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tax query re Non Eu resident but partner remains in France


Sunshine

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Hi

I have tried the search engine but can not find what I am looking for.

This year my husband will declare himself as living and working outside the EU but I prefer to remain in France in excess of 6 months.  Is anyone in the same position?  We are certainly NOT looking to dodge any tax.  One of the many reasons for staying in France is the health care, but I will have no income of my own. 

Surley I must pay French taxes but how do I calculate these.

 

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FHI is currently dealing with somebody in a similar situation and this is proving a nightmare, particularly on the health front.  Even the French authorities are totally puzzled as to what should be done.  Have you been here for the requisite five years yet, because that can make a huge difference to your situation?

As far as the tax is concerned, I will ask this lady what she and her husband do, but I would assume that you fill in a French tax form, but the money he earns will not incur tax here (much as a person whose pension etc is taxed in the UK does) but I honestly do not know for sure.  I will ask.

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There are two important questions to consider here.

The first is whether there is a double taxation agreement between France and the particular 'non-EU country' you are talking about. If there is not, it does not necessarily mean that you will pay more tax, but it could make things very complicated and mean you need a specialist accountant.

The second is that you refer to your 'partner'. If that means you are not married to each other, that will make a big difference to how French taxation is dealt with.

 

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Thanks Steve, just noticed that 'husband' was mentioned in the text and went back to edit my post, but you beat me to it. Unlike most other forums, you can only see the post immediately preceding when you are replying, not the original.

When married, you are taxed as a couple in France (even if one of the couple only has income from elsewhere). So, you have to declare your joint worldwide income and the effect is that, if there is a double taxation agreement, tax paid elsewhere is 'credited' against your French liability. That's a gross simplification as it depends on the terms of the agreement and several other factors but that's how it usually ends up. If there is no double taxation agreeent there are usually provisions in the tax law to ensure that you are not taxed twice on one income, but it can make things very complicated to deal with.

 

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Cooperlola   Thank you for your input esecially as you are dealing with a similar case FHI.  I have sent you a PM.

Will....   I thought, as Cooperlola did, that we declare our UK income to the French tax authorites, and pay accordingly.  Its the world wide income I query becuase he will be a permenant resident in a non EU country..

Can any one recommend a good accountant?

 

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[quote user="Sunshine"]

Will....   I thought, as Cooperlola did, that we declare our UK income to the French tax authorites, and pay accordingly.  Its the world wide income I query becuase he will be a permenant resident in a non EU country..

[/quote]

Precisely. UK income counts as part of your worldwide income. Depending on the source and type of income it may be taxed in Britain, or it may be taxed in France. Where the tax is paid is determined by the France/UK double taxation agreement, not by your residence or your choice. Income from a non-EU country must be similarly declared in France, as your husband will be deemed fiscally resident in France on the grounds that his main home/family is in France. He can of course also meet residence qualifications in another country as well as France, which is why it helps to have a double taxation agreement with the other country.

If that doesn't make sense, then another way of looking at it is that France taxes couples jointly, not as individuals, so as long as one spouse is resident in France you have to declare your joint income in France.

Just because you have paid tax on a particular income elsewhere does not mean it should not be declared in France.

We are in this situation, and that's how it works for us. It is complicated, and we use a good accountant, but that doesn't stop the French tax authorities from cocking it up (in our favour as it happens, but we will still have to make up the underpayment, I am sure).

Because different countries have different tax rates and bands, there may be an adjustment to pay in France. Say your income all arises in a state with low tax rates, and your husband pays 1000€ tax in that state. You will declare that income in France, in the box for 'overseas income already taxed', and if you would have been taxed at 2000€ then you will have another 1000€ to pay in France. And any health contributions etc will be worked out according to your total income. Unfortunately it doesn't work the other way round, with France giving you a refund, needless to say. That assumes there is a double taxation agreement that allows for such 'tax credits' - if not, you will be unlikely to pay tax twice, but working it out can get even more complicated.

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