In past years I have taken the tax form into our local tax office and all they wanted to know was details of our pensions. In fact they work out the exchange rate and fill in the information for me. They have never asked if we have any other income. But having just read the article in The Connection where it says that all residence in France must declare their world wide income I am now worried that we haven't declared an income that we receive from shares dividends, which goes into our UK bank account in UK. All our income is declared on our UK Self Assessment tax form and we don't earn enough to pay UK tax. Of course ignorance is no excuse for not doing the right thing, and I am really worried. Can anyone give me advice on how to proceed, and will I be in trouble for not declaring this in all our previous french tax forms?
First the tax office cannot ask you to pay tax on incomes that should have been declared more than 3 yeras ago. As an example, undeclared incomes from year 2012 cannot be taxed since december 31, 2015. You are now accountable for the incomes of 2013-2014 and 2015.
Second, because of the 2008 Double tax treaty between France and the UK, what is declared and exempted one side should not be taxed the other side. The only issue with French tax office is that adding your pension + your dividends you may leap into another "tranche" (tax class with a different tax level). That means that you could have been taxed more on the basis of your pension only.
I recommend declaring your dividends this year as a proof of goodwill. For the 2 missing years, you can go to your local tax office and discuss with them or just wait, keep your UK Self assessments ready and pray ;-)
Hi Christian - many thanks for your reply, you have given me hope that it might not be as bad as I thought - well that was until I got to 'and pray:-'!! I wasn't taxed last year on our pensions - in fact I received a cheque for 19 euros from the tax office. I just hope now that I get a sympathetic tax official when I go with my relevant documents.
I would be extremely careful on what I disclosed. Honesty is the best policy but perhaps not the most prudent in this case. An issue that a lot of people have been hurt by is the mandatory disclosure of (bank) accounts outside of France. Apparently the tax law requires disclosure of all accounts held outside of France. Not the amount held inside of the account or insurance policy but just that it exists. I would appreciate clarification on this issue since I admit to being a novice. I am Canadian and I must report income in both France and Canada. Double taxation for me, consider yourself lucky if you are from a country that has a treaty.
Thanks for that David - poor you being in a double taxation situation. I will follow Christians advise though and submit revenue from dividends, which I had planned to anyway. I'm not too concerned about bank accounts as we only have one in England as well as our french bank account. I will also submit my bank details on a separate piece of paper as other people on this site say they have done. And then fingers crossed!
we declared our Uk (current) accounts online this year, as didn't know to do this previously.
Just had to list the account holders type of accounts and when opened (or closed);
we definitely don't get interest paid on them, so what's the point?
AFAIK Rachel, it's to do with the dreaded money laundering issue.
We have in previous years added a list of our UK accounts on a separate piece of paper but this year, for the first time, we filed on-line using a local French support guy.
As he hadn't checked the box 8UU on page 4 on form 2042, we asked him to explain the reason and he responded by saying that as we had already declared these accounts, we didn't need to do so again unless there was a change.
Now, I'm quite happy with that. The curious thing about the French fisc is that if you do (or omit) something with good reason and can back it up with appropriate paperwork, it is unlikely that they will impose a penalty. I'll be keeping a copy of his response with our copies of the submission...
Hi all - I'm new to all this and when I paid my Taxe Fonciere for my property they said you can come back in May for an income tax form. I have no income in France whatsoever so do I complete a nil return? If I complete one does this mean I am resident? I'm not even clear that I am - I'm UK based but spent more time here last year (2015) because of buiding works than I anticipated. What are the rules for residency? Any advice gratefully received. TY.
Steven. From the French Property website:
"To be ‘fiscally resident’ in France, under Article 4B of the Code Général des Impôts (CGI) only one of the following three conditions need apply:
- It is considered you have your main home in France;
- You carry on a professional activity in France, either self-employed or as an employee;
- Your centre of economic interests is in France, e.g. investments, business.
In order to assist with the determination of residency status the general rule that is applied is that if you spend 183 days per calendar year in France then you are deemed to be resident.
But you would also be deemed to be resident if any one of the other conditions stated above applied.
If you arrive in France with an intent to becoming resident, then strictly speaking you become resident when you step onto French soil."
So, without knowing your precise circumstances, it's somewhat difficult to advise directly...
But yes, if you are considered a resident of France, even with no income here, you are obliged to complete a tax return and to declare your world wide interests.
As far as I know, if you are not resident in france and have no income that arises in france eg. from renting a property then you do not have to complete a tax declaration. Rules for residency always seem a bit vague to me. The simplest test seems to be whether you spent more than 183 days in a country in any given year, although I am guessing that nobody other than you would have a clue whether you have done so or not :-) This site has a summary of UK residency tests: http://www.cambridgetax.co.uk/ctp/New_Residence_Rules.html
Oh dear. I am getting so worried about all this tax business! Because my state pension, income from house and my civil service pension took me over the allowance in the UK, my state pension was added to my civil service pension so that the Civil Service Pension department could deduct the tax as instructed by HMRC. After two or three years of mayhem (they said I owed them money, then they owed me money etc etc. On and on until I thought I would go mad!). Thank God it seems to be working okay now. I complete a French tax form annually and have only ever received a "0" return. But on reading the above it seems that I HAVE to pay tax on my State pension in France. I really do not know what on earth will happen if I try to get the State pension "untied" now. I am at my wits end to know how to proceed. Any advice PLEASE?
Norah. Which bit where says you have HAVE (sic) to pay tax on your state pension in France?
And what do you mean by getting your state pension "untied" now?
Graham, I keep reading on SFN and others, than your state pension must be taxed in the country in which you reside. In my case this is France. But I simply dread contacting HMRC and saying that, after all the trouble they had getting my tax situation right, I now want them to take my state pension out of the UK tax equation and get it taxed over here in France. I just know it will take them probably more than a year to do it and then it won't be "done right". I do not trust them to understand or organise it and meanwhile I could end up being taxed in both countries!
I understand your concerns, but unfortunately these are not matters in which we have a choice. What you need to do is to contact the very helpfull and friendly staff at the HMRC Centre for Non-Residents in Nottingham. I suggest that initially you should telephone them, and I am sure that you will be pleasantly surprised by their knowledge and efficiency in these matters. They will happily sort these matters out for you, and will arrange for the relevant parts of your income to be correctly taxed in the appropriate country.
Yes, there will be a form or two to be filled in, but the Centre for Non-Residents will guide you through it all. From what you have said previously, it sounds as though you are currently being excessively taxed in the UK, and the nice people in Nottingham will help you to obtain the appropriate refund.
There really is no need to be frightened or concerned about sorting things out properly, and you'll no doubt sleep easier once it is done.
I, like you, am in a double taxation situation. I am from the US. For several years I filed my French taxes through our local Fiducial office, but they stopped doing filings for les etrangers three years ago, so I went to the local tax office with my already filed US tax form and let a jolly fellow there do it for me. It was quick and painless until he retired. Last year when I went in I was placed at the mercy of two ladies who were over-the-top fonctionnaire. They asked about my US Social Security which only pays about $14k per year. I explained that no one had previously ever included it as French taxable income. Au contraire said they as they included it in the filing. I explained that for a decade I had never paid on the US social security before. They said that henceforth I would, but there would be no penalty for the previous filings. Grin and bear it.
In January this year I received a letter from the République Française tax folks informing me that I had been overcharged for the 2014 filing and that in March I woud be reimbursed. Sure enough in March a check arrived in the amount that the charges for the US social security payments had increased the 2014 filing. Welcome to France, where the official interpretation of the tax codes is an ambiguous affair at best.
Thanks Graham - clear & succint - I like it!
You seem to be 100% on top of things - just as a follow up - as I live in both countries - would my residency swap from one year to the next if I spent the 183 days in the UK this calendar year? Does it or can it just flip from one year to the next? One final point if I spend 4 months in UK, 4 months in France and 4 months in Spain - where do I reside as none of the above applies to me? I really appreciate any pragmatic feedback - Merci beaucoup Graham.
Hi Don - my experience was similar to the one you had with Good Fonctionaire Bad fonctionaire. My first years visits were to G.F who was really helpful, kind, filled in my form, he was sent to another office. Next two were jolly kind, helpful, and filled in my form. The last year's BF a woman - no offence I am a woman!! - She was awful, threatened me with all kinds of dire consequences if I didn't find out if our UK pensions was taxed at scource. And that was before I knew about declaring income from dividends. Which is why I am so worried about this year when I will be declaring all our income. What if I have to see her again? The 'praying' I will be doing will be that she too has moved on - don't care where!
Thank you for your kind reply Robert. I have been to hell and back with HMRC, paying hundreds of pounds and then discovering it was too much. Getting it straightened out and then receiving the same bill the following year. I cannot begin to tell you how sick with worry I have felt. Hours spent on the phone daily and each person passing me to another who disagreed with what the first person told me and telling me to do something else. Tax forms returned etc. But because it is all working now, after all these awful years, I am horrified at the thought that I may have to go through this again. Indeed, so bad has it been that I think I would rather return to the UK! We intend to do so eventually and I know I will have to have my tax matters straight there or heaven only knows what we will go back to.