UK Rental Income & Social Charges Again!

[Bertiebe]

Hi

Apologies to everyone on the forum who have answered this query before, but we have just received a bill for Social Charges against our UK Rental income even though all figures were entered as"Revenus exoneres" on our 2042.

As quoted below from the French Tax FAQ's page (which we found extremely helpful) we believed that this would not be elgible for Social Charges.

  "Rental Income from UK Property

Q          I have a house in the UK that I rent out.  Tax is deducted from the rent in the UK, do I need to fill out a French tax return.

A          UK property rental income is covered by the UK/France Dual Taxation Treaty in the same way as public sector pensions mentioned above, so whilst it is taxed in the UK, it still needs to be declared in France because it's taken into account for determining your overall French tax rate.

So, on form 2047, your gross rental income goes in section VII. REVENUS EXONÉRÉS PRIS EN COMPTE POUR LE CALCUL DU TAUX EFFECTIF - the form explains which figures go where.  You then transfer the total to box TI on your form 2042.

Note that income taxed in the UK under the Dual Taxation Treaty is not subject to French social charges."

Having searched the forum there still seems to be some members who are being invoiced for Social charges and some who are not on UK Rental income, therefore, can anyone please point us to an official document that details the Dual Taxation agreement (in French or English) and states that these charges are not valid which we can take along to our Tax Office in St Gaudens?

Thanks to everyone in advance for information.

Regards

Bertibe

 

 

[Sunday Driver]

If you have correctly entered your UK rental income in box TI, there should be no social charges levied against that income. The French taxation system doesn't generate a social charge against any amount input to box TI.

Are you sure the charge relates to your UK rental income?  Have you other income such as savings/investments that it could refer to?

 

 

[Bertiebe]

Yes, did enter rental income into box T1, however, on our Contributions Sociale invoice the amount they are charging 11% against states:  Revenus fonciers nets.  We assume that this is for taxation on Rental/land income??  The figure does not match exactly the figures we entered onto our 2042s/2047s (even more confusing as we had to enter 3 tax declarations due to Pac's last year).  We only have an extremely small amount of savings interest and this figure is correct under "Revenues de capitaux mobiliers".  

We know that our rental revenue taxed in UK should not attract Social Charges what we need, however,  is a reference to take to the Tax Office, if anyone can help.

Thanks. 

[parsnips]

[quote user="Sunday Driver"]

If you have correctly entered your UK rental income in box TI, there should be no social charges levied against that income. The French taxation system doesn't generate a social charge against any amount input to box TI.

Are you sure the charge relates to your UK rental income?  Have you other income such as savings/investments that it could refer to?[/quote]

Hi,

   I recently helped a couple who had correctly entered their UK rental income at sec VII 2047 and TI 2042, -they entered it in 2 equal 1/2s on 2047, as it is joint.The figure they put at TI was a single figure comprising rent plus a government pension. They recieved an Avis which included 1/2 the rent(minus 30% for micro foncier) as taxable. As they in fact paid no tax they did not notice this. They have now recieved a demand for CSG on "revenus fonciers" again based on 1/2 the rent (-30%).

      I was preparing a letter for them to demand a repayment when I found on recalculating their tax that the tax office had used a completely wrong figure for the calculation of the "Taux Effectif"-a figure that try as I might I could not relate to their declared income, and that in fact, when all was corrected they owed no CSG, but about 4 times the CSG bill in impots sur le revenu.

     When I explained the position they decided to do nothing and see what happens next year.

     I am currently helping another friend who is dealt with by the same office, who although not being taxed on his UK rents has been subject to a taux effectif based on another totally erroneous global revenu. This friend had the same problem as the other couple quoted above 2 yrs ago( taxed on his UK rents) and it took over a year of letters and phonecalls to put right and finally, after we set out a case which we said we would present to the Tribunal Administratif, they paid back ALL his tax including what was rightly due.

    I take two lessons from this 1. there are some total incompetents working in Tax offices, who persist in their errors and hope the aggrieved client will give up in despair and go away.

              and                                 2.A threat to take a well-presented case to the Tribunal Administratif can work wonders when the fonctionnaire is bluffing, as they are obviously very keen to avoid adverse judgements which might damage their careers.

[Bertiebe]

Just to draw this thread to a close, we have just had a happy resolution to our little discussion with the tax office.

We wrote a letter of reclamation (with the help of Parsnips) citing Article 5 of the 1968 UK/France double tax agreement (a more deliberately vague document you never did see), which is to be Article 6 of the new 2008 agreement which is not ratified yet.  Yesterday we visited our local Centre des Impots where a very nice man told us that our reclamation had been successful and that all taxes due were cancelled.  It just goes to show that sometimes a little effort is enough to make the system roll over.  We were certainly surprised and thought we would have to pay up and argue the toss in retrospect.

For those of you who might be going through this process, here are the links to the Double Taxation Agreement:

Double Taxation Agreement 1968 (English) I have also got the whole thing on .pdf but I'm beggared if I can find the link now.  You can PM me if you need a copy.

Double Taxation Agreement 1968 (French)

Double Taxation Agreement 2008 (French - not in force yet) I also have the English version of this on .pdf if anyone wants it but can't locate where I got it on the HMRC's labyrinthine web site.

Now all we have to do is get the exchange rate sorted out...

'Bert

[Cjlaws]

[quote user="Bertiebe"]

Double Taxation Agreement 2008 (French - not in force yet) I also have the English version of this on .pdf if anyone wants it but can't locate where I got it on the HMRC's labyrinthine web site.

[/quote]

The English .pdf is HERE