Money transfer from Uk to France - tax issues

[pushkin]

Is French tax payable on part encashment of an offshore life insurance policy? Can anyone advise on the most economic way of transferring cash from a UK bank account to a French account, without incurring excessive bank charges?

[johnycarper]

Hello,

Not sure about the tax side of things and there are a lot of money transfer companies out there,but we use moneycorp and have for the last 4 years and have never had a problem.They only charge 10 pounds and the transfer usually goes through in a day.

[parsnips]

[quote user="pushkin"]Is French tax payable on part encashment of an offshore life insurance policy? Can anyone advise on the most economic way of transferring cash from a UK bank account to a French account, without incurring excessive bank charges?[/quote]

Hi,

      French tax is payable on the interest or gains element of the withdrawal as it would be on a french life assurance plan. Whereas french insurance companies provide all the necessary figures , your company may not. To calculate the taxable amount there is a formula ; For the first withdrawal........

      PI =RP(V x {RP/E})    where PI = amount of interest or gain declarable.  RP= the amount withdrawn,

      V = total amount paid into the policy. E = value of whole policy at time of withdrawal.

For subsequent withdrawals .............

    PI= RP({VCR} x {RP/E})    where CR = capital repaid previously....ie previous withdrawal(s) - taxable part(s).

       

[AnOther]

Crikey, dunno about anyone else but that's given me a headache [blink]

I think the important thing to remember is that your worldwide income from all sources is potentially taxable in France and therefore should be declared on your annual tax return.

Depending on source and circumstances relief may be available for tax already paid elsewhere but you must still declare it as income.

[LOie Splendide]

Hi,

In regards to an economic way to transfer money from UK to France, FXcompared.com will show you the way.

I've got an account on Globalwebpay who've got the best rates to France at the moment. They charge me £4.75, whatever the amount I need to send to my son's CiC account.

Much better than the banks as we learnt the hard way through Barclays!

Hope this helps

[allanb]

"I think the important thing to remember is that your worldwide income from all sources is potentially taxable in France..."

Yes, but when you cash in a life policy, how much of it is income?  I think that was the point of Parsnips' reply.

[nomoss]

[quote user="allanb"]"I think the important thing to remember is that your worldwide income from all sources is potentially taxable in France..."

Yes, but when you cash in a life policy, how much of it is income?  I think that was the point of Parsnips' reply.
[/quote]

BUT

PI =RP(V x {RP/E})    where PI = amount of interest or gain declarable.  RP= the amount withdrawn,
      V = total amount paid into the policy. E = value of whole policy at time of withdrawal.

 

 

So I draw 1,000 (RP) from a Policy into which I have paid a total of 10,000 (V). The value at the time of withdrawal is 15,000 (E).

 

Declarable gain by formula is :

 

1000 (10,000 x {1,000/15,000}) = 1000 ( 10,000 x 0.06667) = 666,666.7

 

Summat wrong with that formula !

 

[parsnips]

[quote user="nomoss"]

[quote user="allanb"]"I think the important thing to remember is that your worldwide income from all sources is potentially taxable in France..."

Yes, but when you cash in a life policy, how much of it is income?  I think that was the point of Parsnips' reply.

[/quote]

BUT

PI =RP(V x {RP/E})    where PI = amount of interest or gain declarable.  RP= the amount withdrawn,

      V = total amount paid into the policy. E = value of whole policy at time of withdrawal.

 

 

So I draw 1,000 (RP) from a Policy into which I have paid a total of 10,000 (V). The value at the time of withdrawal is 15,000 (E).

 

Declarable gain by formula is :

 

1000 (10,000 x {1,000/15,000}) = 1000 ( 10,000 x 0.06667) = 666,666.7

 

Summat wrong with that formula !

 

[/quote]

You are right! The example which I copied omitted a vital minus sign---it should read PI= RP - (V x {RP/E})

Thus 1000 -666.6667 = 333.3333€ declarable. (which accords with common sense).

Sorry about that.

 

[pushkin]

Hi,

Many thanks for that advice - I was about to go through Barclays but they charge so much commission I thought it better to see if there were better options!

[pushkin]

Many thanks for the advice - and correction! However my case is rather complex - withdrawals in Uk over many years avoiding tax, and splitting the capital invested several years ago- that it would be impossible to apply the formula. I did try but the figure came out with the declarable amount vastly exceeding the amount I wanted to withdraw!

I suppose that if I just made the transfer payment to my UK account, it would still be considered as worldwide income.

I had heard that life insurance payments were tax free - but it seems that must be a myth, unless this refers to the benefactor(s) after death of the policyholder.

[parsnips]

[quote user="pushkin"]Many thanks for the advice - and correction! However my case is rather complex - withdrawals in Uk over many years avoiding tax, and splitting the capital invested several years ago- that it would be impossible to apply the formula. I did try but the figure came out with the declarable amount vastly exceeding the amount I wanted to withdraw!

I suppose that if I just made the transfer payment to my UK account, it would still be considered as worldwide income.

I had heard that life insurance payments were tax free - but it seems that must be a myth, unless this refers to the benefactor(s) after death of the policyholder.[/quote]

Hi,

      See my post of 24/1/2011 re subsequent withdrawals (don't forget to insert minus).

They were tax-free to beneficiaries , but now (due to "la crise" ) the b***ards are going to take 12.3% CSG from gains part of the proceeds paid out.