French tax - Uk rental income.

[salzuflen]

Reciving contradictory advice-help.

Which form do you declare Uk property rental income/losses? Form 2047 as we are led to believe but French bank indicated Form 2044. Any help greatly appreciated.

 

Salzuflen 

[Clair]

http://www.completefrance.com/cs/forums/1196188/ShowPost.aspx

2047 is used to declare income generated outside France.

2044 is used to declare rental income generated in France

[parsnips]

[quote user="salzuflen"]

Reciving contradictory advice-help.

Which form do you declare Uk property rental income/losses? Form 2047 as we are led to believe but French bank indicated Form 2044. Any help greatly appreciated.

 

Salzuflen 

[/quote]

Hi,

     Although you have to declare UK rental income it is NOT taxable in France , only taken into account to calculate your rate--make sure when you receive your avis that you have not been taxed on it , as certain offices do not seem to know how this works .

     You declare at VII "revenus exonerés etc...." showing gross rent, tax paid and expenses in cols.4, 5 , and 6 and then transfer the net figure to 2042 sec 8 "divers..." box TI.

[BillN_33]

Could you just clarify this with reference to the following example

Couple newly Resident in France and registered to pay French Taxes

If house in the UK is rented for say £15,000 pa gross

1). We will pay tax in the UK on the net income we receive - gross income less expenses of letting - it will be deducted by the letting agent?

2). At what rate will tax be deducted in the UK - 25%???

3). If we fill in a UK Tax form WILL WE GET UK personal allowances and be able to claim back any tax "overpaid"

4). This income should be included on our French Tax Return, but we will not pay any additional Income Tax and NO SOCIAL Charges will be payable on this income

I thought that the procedure would have been

1). Declare the GROSS Amount on the French Tax form

2). Get a 50% Reduction

3). Be assess to tax effectively on 50% of the GROSS INCOME

4). RECLAIM any Tax paid in the UK

5). Pay French social charges at 12.10%

My first posting and will really appreciate confirmation on what the situation will be

Cheers

[Araucaria]

Hi BillN

Your first (1) to (4) is right. Your second (1) to (5) isn't.

The UK personal allowances reduce the tax substantially.

It's pretty common for countries to wish to tax income that is earned in their jurisdiction, and from the point of view of HMRC in the UK, rent paid in respect of a property in the UK fits this description.

Then it's also fairly common for countries to wish to tax their residents on all of their worldwide income - in your case this would normally include your UK rental income when it comes to filling in a French tax return. But France has agreed not to tax it - they only take it into account in working out what rate of tax you pay.

It's unusual (I don't know of any cases, but what I don't know would fill several encyclopedias) for any country to repay tax due on property situated in that country on the basis that the landlord lives abroad.

I hope this helps

[Patf]

[quote user="Araucaria"]

 


It's unusual (I don't know of any cases, but what I don't know would fill several encyclopedias) for any country to repay tax due on property situated in that country on the basis that the landlord lives abroad.

I hope this helps
[/quote]

If the UK agent deducts ?25% tax and pays it to the Revenue, the landlord can fill in a selfemployed tax form, claim allowances and claim back any tax overpaid by the agent. Even if the landlord lives abroad. So we were told when we first started on this road.

However we haven't had to do this as we submit a S.E. form, claim allowances and pay tax due without going through the agent. We do it online.

[Araucaria]

That's right - what the agent deducts is just an "on account" payment and it's usually too much - you'll get back the excess over what is finally due when your allowances and tax bands are properly taken into account.

It's that amount - the amount finally due - that HMRC won't repay, even if you are liable to pay tax on the same income in your country of residence.

[BillN_33]

Thanks patf and Araucaria

A H van man - well - I have thought about it but my 2CV is still lurking!

[oldgit72]

Hi, we are thinking of buying an investment property in the UK. Am I right in thinking that no UK tax wil be payable if the total net rental income is less than UK personal tax allowance? What about other income (pension) declared in France? would this count against UK tax (ie added to the rental income and put me over the personal allowance limit?) Also, if no tax is payable in France on UK rental income, what about French social charges, are they payable on it?

[parsnips]

[quote user="oldgit72"]Hi, we are thinking of buying an investment property in the UK. Am I right in thinking that no UK tax wil be payable if the total net rental income is less than UK personal tax allowance? What about other income (pension) declared in France? would this count against UK tax (ie added to the rental income and put me over the personal allowance limit?) Also, if no tax is payable in France on UK rental income, what about French social charges, are they payable on it?[/quote]

Hi,

     UK  rents are taxable ONLY in the UK (DT Treaty) . If the net rents are less than your personal allowance (allowances if house owned jointly with wife) then no UK tax is payable ,provided there is no other UK taxable income. Pension income which is taxed in France (ie all pensions except those in respect of government or local authority service) has no effect on your UK tax assessment as it is taxable ONLY in France(DT Treaty). If you are on E121, none of your pension income will be subject to social charges , but your net rental income should be subject to 12.1% social charge; however it seems that some tax offices do not apply this (perhaps because of the unclear way it has to be declared).

[Will]

I think you are basically correct in that as you are (presumably) French resident you declare your whole worldwide income in France and you only declare the relevant bits (i.e. rental income) in UK. So your pension will not affect your UK tax liability, and if your rental income is below the personal allowance limit there will be no tax payable. However if your pension is one of those that is taxed in UK then it will probably put a different slant on things.

This site would seem to indicate that social charges are payable in France on rental income from overseas if you are French tax resident.

Edit - parsnips posted while I was checking my reference material - we seem to have reached the same conclusions.

[Sunday Driver]

Income which remains taxable in the UK under the DTT, eg government pensions and UK rental income, is exempt from French social contributions. The method of declaration is quite clear - both are declared in the same way as revenus exonéré pris en compte pour le calcul du taux effectif.  The resultant tax calculation does not generate a social charge on this income.

 

 

[parsnips]

[quote user="Sunday Driver"]

Income which remains taxable in the UK under the DTT, eg government pensions and UK rental income, is exempt from French social contributions. The method of declaration is quite clear - both are declared in the same way as revenus exonéré pris en compte pour le calcul du taux effectif.  The resultant tax calculation does not generate a social charge on this income.

 

 

[/quote]

Hi,

    This is what I have always believed, and found to be the practice in my area , but wishing to verify any info before advising the OP ,I checked on google and found a majority of sites ,including one by Bill Blevins, saying that social charges ARE due on UK rents, although some said the opposite. The DTT doesn't help much as it doesn't cover social charges. On balance I agree with you SD, but don't want to confuse the OP by ignoring what other "authorities" on the subject may tell him.

   

[Sunday Driver]

Describing them as 'authorities' is being a bit generous....[;-)]

In his Living France article entitled 'Expert advice- social charges in France', Bill Blevins writes:

There is a lot of confusion regarding payment of French social charges, which are another form of income tax in France, payable on all forms of income received, including pension income and income used to calculate the taux effectif (ie income not directly taxed in France, such as UK rental income, but which is taken into account to calculate your overall French effective tax rate).

In a similar LF article entitled 'Tax - social charges in France', he writes:

Social charges, which are not to be confused with social security contributions, are effectively another form of income tax in France, payable on all forms of income and capital gains received by French residents, including pension income.

Some kinds of income are not directly taxed in France, such as UK Government Service pensions (eg armed forces, police, civil service, teachers’ and local authority pensions), but are still subject to French social charges.

Are there any early retired armed forces, police, civil service ,teachers or local authority bods on here who pay social charges on their UK government pension? 

 

 

[Un autre Gallois]

I may have missed this point on previous posts - if so I apologise!

Under the non resident landlords legislation one can apply to the revenue for a dispensation so that no tax deductions are made either by the tenant or the managing agent, if certain conditions are met. In any event, if the rent is less than £100 per week, there is no duty to deduct tax (unless the revenue have separately & specifically directed it to be so.

UAG

[Maricopa]

[quote user="Sunday Driver"]Are there any early retired armed forces, police, civil service ,teachers or local authority bods on here who pay social charges on their UK government pension? [/quote]

As 2008 was the first year that I wasn't covered by an E106, I will let you know!

[oldgit72]

Thanks all for the replies and links. Seems that investing in a UK rental property might be tax efficient for us as other pension income will be subject to French tax and not taxed in UK.

[Bertiebe]

Sunday Driver wrote:

"Are there any early retired armed forces, police, civil service

,teachers or local authority bods on here who pay social charges on

their UK government pension? "

Last year our French tax bill included a large amount for Social Charges even though we had declared as: revenus exonéré pris en compte pour le calcul du taux effectif, however, we took a copy of the Double Tax Agreement between UK and France to our Impot in St Gaudens and the

nice gentleman recalculated our tax and we ended up with a zero amount for Social Charges. 

Haven't received this year's tax confirmation yet but are hoping that the Military Pension will come through as zero rated for Social Charges!

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