UK Rental Income and French Tax Return

[Glyn]

I have rental income for 2006 from a property in the UK from which no UK tax is being deducted. I am also covered by a E106 which I understand to mean that no CSG, CRDS or PS should be payable on the rental income.

I am using the French Online Tax simultaion to determine how I should be filling up my tax return when I recieve it and have two questions related to this.

1. From previous posts I understood that the gross rental income should go in box BE (Revenue fonciers). However when I do this the simulation calculates that I should be paying CSG, CRDS and PS. I expected this when my E106 expires but not before.
2. I understand that to have rental income assessed under the Micro foncier regime it must be less that 15000 euros per annum. If it is more that this, how should the tax form be completed?

Thanks

Glyn

[cooperlola]

Glyn, I have a horrible feeling that rental income may be seen as unearned and that you will therefore pay the full social charges.  Where are you SD?

[Patf]

I may be wrong, but I thought tax must be paid in the UK on rental income from UK property. And yes someone wrote recently that the french regard rental income as unearned. We declare ours to the IR on a supplement to the self employed form and pay tax in UK then declare it on our tax return here.Pat.

[Glyn]

I filled in form NRL1 from the inland revenue which allows the rent to be paid without UK tax being deducted. I assumed this meant that I would actually pay any liability in France. However having just read the form again it looks like this mat not be the case and that the tax should be declared and paid in the UK.

Even so I would still imagine it would have to be declared in France. If so, where would this be entered?

Thanks,

Glyn

[Patf]

You use form 2044.On page 2 there are spaces for amount received (immeubles donnes en location) then after that fees etc, and mortgage interest to be deducted. Then net rent.The tax you have paid in UK is entered on the back of the summary form 2047-K in section vii, last columns. That's the way I did it anyway, with guidance of the tax man here. Don't forget the tax year here runs from 1st Jan. so you can't just copy your uk figures but will need to do a bit of pro-rating. Also change to euros. Pat.

[Glyn]

Patf

Thanks for that.

Glyn

[Glyn]

Patf,

Do you know how the French social security contributions are calculated on your UK rental income

Thanks

[Llwyncelyn]

Glyn we have some rental properties in the UK and where rental is paid gross and with Agents fees and associated costs being deducted.  We then declare the revenue here in France.  That is what at least our Experte Comptable tells us.  So far he has been absolutely spot on so I am not going to change things.

However interest on savings are totally another matter and our BS who favour the 'over 60' deduct tax at source I then reclaim it and then send it back to the BS to credit the account.  They will not change this approach although they do not have to deduct interest but it is their policy.  I am now a bit stuck for being resident here in France it is very difficult if not impossible to open new accounts in the UK.

[Ron Avery]

Glyn

After SD and I spelt it out for you yesterday, I cannot believe that you can make  a statement like:

"I have rental income for 2006 from a property in the UK from which no UK tax is being deducted. I am also covered by a E106 which I understand to mean that no CSG, CRDS or PS should be payable on the rental income" 

That is not what you were told at all.  You were talking about a UK private pension and state pension, not having rental income in the UK[8-)].

It is correct that you do not pay CRDS on your pension income whilst covered by an E 106 but that is all, equally you would not pay CSG or PS if you only have a UK pension taxed or not taxed in France, but you will pay social charges (CSG and PS) if you declare rental income in France.  As with interest on savings,  rent is treated as unearned income and is therefore liable to CSG and PS, I don't know anything about rental income in the UK but I believe that you should pay tax on it in the UK maybe Will or SD can confirm.

[Glyn]

Ron,

Thanks for your invaluable information but yesterday I believe you mentioned that CSG, CRDS and PS were payable on UK 'unearned income'. I posted this topic as I was unaware that rental income was classified as unearned income!

Now this has been clarified I now understand that social contributions would be payable.

Just because I did not declare my total financial situation in the question I asked yesterday does not negate the relevance of the questions asked or the replies received.

Thanks to everyone for there input.[:)]

Glyn  

[avinalarf]

My UK rental income is also paid gross but is taxable in the UK.  In France the rental profits are not taxable but are taken into consideration for determining the tax rate applicable to worldwide taxable income.  This is set out in the UK France tax treaty.

The UK tax is paid annually (April to April) via the self-assessment system.

In France you declare the calendar year profit on form 2047 section VII.  "revenus exoneres pris en compte pour le calcul du taux effectif."  My understanding is that 2047 section III and form 2044 is only to be filled in for taxable revenues. Because of the UK France tax treaty sections III and VIII are mutually exclusive.

Finally, there are no contributions sociales to pay on revenue not taxable in France.

This advice is contrary to some of the above replies.

 

 

 

 

 

 

 

 

 

 

[Glyn]

avinalarf,

Thanks for the detail you have provided. It is very interesting that you have said that revenue not taxable in France is not subject to contributions sociales. As you say this is contrary to some of the other replies.

I wonder if anyone else would like to comment?

[heidi h]

Hi

I too have UK rental income which is not taxed by the letting agent but I do pay UK tax on it and am not taxed or social charged on it in France. I have a small amount of UK bank interest which I do pay tax and social charges on in France. My health cotisation payments take all income into account be it in France or the UK.

Hope it helps and you are not confused further.

[avinalarf]

Patf,

By declaring the profits on form 2044, have you been charged any tax or social contributions?

Welshnamewithl'sandw'sthatIcannotremember,

When you say you declare your rental income in France, does this mean that you declare it as taxable?  Do you also declare it in the UK?

 

[Bertiebe]

As the French tax year runs Jan/Dec and the UK Tax year runs April/March I assume I will not have completed my self assessment for declaring UK rental income in the UK until well after the deadline for the French tax return.  Can anyone advise how they get around this situation?

Also, I am in the unusual situation that this year (and possibly in future years) my rental income in the UK after agents fees etc. will be below my UK tax allowance, and therefore I assume I will not have to pay tax on it even though I will declare on my self assessment.  Does anyone know whether this means I will have to declare it as unpaid on my French Tax Return and if so what box this should go in?

Thanks to everyone for help and info.

[avinalarf]

You keep a monthly record of the income and expenses - so you can prepare the figures over the two different periods. 

You fill out a UK self-assessment - remembering to claim a personal allowance (box 9.7 I think).  On the French form you declare the eventual tax paid as nil.

 

[Patf]

avin alarf - your question on the previous page - no we don't have to pay any social charges or health contributions etc. Nor any tax in France - not yet anyway. We have forms E121. So it looks as if I'm filling in the wrong forms, but the man at the Hotel des Impots is satisfied so I'll leave things as they are. Pat.