Tax on savings account

[Mike]

I've had a CA 'Compte sur Livret' for 10 years. It has never been taxed in France. As a non resident I've received a notice every year of interest received for my UK tax return. That was until 01/01/07 when, without warning, 'prélèvements sociaux' were deducted, apparently under loi de financement de la Sécurité Sociale. Has anyone else come across this? Is is reclaimable or can it be deducted from uk tax payable? Advice please. Mike

[Clair]

Hello Mike

You pay a form of tax (as well as income tax) on the interest on most interest-bearing accounts.

[quote]

Le régime fiscal

Les intérêts du Livret B et du Compte sur Livret Bancaire sont fiscalisés et soumis aux prélèvements sociaux. Vous avez alors le choix entre les deux options suivantes : - Le prélèvement libératoire fixé à 27 %, prélèvements sociaux compris - La déclaration du montant de vos intérêts à l'impôt sur le revenu

[/quote]

More info (in French) here: les cles de la banque.com

[Mike]

Clair, thank you for this helpful banking information. However it doesn't explain why the tax has never been levied before, nor, and this is the main point, why this is imposed on the acount of a non resident. (ie I declare interest paid in France to the HMRC). Any more ideas please.

Mike

[BJSLIV]

What % deductions have they taken this year 11% or 27%?

 

[Mike]

It's 11%. Is this a European wide 'withholding' tax? If so, is this covered by a double taxation agreement? Mike

[Sunday Driver]

This year saw the introduction of a new system whereby bank interest and social charges could either be deducted at source at a fixed notional rate or left to the account holder to make a manual declaration.  This choice would clearly depend on the rate of tax that the account holder pays. You have to advise your bank of your preference at a predetermined time (I think it's in December).

Your account is a standard savings account and therefore your bank is unlikely to differentiate it as belonging to a foreign resident.  You should therefore opt for the manual declaration choice to avoid the automatic imposition of tax and social charges.  Contact your bank to regularise the position.

 

[BJSLIV]

A deduction of 11% is really weird.

Why?

For them to pay you interest without tax being deducted you have to notify them, either that you are French resident and that you will pay tax due through your tax return, or that you a resident abroad, which requires a certificate from the tax authority of your country of residence.

If you claim exemption on either of these grounds then they deduct 0%. With no notification they should deduct 27%.

So 11% is odd.

Its bad news too, because, as it is not a tax but a social security deduction it wouldn't be covered by the double taxation agreement, moreoveri it wouldn't be deductible from UK tax as its not payable if you are not tax resident in France.

Incidentally if you do get tax paid gross, the bank notifies the both the fisc and your own tax authority of the amount of interest paid.