You still happily married, George?
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Don’t forget I made a request too…
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Get in the queue, Jane.
He’s the polar opposite of my husband. Who thinks a tax return is a set of drawing pins you send back to Amazon.
1st: Sorry you’re right. Not all NS&I savings are UK tax-exempt. Some are (Premium bonds and direct ISAs).
2nd: yes you’re right, HMRC will tax it. But I was under the impression that double taxation treaty meant you got taxed in the country of provenance (UK), and then you don’t pay tax in the country of residence (France).
I’ve just re-read the form 2047 guidelines and I’m wrong:
Whilst that is true for dividends it’s not the case for bank interest:
According to this you get taxed in the country of residence. So not sure how to declare UK taxable bank interest in the UK, without getting taxed.
I only have UK tax-exempt savings hence my mistake. And yes, I’m a french resident for tax purposes.
OK, thanks for clarifying Fred.
Hello Helen,
No one has asked the question; might it not be simpler to pay the UK taxes in the UK (using the self assessment return) and then simply filling in the “crédit d’impôt égal à l’impôt français” box on the French declaration as one does with property lets?
No, you cannot choose where you pay your taxes. This is all part of the international tax agreements.
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If that is the case why is there a "crédit d’impôt égal à l’impôt français” box, and where does it say in the treaty that you cannot choose to be taxed in country of origin and not use the "crédit d’impôt égal à l’impôt français” option?
In the past (pre 2016) all interest was taxed at source and the treaty has not changed to my knowledge…
Also private pensions and annuities are taxed at source.
In either case the net result is the same for the tax payer, but paying in country of origin is surely fairer for the countries involved, otherwise France receives all the tax earned in the UK, and the UK gets nothing; was that the original intention of the treaty?
But, given that services are used in France, why would it be fairer to pay the taxes to the UK?
When interest was deducted by HMRC at source in the UK then actually the correct procedure would have been for the tax on it to be reclaimed from HMRC based on the fact that you were not a UK resident. These days you prove that you are not UK resident by providing HMRC with a completed France Individual form, stamped by your local French Tax Office, for each UK source of income.
Meanwhile the gross amount of the interest you received in the UK, including the amount that had been deducted for UK tax, you would declare in full on your French tax return and you would be taxed on it all at French rates payable to France.
This, no matter how much admin effort and followup effort, or how much waiting time might be required for you to pursue your refund from HMRC meanwhile.
A tax treaty, even where it exists between 2 countries, might not actually allow a tax credit in one country for tax of some types in the other. So you’d be in the same situation as if there hadn’t been a treaty for those eg you’d pay tax twice - once in each country on the same income.
So the fact that tax on bank interest is not deducted at source any more in the UK is saving you admin and waiting time to get your money back from HMRC. But doesn’t change the fact that you’re still going to pay tax on UK bank interest to France if you live here.
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Moot point: I am personally of the opinion that taxes should be paid where earned regardless of where you live; that is certainly the case with property, business taxes and VAT for example.
There also doesn’t seem to be anything unfair about it given that, if the situation were reversed, someone resident in the UK who earned interest on French bank accounts would be liable to tax in the UK only.
Here’s what the HMRC Community site had to say on the subject recently:
“Article 12 of the tax treaty covers interest and advises that interest arising in France and is owned by a resident of the UK, is only taxable in the UK. (UK/FRANCE DOUBLE TAXATION CONVENTION ). If the individual is a UK resident, they should request a certificate of residence (How to apply for a certificate of residence to claim tax relief abroad) which they can use to claim the tax back from the French tax authorities. The UK resident should declare the gross interest in the self assessment tax return, but cannot claim a foreign tax credit, as tax is not payable in France on the interest.”
But when it comes to tax, personal opinions don’t count, which is perhaps just as well because opinions are like a*seholes. Everybody has one.
Sorry, not correct on VAT and not completely correct on business tax either in the case of Britain and France.
VAT for physical items sent from UK to a private individual in France can be deducted by processing the item as an export so UK VAT is not charged. VAT is then charged by whichever EU country the item first lands in even if the item’s end destination is a private individual in France.
For businesses in France receiving, the rules are different.
If I as a British narional living in France own and drect a UK company, say, then the profits of that company are actually subject to tax in France due to my living in France. Obviously this field is complicated and so you’d have to consider very carefully how you structure and operate your business. That depends on a lot of things - best taking professional advice.
I follow what you are saying , but it still begs the question why is there a box in the French declaration form under foreign interest: “crédit d’impôt égal à l’impôt français”, which is what one fills in in the case of revenu from letting property.
Why is the box their along with its sister box: “crédit d’impôt égal à l’impôt étranger” if it no longer used?
Because not every French taxpayer receiving income from property abroad has the benefit of a tax treaty between France and the UK that allows such a tax credit.
French taxpayers may be receiving income from property all over the world. A number of countries where this property may be, have a tax treaty with France but many may not.
I did say that it was a personal opinion (not government policy), and it was in reply to someone’s rhetorical question.
Exactly.
Here’s how the CIC explains it:
“Des conventions fiscales pour éviter une double imposition
Un crédit d’impôt égal à l’impôt étranger
Si une convention fiscale est signée entre la France et le pays où vous avez perçu des revenus locatifs, un crédit d’impôt égal à l’impôt étranger peut vous être accordé. Vous payez l’impôt dans le pays étranger et vous déclarez ces revenus fonciers au fisc français. Ils s’ajoutent à vos revenus fonciers français et entrent en compte dans le calcul de votre impôt français. Un crédit d’impôt équivalent au montant de l’impôt payé à l’étranger vous est alors accordé en France.
Si cet impôt étranger est supérieur à l’impôt français que vous auriez dû payer avec la méthode de calcul du fisc français, vous ne pourrez pas l’imputer sur l’impôt dû au titre des revenus globaux. L’excédent est en quelque sorte « perdu ».
- Dans le formulaire n° 2047, remplissez le cadre 4 ;
- Puis reportez dans le cadre 7 le montant des revenus sans les charges et sans déduire l’impôt payé à l’étranger, ainsi que l’impôt payé à l’étranger ;
- Reportez enfin le total de l’impôt acquitté à l’étranger au cadre 8 de la déclaration n° 2042-C.
Un crédit d’impôt égal à l’impôt français
Selon la convention fiscale signée entre la France et le pays où vous avez perçu des revenus locatifs, un crédit d’impôt égal à l’impôt français peut vous être attribué. Vous payez l’impôt dans le pays étranger. Vous déclarez les revenus fonciers étrangers au fisc français. Ils s’ajoutent à vos revenus fonciers français et entrent en compte dans le calcul de votre impôt français. Un crédit d’impôt équivalent au montant de l’impôt français que vous auriez dû payer sur ces revenus vous est accordé en France, en principe quel que soit le montant de l’impôt effectivement payé dans l’État étranger.
- Dans le formulaire n° 2047, remplissez le cadre 4 ;
- Puis reportez en page 4 dans le cadre 6 le montant des revenus sans les charges et sans déduire l’impôt payé à l’étranger ;
- N’oubliez pas de déclarer le montant des revenus fonciers perçus à l’étranger au cadre 8 du formulaire n° 2042-C.”
Except it wasn’t a rhetorical question. I genuinely want to know why thought it was fairer that tax wasn’t paid in the country where services are used. It simply doesn’t make sense.
This is almost the definition of a moot point as the law has no interest in your personal opinion.