first tax year in France!

[Dc]

2005 is my first year resident in France. In the new year I will have to arrange my income tax declaration. I live off interest on capital now after selling UK house, I stashed the cash in a UK bank, and have a few quid in a cash ISA, and not forgetting £2 in premium bonds and a life insurance policy  . How will this be treated here in France. Can anyone out there help with advice or give me the name of a decent tax expert.

best regards

dc

[Ron Avery]

The

interest from the capital and any profits etc from the ISA will be

treated as unearned income, ISA' s are only tax exempt in the UK not

France. (EDIT I am advised by my accountant that

you cannot keep an ISA as a French resident,  they are a

means of saving for UK tax payers and residents only) 

 On

un-earned income you pay income tax payable by September and

social charges that are issued separately and payable in

November.  If you win on ERNIE that will also be treated

as un-earned income, but check that living in France does not

disqualify you from holding Premium Bonds.

 The

life insurance policy offers no tax relief in France and I would check

with your insurer that they know you live in France; some

insurers do not cover you here.  Any way the good news is

that you don't have to worry all this until March, in the

meantime, save up and also do a search in finance back a couple of

months, there is a thread about tax and declaring interest including

details about which tax forms to fill in and which boxes..

[chessfou]

According to my research:

(1) Premium Bonds can be retained in France (and quite a few other

countries but don't ask me which; it wasn't relevant - source: phone

call to National Savings). "Winnings" would not be tax-free in France.

(2) Ron's accountant may be wrong (at least he apparently is with respect to Stocks & Shares ISAs, I have absolutely no idea

about cash ISAs) as the general rule (according to all my sources -

brokers & IR, though source notes not kept) is that any ISA (ditto

PEP) wrapper can be retained although:

(2a) you will no longer be able to add funds to it/them (unless &

until you become UK resident again, so if there's a possibility of that

you may not want to burn your tax-free bridges);

(2b) all the gains - divis, interest & capital gains  - will be liable to French tax.

Therefore, depending upon your circumstances it may be a good idea to

investigate a PEA - Plan d'Epargne en Actions - (sort of French ISA

equivalent) which can contain pretty much any of the stocks you have in

your UK ISA. Like a UK ISA you can only pay cash (not transfer stocks)

into a PEA (in one or more lumps up to a lifetime limit of EUR 132,000

- that's cash paid in, not total value - and, if you're married, you

can each have one, so EUR 264,000 total). They have a couple of

disadvantages compared with ISAs (you get hit for CGT if you take money

out too soon - and/or the 11% social tax on your gains withdrawn -

basically you have to plan on running the PEA for an absolute minimum

of 5 years and better 8 years) but after 8 years they are just like UK

ISAs (tax free and withdraw what you want when you want, although the

provider may have some limitations on that).

Look here for brief details:

http://www.edubourse.com/guide/fiche.php?idFiche=148

and the full works here:

http://www.boursorama.com/patrimoine/guides/Bourse/PAT48.html

[chessfou]

[quote user="chessfou"]

but after 8 years they are just like UK

ISAs (tax free and withdraw what you want when you want, although the

provider may have some limitations on that).

[/quote]

Drat. Sorry, that's wrong. I forgot that they just changed the rules

(see - it's not just Gordon [;)]) and net gains will be subject to the

11% when withdrawn.

[expatgirl]

Mine, too. We moved to Paris in November, neither of us working, my husband on a UN pension which I know to be taxable as income in France, but is there some sort of cutoff date for filing the previous tax year? That is, since we were late arrivals in 2005, do we need to file, and when and how? Sorry to be such an ignoramus...

[Teamedup]

You should fill one in even arriving so late in the year. Your local tax office may say you needn't, as they can do, but you really should. You can get hold of a form in March from your Mairie, just fill it in and send it in. They are actually useful things to have and unless you are super rich you won't be paying tax on two months income anyway.