Nasty surprise in tax assessment - because of UK property or tax rate?

[Ian]

I've just had our assessment for 2011. They want about €600 more this year than last year, while our incomes have been much the same.

There are two major differences in the assessment, compared with previous years. One is that they quote a gross figure which contains rental income from our UK flat. However, the "Revenu imposable" and "Total de votre imposition nette a recouvrir" are in bold print and it's not, indicating it's for information only.

The second is that the "taux d'imposition" has gone up by 40%. Does this mean I'm paying a higher rate of tax on the taxable (rental-free) income? And if so, why?

Please, can someone tell me if this year is correct, or if it's all a mistake, and I can ask them to re-assess me (for less)?

Cheers

[parsnips]

[quote user="Ian"]I've just had our assessment for 2011. They want about €600 more this year than last year, while our incomes have been much the same.

There are two major differences in the assessment, compared with previous years. One is that they quote a gross figure which contains rental income from our UK flat. However, the "Revenu imposable" and "Total de votre imposition nette a recouvrir" are in bold print and it's not, indicating it's for information only.

The second is that the "taux d'imposition" has gone up by 40%. Does this mean I'm paying a higher rate of tax on the taxable (rental-free) income? And if so, why?

Please, can someone tell me if this year is correct, or if it's all a mistake, and I can ask them to re-assess me (for less)?

Cheers[/quote]

Hi,

      It's difficult to say without more detail, but check to see if there's an entry for " Credit d'impot sur rev. étrangers (13)" near the bottom of the form --if not then you may have been wrongly taxed on your UK rent.   This happened to many people last year.

[Clair]

I can't actually answer any of the questions you have asked, but I can point you to this page which shows the tax thresholds (taux d'imposition).

revenu imposable = taxable income

total de votre imposition nette a recouvrir = total net tax to pay

Income tax is calculated as a whole, based on the income which has been declared and not as individual sections each with its own threshold.

So the answer to your question Does this mean I'm paying a higher rate of tax on the taxable (rental-free) income? is no.

You could have declared your income incorrectly, or the form may have been assessed incorrectly, or your income has really gone up...

If you have declared online, you can rectify your income declaration online until 30th Nov. 2012 (see here).

if you declared on paper, you'll need to contact your local tax office as shown at the top of the form.

To avoid a nasty surprise next year, you could use the "calculez votre impôt" tool, which helps you assess your income tax before you actually complete the form online or on paper.

[Ian]

Thanks for replying, Parsnips.

That line doesn't appear on the assessment, but it wasn't on last year's assessment, either.....

I'm confused.

Cheers

[Ian]

Thanks, Claire.

I used that page to simulate my tax bill - it yields the same amount as last year (give or take a few euros).

So, either I filled it in wrongly this year (I'll check) or they've erred. If it IS their mistake, I assume I have to go and talk to them?

Cheers

[parsnips]

[quote user="Ian"]Thanks for replying, Parsnips.

That line doesn't appear on the assessment, but it wasn't on last year's assessment, either.....

I'm confused.

Cheers[/quote]

Hi,

     If your UK rents have been included in your taxable income , and you do not have the credit entry I quoted , then you have had tax assessed on the rents , without getting the corresponding credit which is the mechanism for applying the exemption for the rents.  Therefore , you have had tax taken on your UK rent which is in breach of the double tax treaty--you should go to, or preferably email , your tax office to claim a refund.  (I say email, because that way you have a record of what you have said , and more importantly their reply , for use in possible future appeals).

[Ian]

Looks like this is the case.

I will send them an e-mail. Will it be enough to simply say (in french of course) "You seem to have taxed me on rent from UK property. As I am taxed on this in the UK, you should not have done this". In other words, is it a simple mistake that will be obvious when they re-look?

Cheers

[Clair]

[quote user="Ian"]Thanks, Claire.

I used that page to simulate my tax bill - it yields the same amount as last year (give or take a few euros).

So, either I filled it in wrongly this year (I'll check) or they've erred. If it IS their mistake, I assume I have to go and talk to them?

Cheers[/quote]

If you saved the simulation, you should be able to compare it to the actual declaration and check if a figure has been entered in the wrong box...

[Ian]

I must be missing something here.

The simulation I found was very simple. Enter "Revenu Imposable" "Situation" "Enfants a Charge" and "Nombre de Parts", and out pops your tax bill.

Is there another?

Thanks

[Clair]

[quote user="Ian"]I must be missing something here.

The simulation I found was very simple. Enter "Revenu Imposable" "Situation" "Enfants a Charge" and "Nombre de Parts", and out pops your tax bill.

Is there another?

Thanks[/quote]

As well as the above, you get to choose which forms you want to include, according to your income, then enter the relevant numbers in the relevant boxes, as if you were actually completing the forms, and at the end of it all, you get your proposed tax, according to your numbers.

You can redo it if you have forgotten something and save it when you're happy with it.

[Ian]

Sorry, Clair, but I can't find that facility anywhere. Another hint, please...

Cheers

[NormanH]

The simulation only used to work with very simple cases.

It wouldn't accept UK income for example.

Is that still the case?

[parsnips]

[quote user="Ian"]Looks like this is the case.

I will send them an e-mail. Will it be enough to simply say (in french of course) "You seem to have taxed me on rent from UK property. As I am taxed on this in the UK, you should not have done this". In other words, is it a simple mistake that will be obvious when they re-look?

Cheers[/quote]

Hi,

    You obviously haven't dealt with them before!  They never admit "simple mistakes".  You need to send a letter along the following lines

Head it with your details and the references from the "avis"

"Objet; reclamation impot induement pris sur mes revenus fonciers provenants du Royaume -Uni.

Vu article 6 de la convention entre France et Royaume-Uni signé 19 juin 2008  qui dit,," les revenus qui sont imposables ou ne sont imposables qu'au Royaume -Uni....sont pris en compte pour le calcul de l'impot   français......le resident de France a droit ....à un credit d'impot ...ce credit est egal;

  (i ) pour les revenus non mentionnés à l'alinea (ii )  (et les revenus fonciers ne sont pas mentionnés) au montant de l'impot français correspondant à ces revenus à condition que le resident de France soit soumis à l'impot du Royaume- Uni à raison de ces revenus" (j'ai été soumis à l'impot du Royaume- Uni -voir  copie ci-jointe).

Je vous prie de bien vouloiur porter attention à mon dossier et me faire rembourser l'impot induement prelevé.

Prier d'agréer Monsieur/Madame l'inspecteur l"expression de mes sentiments distinguées,

signed ........................

Attach copies of all correspondence including the "avis" and the proof of the tax paid in the UK.

    

[Ian]

Parsnips, that's wonderful! I'm very grateful. The letter will be sent tomorrow.

Merci beaucoup

[Earlybird]

Parsnips, I second that - like Ian, I had a nasty surprise in this year's tax assessment, and lost out on part of the child-care tax credit I was hoping for (make that "counting on"...), on account of rental income in the UK. Your reply is *very* helpful. I'll send the relevant documents to the tax authorities, and see what happens...

[Debra]

Has tax actually been paid in the UK though?  Could this be the result of the decision made by Paris in the issue about CSG and CRDS charges on UK rental income last year - that 'subject to tax' actually means that 'tax has been paid'?  So are people whose rental income is under their UK tax allowance going to be charged both tax and CSG/CRDS this year, with no credit?

Earlybird if the child care tax credit is means tested, I can't see how Parsnips' reply  has helped you, because your UK rental income is still part of your 'means' even if no French tax is due on it.

[parsnips]

[quote user="Debra"]Has tax actually been paid in the UK though?  Could this be the result of the decision made by Paris in the issue about CSG and CRDS charges on UK rental income last year - that 'subject to tax' actually means that 'tax has been paid'?  So are people whose rental income is under their UK tax allowance going to be charged both tax and CSG/CRDS this year, with no credit?

Earlybird if the child care tax credit is means tested, I can't see how Parsnips' reply  has helped you, because your UK rental income is still part of your 'means' even if no French tax is due on it.

[/quote]

Hi,

       The point about "subject to tax " being taken by some french tax agents (wrongly) to mean UK tax has actually been paid is what caused a lot of problems last year (and looks set to cause still more this year).    Careful reading of the treaty, together with the fact that form 2047 expressly directs that the  amount of UK tax paid on the UK rents should not be entered, demonstrates that whether or not UK tax has been paid is irrelevant as the credit is for the amount of tax which would be payable if the rents were taxed in France.   I am not aware that "Paris" has made a decision on this , although I am sure some tax offices have said this to get rid of complainants--I would like to see references for an official publication to that effect.

  

  Debra is correct.  Whether or not the rents should be taxed, they are added to your revenu fiscal de reference which is used in means testing.

      

[Patf]

If we are asked not to enter amount of tax paid on UK rents, what does this mean? (form 2047 V11, column 5):

"Nature et Montant de l'Impot Eventuellement Acquitte à l'Etranger".

That's where I've been entering any tax paid.

[Boiling a frog]

[quote user="Patf"]If we are asked not to enter amount of tax paid on UK rents, what does this mean? (form 2047 V11, column 5):

"Nature et Montant de l'Impot Eventuellement Acquitte à l'Etranger".

That's where I've been entering any tax paid.

[/quote]

Problem is that one does not complete that section ,one completes section V1

[parsnips]

Hi,

    BAF is correct , since last year rents should be entered on 2047 VI net of expenses, but as it says in that section, UK tax paid should not be entered or deducted.  The figure is then transfered to 2042 8TK.

[Ian]

There we have the source of my problem.......

I followed the same method as before, and entered the amount in 2047 VII, transferring it to 2042 8TL.

Oops.

Well, at least I've sent them the letter you drafted, Parsnips. Should I (A) just wait for that to have some effect, (B) go and see them face to face, or (C) go into the website and correct it?

Cheers

[idun]

If you did your declaration on line, you can just amend it on line without contacting them by letter.

[Boiling a frog]

[quote user="idun"]If you did your declaration on line, you can just amend it on line without contacting them by letter.[/quote]

Are you sure, once a declaration has been processed surely one cannot just amend it on line.

[Patf]

[quote user="Boiling a frog"]

Problem is that one does not complete that section ,one completes section V1[/quote]

Oh, I see now. I just fill the form in the same places each year, and they have never complained.

We've had our Avis d'Impot this week, 0 to pay.

Makes you realise they don't scrutinise all the forms.

[NormanH]

The system changed recently, this year in some places, two years ago in others.

There was a lengthy thread or two about it but I am sure some people are still unaware.