Just to say, I have the new Connexion tax guide and the suggested exchange rate for this year’s tax return is:
£1 = €1.139
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Thank you, but I bet that is a better rate from our point of view than my tried and trusted method always produces. But as long as we don’t earn enough to pay any tax on income at all, I will continue as before in wearing my 
They even include a handy little explanation in French that you could include in the Mention Expresse box, to show how the exchange rate was arrived at.
Well, well - I posted my own initial calc in the tax 2024 thread - pretty much the same! Thanks for posting. @Helenochka - is the handy explanation the same method as mine?
I posted -
My method since I got here is to use the average of the BDF / ECB rate at the start and end of the tax period. That method was highlighted to the tax inspector when we first arrived, albeit it was for the 1 month in our first France tax year (December). Last year the calculation gave me 1.1572 which was pretty much the same as the connexion rate posted last year.
This year I get
| BDF 2 Jan 23 | 0.8863 |
|---|---|
| BDF 29 Dec 23 | 0.8691 |
| Average | |
| 0.8777 | |
| 1.13934 |
which is a bit less than the ECB average over the whole year of 1.1497
It’ll be interesting to see what the connexion / impot figures posted this year are.
They say they calculate it using an average of the month-end rates for December 2022 and December 2023.
You are supposed to use the rate on the day you received the funds.
Surely it is easier just to make a note of the amount received every time you receive it.
Oh wow, wouldn’t that mean alot of checking back and calculation? I know it would be for me, so keeping track would just be too time consuming and impractical for me.
You must be kidding! We have umpteen items of income & expenditure linked to UK rentals.
I find the French tax traumatic enough as it is without having to worry about what the exchange rate was on 7th October when Bob the plumber fixed the loo.
Put it into a spreadsheet, then it will total it up for you.
Easy peasy.
But I’d still have the pfaff of trying to determine the Banque de France rate on any given day.
I’ve used the Connexion rate for years without any problems on the part of the tax office. So for me this method is by far the simplest.
I presume this is for any personal sterling that has been transferred to your french account only and not for UK state pension payments?
Hi Shiba
I use the Connexion mag rate for any £ income that never hits my French bank account.
Such as UK rental income (we leave it in our UK accounts).
I guess if I had UK-source that was being paid into French accounts I would report the actual amounts received in €.
Not sure what other people do.
Sorry, Crabtree24, I didn’t read your post properly.
I see what you’re saying now.
In our case, the sums to be reported are never received in €.
The expenditure is incurred - and the income stays - in the UK.
I know my method is not the correct one as I do not, as @JaneJones says, calculate the UK income when it is received by us, but when it is received here, but it always comes out in favour of the taxman not us. So I am pretty confident it will not be questioned. And, as all the money arrives here anyway eventually, a tiny amount only is spent mainly on online books, it is a good indication of our total income.
What I do is simple, I report all of our incomes, originating both here and in UK, but use the actual rate of each transfer and apply it to the whole. As I said I always overvalue it but it doesn’t matter because they never demand tax even on that slightly inflated amount. If the time ever came when we slipped into the tax paying bracket, I would have to change the way I do things.
Regardless of any strict official position, having seen at close quarters how tax returns are prepared in a number of major countries, I personally think the most practical, non statutory approach is to use:-
I) an average exchange rate figure for recurring items eg rent, regular pension etc; and
2) actual (spot) rates for significant items eg a property sale or pension lump sum.
I think it is important to be consistent ie not ‘abuse’ matters, by using actual rates for some large items but averages for other large items in the same tax return.
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As I only do one drawdown a year from my pension and transfer most of it to France in one transfer, I’ve always put this down using the actual amount of Euros that has been transferred into my bank and used the same rate for what is left behind in the U.K. If I used the official rate of € 1.139 for last years drawdown amount, this would definitely be favourable for me (I got € 1.159). So, which rate should I actually use ?
In your place I would report the actual amount just in case the Fisc ever asks for proof. In which case they would immediately see that the supporting document (presumably your French bank statement) and the amount you reported in the tax return matched.
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I don’t understand why there is any need to report individual transfers between the UK and France and convert to €.
I receive two pensions from the UK here in France: State and Unilever. They do the conversions into € and those numbers go on my tax return.
I have two further pensions which stay in the UK in my HSBC a/c (I know, this sounds very grand - but the amounts are small). I declare these in £ adding up the whole year and convert the single annual figure from £ to € using the advised rate. And that’s it.
If I then move some money from my UK a/c to my French a/c that’s up to me and does not need to be declared - the French tax authorities have all the info they need from my total income data - 2 pensions in France in € and two pensions in UK in £.
We also declare rental income from our flat in the UK and our gite in £ for the year and then convert the single figure for the year to €.
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Obviously I don’t report individual transfers, meaning just money I’ve moved myself from our UK accounts to our French accounts.
I do however have to list umpteen individual items of expenditure - including details of the date the expenditure was incurred and the amount - for our UK rentals because our total rents are over €15 000 so we’re required to declare them under the régime du réel.
For income generated in the UK, like you I total everything and apply a single exchange rate (the one suggested in Connexion). The same rate as for items of expenditure.
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Ah, ours isn’t so still just a micro bic (I think that’s what it’s called).