tax when only half the married couple is resident in France

[freddy]

Hi

We are considering moving out to France in the next year or two and one of the options we are looking at is that my wife moves out full time and I remain working in the UK for a year or so getting out to France for week ends etc. when I can, (overall aim to build a bigger pot of savings). The net result would be that I am tax resident in the UK and my wife is tax resident in France.

If advantageous I would ensure that I spent less than 6 months of the year in France.

My question is this - how would this be handled tax wise.

If it were all under UK rules it would be easy, each party does a tax return for themselves in the country of residence.

Given the French rules of taxing by household this wouldn't seem to work.

As I will be tax resident in UK I will pay tax and NI as usual but my wife would presumably have to submit a French return for the 'household' - so how the bl***y hell does that work.

I would prefer to keep my UK earnings out of the French tax regime if possible for this period to avoid the whole social contributions vs. NI situation -  and I can continue to make and get relief on payments into a UK pension - not to mention that I suspect that the overall tax and social contributions burden will be heavier in France.

I think I have resigned myself to the fact that I will have to pay for professional advice if this circumstance but would be grateful for any pointers here.

By the way I am also unclear how the medical coverage situation would work under these circumstnaces either.

I may have to go for little lie down.

[Will]

This has been covered before, but...

Let's assume you are employed in Britain, carrying out your work in Britain, and your wife does not work in France.

You will pay tax and NI through PAYE. You will thus belong to the British health system, you have a NI number, and can register with a nearby doctor, which allows you to apply for the EHIC which will cover you (individually) should you need to see a doctor in France. You will also stay under the British pension contribution system and not have to get involved in the French social security system.

You will need to apply for an E form (most likely E109, though some seem to have been given E106 under these circumstances) from the DWP to cover your wife under the French health system. If you get E106 this most likely will cover her for up to two years; an E109 does, in theory at least, last longer, but it is not indefinite.

As far as French tax goes, you declare your income on the French tax form in the box for 'overseas income on which you have already been taxed'. Under the double taxation agreement between Britain and France you will only have to pay extra tax if there is additional income in France (e.g. from gite rentals etc) and your British income takes you into a higher French tax band.

So it is basically quite simple.

It can get a little more difficult if your circumstances are different, e.g. you are self employed (in which case any work carried out in France can have rather more bearing on your situation) or if your wife works in France, but it should still be quite straightforward, and a good accountant who understands both French and British systems will be able to minimise your liabilities  

[freddy]

Thanks for the reply - I would be employed - not self employed - all my income would be earned from work in the UK.

 - now I realise that I am looking for a self serving answer here - given that I am not tax resident in france under these circumstances surely the french tax authorities are not due any tax from me even if my earnings would have been taxed at a higher rate than the UK. (unless that income arises in France, which it won't) - so I am not clear why I have to declare my UK income to the French tax authorities at all - tax paid or otherwise, it should be none of their business. My feeling is as a UK tax resident paying UK tax - none of that income can be taxable in France under any circumstances as I have no liability for worldwide taxes in France.

Ho hum - tax law is a bit of a bu**er isn't it - however I think you're right I should hunt our a paid specialist to get the best possible answer.

 

[Will]

All French residents have to declare tax annually. Not every country has the same qualifications for residence. Two of the criteria in France are that you are considered resident if your main home is in France, or your family/dependents are in France. So you meet one, possibly two, of those criteria. And as you rightly pointed out in your original post, in France you are taxed as a couple, not as individuals. So if at least one of you is in France, you declare your income there even if you have already paid tax elsewhere.

[Chezstevens]

I work in the UK, SWMBO and boys live in France.  As a serviceman I pay tax to UK and declare my earnings as described above to the French Impot.  There is no choice - you are obliged to declare your earnings to the french tax authorities - do something else and they may assume you have something to hide.

[freddy]

AHHH.. you have to declare if your dependents live there - all becomes clear, though I would still argue that they can't tax me any extra on it as I am not resident in France - but then I doubt my opinion of what is fair and/or just has little bearing on the matter.

Off to the accountant it is then to minimise exposure

Many thanks for the replies

[Chezstevens]

I pay 40% to HMG and pay no additional to french authorities. 

[Will]

Read my first reply again.

If you have no other source of income in France then it is practically certain that you will pay no tax in France. In our case because I am paid, taxed etc in Britain and Mrs Will works in France we pay more tax in France than that due solely on Mrs W's salary, because with the two incomes added we are in a higher French tax band. Clear as mud?

[freddy]

Gotcha - now fully understand what you're saying - in which case that dosn't sound to bad - cool - thanks again