Social charges.. What forms of UK income are they charged on?

[Chocfish]

We have UK income from three sources:

UK rental income, furnished flats

Dividends

Bank accounts

We are working in France and fully affiliated with French social security servce. We are resident in France and we are not S1 holders.

So which of the above income sources are we required to pay social charges on?

From our 2015 tax return, we received a credit of 100% on social charges. Last year (2016 return) we only received 70% credit. When my husband queried this with the tax office he was told that "100% tax credit for social charges on UK income" was a myth, and that in fact the Government decided each year what % the tax credit would be.... we didn't challenge it at that point but since then I've seen various posts in various places suggesting that this advice is not correct and that we should pursue a reimbursement of the social charges?

Any advice oh wise ones?

[parsnips]

Hi,

      S1 status is irrelevant in your situation. 

   All income derived from "fixed assets" (real estate) -ie. rents in the UK is taxable only in the UK and exempt, under article 6 of the double tax treaty of 2008 ,from all french taxes and charges-   (however, capital gains from sale of UK real estate is not exempt)..     Other investment income , dividends , bank interest etc., is taxable in france , and also liable to social charges. 

  What the tax office told your husband is rubbish - the exemption is enshrined in the double tax treaty.     There was , several years ago, a lot of mistaken application of social charges to UK rents , mainly due to the poor drafting of the treaty, but I thought this had been sorted.  You can find all (and more than) you need to know on the French Entrée Forum , which although now closed , has archived all its past info - look under "social charges , UK rents'.  You may also find some info by searching this forum (I seem to remember posting a model reclamation letter here.) .

[Chocfish]

Cheers parsnips, I hoped you'd happen by...;-)

On the avis primitif they have

Added together all our UK income (rent and dividends) to get the BASE IMPOSABLE then...

Multiplied that by the Taux (8.2% for CSG etc) to get the Montant de l'imposition then..

Applied a credit of 73% and subtracted that from the Montant then..

Charged us the remaining 27% social charges.

The only other possibility that makes sense is that the Impots has only applied the tax credit to the part of our income that comes from rent - and not to the part that comes from dividends (which would make sense in light of what you've confirmed above). The numbers match up (dividends = 27% of total UK income, rental income = 73% of total UK income: tax credit granted for 73% ) but it's not explained anywhere on the avis that I can see.

Notwithstanding that,the advice at the tax office was still mince - even I could see that!

[parsnips]

Hi,

    They don't show the relevant calculation on the avis, but for income tax the credit is basically the tax calculated on the whole income (exempt + non-exempt) X  the exempt rent / the whole income  = credit , this credit is subtracted from the tax on the total income to give the tax payable.

 For Social charges (should be shown on avis) the types of income - revenus de valeurs mobiliers (dividends and interest) which are liable , and separately, revenus fonciers (rents) which are not.    The various charges are then set out for each category of income , and then a credit equal to the contribution calculated on the rent is taken off the total.

  Hope this clarifies .