Income tax on gite rental

[Marie]

Income tax again!

My husband's accountant (he's self-employed), says he needs to declare the income from our gite rental on his tax return, even though we have already declared it in France and paid tax on it.  Can anyone confirm if this is the case, and if so, how much are we likely to have to pay in tax in addition to what we have already paid in France? Isn't this double taxation???

I know this has been raised before, but I can't find the relevant pages!

 

Marie

[BJSLIV]

It will be a bit like dividend income. You will be taxed at your uk marginal rate, but will be given credit for any tax already paid in France. The main impact will be if you are liable for for any 40% tax

 

[Audois]

If you are resident in the UK then the easiest way to do this is to NOT declare it in France but just in the UK on the 'Foreign' pages, usually you'll need to ask the IR for those extra pages.  I used to run at a loss so was never taxed on the income I made from the gite.  This is perfectly legal under both tax regimes as the UK has the tax treaty with France; so as long as it's declared in one of the two countries you're fine!!!

Declaring it in France then doing it in the UK again sounds like a pain, I would ring the IR office for advice, possibly asking for the expat team who are very helpful usually!  Next year, if you're still in the UK regime, I'd just stick to that!

[Jhc]

Sorry Audois but you are entirely wrong here as I am sure lots of people will leap to tell you. Any basic book on tax in France will confirm it. Any rental income earned from Franch property MUST be declared in France, despite the double taxation treaty - and yes it is a real pain. You have to pay the amount owed in France to the French tax authority and then when you declare in UK the amount you already paid in France is deducted from what you owe for rental income under UK tax law.  As someone else said it is likely that your bill in UK will be v small unless you are a 40% tax payer.

[Lori]

www.service-public.fr

 

[Audois]

Interesting that; my accountant in the UK said it was fine, since being here permanently I have been under the French regime and told them of my previous declarations in the UK; they said that was fine and there wasn't a problem at all with that ...

Maybe my experience is different, but no one seemed to have a problem by doing it that way and I've certainly not kept anyone in the dark!!!

 

[Jhc]

Sorry Audois but as far as I know it is the same world wide - any rental income from a property has to be declared in the country in which that property is situated, and then in the country in which you are resident.  It is definitely so for France - the double taxation treaty does not mean that you can choose which country to be taxed in - it simply means that you won't be taxed twice on the same rental income.  It applies even if all your income from the French property is in Sterling and paid into your Sterling account - it still derives from a French property and a tax return must be completed in France. 

It is the same now we are resident in France and get an income from a UK property - there is no choice in the matter - it has to be declared and tax paid in UK and then declared additionally in France in case more is due in France, in which case we pay the difference between the 2.  Read any book on taxation!!  It could not be clearer - sorry if the implication is that your UK accountant is a duffer and that you struck lucky when you visited the French tax authorities............................Don't forget that this thread started by someone saying that their UK accountant told them French rental income needed to be declared in France and then additionally in UK - exactly so!  I have reacted strongly here but only because you were advising someone to do something that is so blatantly not right.

[BJSLIV]

Interesting that; my accountant in the UK said it was fine

Unfortunately some Accountants seem to have difficulty keeping up with the UK tax laws. There is therefore a risk that their knowledge of French tax laws is likely to be minimal, meaning non-existant.