EUSTD

[nsc]

We live and work in the Somme.

After selling our house in England and buying in France, we opened up tax-free accounts on the Isle of Man to invest the remainder of the money. (We're not rich - we need the money for renovation costs).

My job as an 'intervenant' English Teacher in Primary Schools brings in around 9000€ pa. My wife is currently taking time off looking after our 2 babies. She gets money from thr CAF to do so and we also get mortgage relief. So we cope quite well.

And the money on the IoM gives us a sense of security.

However, I've just received a letter from my IoM bank explaining EUSTD. We have the choice of continuing to receive gross interest, but details of our accounts being given to the French authorities or accepting a Retention Tax at 15% on interest, rising to 35% by 2011. We also have the option of deferring interest. Total interest will run at around £5000 pa.

At the moment, in France, we don't pay tax as our income is too low. Above all, we don't want to lose our CAF entitlements.

What should we do? Is anyone else pondering the same question?

 

Thanks

 

nsc

[LesLauriers]

Pay your taxes in France and pay what you should pay, after all you enjoy the benefits.

Your unearned interest will attract 11% social charges plus income tax at the appropriate rate.

If it affects your CAF allowances it will only be because you are not entitled to them!

You should of course have reported all worldwide income on your tax return and CAF declarations already, undeclared bank accounts are subject to a fine of around 750€ per account plus the income tax you should have paid. The CAF return is a declaration of honour - they may get quite upset!

The new regs are designed to stamp out tax avoidance through offshore investments.

You should look at tax efficient investments in France.