Income Tax

[Alpinemist]

Hi'a - If you are resident in France and receive an income from property rental in the UK which you then offset against your UK personal allowances etc. If you also have another untaxed income in another country does this come under income tax that you can offset this against your tax allowance in France? If you don't work in France due to early retirement do you still get a tax allowance in France? 

[parsnips]

[quote user="Alpinemist"]

Hi'a - If you are resident in France and receive an income from property rental in the UK which you then offset against your UK personal allowances etc. If you also have another untaxed income in another country does this come under income tax that you can offset this against your tax allowance in France? If you don't work in France due to early retirement do you still get a tax allowance in France? 

[/quote]

Hi,

       Your UK rental income is taxable only in the UK, if your UK personal allowances cover it then it is effectively tax-free. You still have to declare it in France (on form 2047 page 4 sec VII and form 2042 page 4 box TI) but it is NOT taxed here, only used to calculate yout french tax rate. All your worldwide income must be declared in France , and if not taxable in the country of origin (in which case it will be dealt with according to the double taxation treaty between that country and France) then it will be taxable in France , where you will receive the same "allowances" as a french national-although the system is different from the UK personal allowance set-up. 

[Alpinemist]

Thanks Parsnips (You're so good at this stuff) - I read on this forum about the tax bands the french use so they would add up all the incomes worldwide and then offset my UK rental income and then tax my other income on whatever band I'm in based on all incomes added together? Is that correct?

 

 

 

[Alpinemist]

Married Persons
Under 65 Years
Household Size	Salaried/Pension	Business Professional
2	19,712	17,741
2.5	22,977	20,679
3	26,240	23,616
3.5	29,504	26,554
4	32,768	29,491

Parsnips - I found these and I'm assuming these are the allowances. Any idea what the tax rate is for a married couple above that figure or are these not the allowance you have?

Just out of interest how can you have 2.5 people? Kids?

[Will]

This gives current rates, and this explains the 'half people'.

[Alpinemist]

Thanks Will

This system will take some getting used to. So if I understand this correctly you don't have to pay tax on a joint income up to your married personal allowance of 19,712 then whatever is left is divided by 2 (husband and wife) and then calculated using the band system. In which case each individual doesn't have to pay tax on the next 5875.00 either. That sounds like I've got it wrong?

[cooperlola]

The simple way is to use the tax simulator to work out your liability:

http://www3.finances.gouv.fr/calcul_impot/2010/

[parsnips]

[quote user="Alpinemist"]

Married Persons
Under 65 Years
Household Size	Salaried/Pension	Business Professional
2	19,712	17,741
2.5	22,977	20,679
3	26,240	23,616
3.5	29,504	26,554
4	32,768	29,491

Parsnips - I found these and I'm assuming these are the allowances. Any idea what the tax rate is for a married couple above that figure or are these not the allowance you have?

Just out of interest how can you have 2.5 people? Kids?

[/quote]

Hi,

      In France , it is the household which is taxed , not the individual . There is a sort of points system -single person 1 , married 2, each child 0.5, certain disabilities 0.5.

  So a couple with one child = 2.5 (this figure is the "quotient familialle")

      To give an example of how the tax is worked out , take a family (couple ) with  UK rent 10000€ , UK occupational pension 20000€.UK bank interest 500€.

              Taxable income (theoretical including rent) = 20000-10% special allowance= 18000+10000+500= 28500€ (This is called revenu globale or revenu fiscal de référence)

               Tax due (notional) 28500 x 0.14 - 2638= 1 352€ (notional tax--I have used a quick formula which takes into account the quotient familialle)

                Actual tax due 1 352(notional tax)x 18500( income taxable in France ) / 28500(revenu globale) = 877€

               There would also be 500 x 12.1% = 60.€ social charge due on the interest.

                These are figures for 2008 income --this year would be marginally less (apart from the social charge).

                                   

     

[Alpinemist]

That's excellent - Thanks everyone.

[allanb]

[quote user="cooperlola"]The simple way is to use the tax simulator to work out your liability:

[/quote]

The tax simulator doesn't work if you have income that is "exonerated" in France because it's taxable elsewhere - which seems to be the case with the OP.

I've been posting this information for several years now, whenever I see somebody recommending the simulator.  I just wish the tax service would wake up and warn you about it at the beginning of the input process, not right at the end when you try to input your revenu exonéré, and the program says "oh, sorry, we can't do that."  Very annoying.

[Dave&Olive]

hi ok

you will end up paying social charges on it 12 % as well in france ??

Dave

[parsnips]

Hi,

      You pay social charge (12.1%) on so-called "unearned "income which is liable to french income tax--bank interest, dividends, gains on life assurance and on FRENCH source rental income, but NOT on UK rents which are taxable only in the UK. The DTT defines french social charge as tax.

[cooperlola]

[quote user="allanb"][quote user="cooperlola"]The simple way is to use the tax simulator to work out your liability: [/quote]
The tax simulator doesn't work if you have income that is "exonerated" in France because it's taxable elsewhere - which seems to be the case with the OP.

I've been posting this information for several years now, whenever I see somebody recommending the simulator.  I just wish the tax service would wake up and warn you about it at the beginning of the input process, not right at the end when you try to input your revenu exonéré, and the program says "oh, sorry, we can't do that."  Very annoying.

[/quote]Thanks Allan, I had quite forgotten (I don't have any exonerated income myself so it doesn't affect me).  Appologies if I misled the o/p and wasted her time with this.[:$]

[Dave&Olive]

[quote user="parsnips"]
Hi,
      You pay social charge (12.1%) on so-called "unearned "income which is liable to french income tax--bank interest, dividends, gains on life assurance and on FRENCH source rental income, but NOT on UK rents which are taxable only in the UK. The DTT defines french social charge as tax.
[/quote] hi ok just wished you were right on this but ... Dave

[Herry00]

Really helpful.Thanks for your post,

[Herry00]

Well contact with any financial adviser he will suggest you the best way.

[Will]

This and this would seem to suggest specifically that it is only non-French (e.g. UK) pension income that is exempted from social charges in France, so it would follow that any rental income should be subject to the 12.1% levy (the rates in the Living France article are out of date).

The current version of the double taxation agreement may clarify this matter - I have yet to check in detail, though a quick peruse indicates that social charges on rental are not specifically mentioned; it just says that rental income from a property is taxed in the country where the property is situated, and includes CRS and CRDS (though not PS) in the definition of 'tax', as Parsnips suggests.

Another can of worms waiting to escape?