Official exchange rate for French tax return

[Rose (& Greyman)]

As I have some UK earnings to enter on my (first year) French tax return, I understand I can either convert at the exchange rate applicable on each day I received my earnings in the UK or I can use an official average 2007 rate.

Given the relentless downward trend in the latter half of 2007 I assume the average rate will probably be lower than the actual rate calculation.

My questions are - am I correct in believing  I can use an average and, where do I find it ?

I've searched on www.impots.gouv.fr with no luck.

Hope someone can point me in the right direct on both scores. Thanks.

BTW, as a former accountant in UK I am glad to escape the annual filing panic on 31 January, 10 months after the tax year end, only to find myself dealing with a 5 month deadline with the forms only available a few weeks prior ! Certainly focusses the mind. I wonder how the French accountants handle the rush ?[8-)]

[Sunday Driver]

According to the the French Impots:

Revenus encaissés en monnaie étrangère

Si les revenus ou bénéfices en cause ont été encaissés en monnaie étrangère, ils doivent être déclarés pour leur contre-valeur en euros, calculée d'après le cours du change à Paris au jour de l'encaissement (réception en espèces, inscription au crédit d'un compte, etc.)

So it's the exchange value on the day of receipt.

However, the practicality of retrospectively calculating this for regular income such as pensions means that local tax offices may normally consider accepting the official exchange rate as at the end of the tax year, or they may set their own rate. 

If you want to use an overall rate, then you'd best confirm it with them first, given that the rate as at 31.12.2007 was £1 = 1.362 Euro and using that figure would clearly result in an underdeclaration.

 

 

[Rose (& Greyman)]

Thanks SD. I'll check locally.

As an accountant an officially sanctioned underclaration would be music to my ears [Www]

[ali-cat]

SD

Can you advise what rate to use if the bulk (90%) of your monthly income was transferred via a currency broker at a pre-arranged rate?  Last tax return I used this rate as it was the rate I actually obtained rather than the month by month rate or officially sanctioned annual average.  As for returns on investments - last return I used the official average annual rate.

Mr Cat

 

 

[Sunday Driver]

Bear in mind that the taxable event occurs on the day you actually receive your income from its source, so that's when the exchange rate applies. 

In practical terms, if your income is transferred here as soon as you receive it, and the currency broker provides you with a note detailing the euro amount of each monthly transfer, then that should suffice for your declaration.

However, if you receive your income into a UK bank account then wait to consolidate your monies before transferring them in bulk, then that pre-arranged exchange rate will be deemed 'after' the taxable event and therefore may not be valid.

My bank (CA) sends me an avis d'operation internationale on the day my UK pension hits my account directly from the provider.  It shows the amount received in euros as well as their exchange rate and my local tax office accept this euro deposit as the declarable amount. They are also happy for me to use that same exchange rate to convert that month's UK bank interest.

 

 

[Graham & Brenda]

SD, I wonder if you could give your opinion on my situation? I receive my pension in the UK in sterling. I deliberately incur much of my French expenditure on a UK credit card which is settled monthly. For French taxes and utilities I cash a fixed sum each month and pay it into my French bank account.

The Impots will require me to convert my pension income into euros. Should I use the 12 monthly rates or the end of year rate? My only concern is that I do it in the most correct manner to avoid queries at a later date.

 

Thanks,

[Ron Avery]

Not SD he is having a liedown before May 1st[:D] 

G&B asked  "The Impots will require me to convert my pension income into euros. Should I use the 12 monthly rates"

 As SD said, you use the rate applicable when you received your income, so your proposal to use the 12 monthly rates sounds a very good idea to me and it will to the tax man.  As long as the rate that you use is reasonable and you do not try and take the proverbial you will not get any queries.

[Mikew]

I had a browse thro' my last years Nationwide statements looking for exchange rates on or just after first of month (pension paid on first), The average was 1.46567. I wonder how far that will be from the figure given out by the local Impots/ official rate.

[Bugsy]

This is a useful site for exchange rates.

HERE

[allanb]

I think it's interesting that the definition in the tax code is not in

fact precise.  It says "the rate in Paris" on the day of receipt, but

it doesn't say which rate: quoted by which bank?  At what time of day? 

For what amount?  Purchase or sale?     

My UK state retirement pension is paid in to my euro account, and the actual average for 2007 (i.e. the total euros I received divided by the total sterling amount paid) was 1.453.  Since this represents the true exchange rate obtained by the Pension Service each time they gave the payment order, I think it's defensible, and I use that rate for any sterling income that needs to be converted.

What is not defensible in my opinion is to use the year-end rate for transactions that happened throughout the year.  For 2007 that would result in understating income by around 6%.   If your tax office says you can use the year-end rate, then of course you should do so and be happy; but make sure they are really talking about income and not asset values.  I think you should assume that they understand the difference. 

I have to disclose that what I do hasn't yet been challenged: nobody has asked the question.

[Sunday Driver]

As allanb says, you're going to get no argument over declaring the actual amounts received.  However, the use of the year-end rate has been a concession to practicality and up to now, tax offices have turned a blind eye to the odd few euros discrepeancy. However, given the volatility of this year's exchange rates, I suspect this concession will no longer be on offer....

 

[cooperlola]

[quote user="allanb"]Since this represents the true exchange rate obtained by the Pension Service each time they gave the payment order, I think it's defensible, and I use that rate for any sterling income that needs to be converted.

[/quote](My italics, not Allan's.)  To my mind, this is the rub.  So long as you have a logical method for your calculation, then at least you can defend yourself if the subject ever comes up - although I haven't been questioned yet either!  The "year end rate method" would certainly look suspect this year - but then I guess there have probably been times when this worked in reverse - ie in the French govt.'s favour - in the past.

[chessfou]

The "year end" rate is swings and roundabouts. My tax office asked me to use that official (year-end) rate last year (noticeably disadvantageous to me). If this year it proves to be advantageous, that seems reasonably fair.

However, I can't now find the source for that official end of year rate (it was obtained from one of the gouv web sites but I don't remember which). I recall, also, that someone (I think on this site, or was it TF?) posted a link but I can't find that either.

[allanb]

I think we can distil a golden rule from this discussion; or rather, three golden rules.

If the tax reporting regulations are not completely clear, and you have to decide which method to use -

(1) Be logical;

(2) Be consistent;

(3) Keep records.

[lorna]

This HMRC site:

http://www.hmrc.gov.uk/exrate/european-union.htm

gives an average for the year and a "spot rate" for 31/12.

[Benjamin]

[quote user="lorna"]

This HMRC site:

http://www.hmrc.gov.uk/exrate/european-union.htm

gives an average for the year and a "spot rate" for 31/12.

[/quote]

It's showing a spot rate for 31.12.08. Do they know something we don't?

[magaret]

[quote user="Benjamin"][quote user="lorna"]

This HMRC site:

http://www.hmrc.gov.uk/exrate/european-union.htm

gives an average for the year and a "spot rate" for 31/12.

[/quote]


It's showing a spot rate for 31.12.08. Do they know something we don't?



[/quote]

 

 

 

That is ready for us next year.

Then we will have  more time for other things.

Or is it to help the French Impot

[lorna]

[quote user="magaret"][quote user="Benjamin"][quote user="lorna"]

This HMRC site:

http://www.hmrc.gov.uk/exrate/european-union.htm

gives an average for the year and a "spot rate" for 31/12.

[/quote]


It's showing a spot rate for 31.12.08. Do they know something we don't?



[/quote]

 

 

 

That is ready for us next year.

Then we will have  more time for other things.

Or is it to help the French Impot

[/quote]

I've just looked again and the 31/12/08 rate has disappeared!!!

[Benjamin]

[quote user="lorna"][quote user="magaret"][quote user="Benjamin"][quote user="lorna"]

This HMRC site:

http://www.hmrc.gov.uk/exrate/european-union.htm

gives an average for the year and a "spot rate" for 31/12.

[/quote]

It's showing a spot rate for 31.12.08. Do they know something we don't?

[/quote]

 

 

 

That is ready for us next year.

Then we will have  more time for other things.

Or is it to help the French Impot

[/quote]

I've just looked again and the 31/12/08 rate has disappeared!!!

[/quote]

So these forums are closely monitored then.  [6]

[lorna]

[quote user="Benjamin"][quote user="lorna"][quote user="magaret"][quote user="Benjamin"][quote user="lorna"]

This HMRC site:

http://www.hmrc.gov.uk/exrate/european-union.htm

gives an average for the year and a "spot rate" for 31/12.

[/quote]


It's showing a spot rate for 31.12.08. Do they know something we don't?



[/quote]

 

 

 

That is ready for us next year.

Then we will have  more time for other things.

Or is it to help the French Impot

[/quote]

I've just looked again and the 31/12/08 rate has disappeared!!!

[/quote]


So these forums are closely monitored then.  [6]



[/quote]

Very spooky.   [:-))]

[Graham & Brenda]

I have just remembered a query from the Impots re my building society interest last year. (The query wasn't about exchange rates but amounts as I had mucked up gross and net - but that's another story!). They quoted an exchange rate from the Banque de France as at 31/12/2006 which was 0.6715 or 1.4892.

The link to the Banque de France website is [url=http://www.banque-france.fr/fr/poli_mone/taux/html/3.htm]HERE[/url]. It shows the rate at end 2007 of 0.73335 or 1.36361.

So, whilst it may seem wrong to use the end of year rate when rates were falling last year, it must be swings and roundabouts overall. In the event that I was asked to justify its use I would be able to quote their letter.

[mint]

Most helpful, thanks.

[Mikew]

My nationwie figure gives about half a percent more euros per pound than x-rates average for the year. hmrc gives even less euros. This is a case where a lower rate is better - less is best.