges for example is the revenu fiscale de référence.[/quote]

My understanding is that if your UK income is £10,000 on which you have paid UK tax of £2,500, it is the equivalent of the net £7,500 that is taken into account (as revenu exonéré) in computing your French tax rate.  (1) is this correct, and (2) is this the credit that SD referred to?