Hi all, a really dumb question as my first but here goes…
We’re doing our second French tax return and, despite doing one last year, I can’t remember or find an answer to this question.
We have rental properties in the UK for which we receive an income and this is taxed in the UK. We complete a UK tax return each year but the tax year is different so…
Do we use UK 2018-2019 figures or 2019-2020 figures for our French 2019 return?
Apologies if this has been asked before but having spent the best part of 2 hours trying to find the answer, I failed miserably.
AFAIK the fisc will accept an income figure based on either the UK tax year (April - April) or the French fiscal year (Jan - Dec) but be careful not to mix year on year.
So, if you used the UK figures based on April to April last year either do the same this year or cut off at the end of December declaring Jan - Dec next following year (There may be a discrepancy between these two years but you can always mention in the comments box that you are simply “normalising” the return for the future).
I hope that helps. If the majority of your income comes from the UK you may decide to stay with the April/April arrangement but it would be best to be consistent.
That said, our 4 pensions come from the UK under the UK tax year arrangement but I record the amounts received in a spreadsheet based on Jan - Dec and declare that result for a full calendar year.
Thus payments received after December in one year are recorded against the new year, as it were.
Remember to keep your UK tax records (for ever). The UK only requires you to keep 6 years IIRC but France could demand you justify further back and so French tax data is kept add-infinitum.
See this link.
Oh and yes, apologies. Welcome to the site
If you are completing French tax returns, I assume you are resident in France.
As I understand it, France has a double taxation agreement with the UK. Since France requires residents pay tax on all earnings, no matter where they are earned, it seems to me that you should be paying tax in France only. Have you advised HMRT that you are now resident in France for tax purposes?
But don’t jump just because I said that. Others may have a better understanding of the way this works.
Watch this space. . . . . .
Aren’t UK rentals only taxable in UK Mike?
You have to declare the income here but with the dual taxation treaty (like UK Govt pensions) there is a credit against tax you would have paid in France. Not sure about cotisations or whatever they are called these days though.
Hi Simon, I think logic would suggest that you should be declaring actual income for the year to 31 December 2019. I imagine the French authorities don’t much care how you declare your income elsewhere. If it’s really a problem to work it out then I would suggest declaring 3/12 of 2018/19 and 9/12 of 2019/20.
It would be helpful to know the official French advice on this but I imagine it would be informal rather than regulated.
I’m not sure this helps much but I hope you get it resolved.
Izzy x
@SimonTS
In another thread I posted some help and notes about declaring your income to the French Tax authorities and the tax expert in her newsletter made reference to this aspect:
Important dates:
You have to declare your revenue for the year 2019 (January 1st to 31 st of December). However, the tax office accepts that you use the revenue corresponding to the UK tax year.
This was on page 2 of her newsletter May 2020 Newsletter.pdf (1.0 MB)
I hope that re-assures you about your question.
For our UK income which is taxed in the UK (rental income and a gov’t pension) we use the correct calendar year Jan - Dec. Once you’ve set up a system it’s not hard to do, and since it is all part of the double taxation agreement anyway it makes no difference as you pay no tax on it here.
Thanks for the reply. I missed yours the first time but now see what you are saying. I’m pretty sure I just used the figures direct from out UK tax return last year and I think I will do the same again this year due to the reducing amount of interest we can claim against our tax.
The UK tax year being out of step with Europe (and most of the rest of the world) is really annoying, isn’t it? - and costly - I’ve been involved in a great many international projects over the years, and frequently had to effectively keep 2 sets of project accounts, with different apportionments, etc, because the UK persists in not using the calendar year like (almost) everybody else.
France requires you to declare worldwide income if you are resident in France but whether you pay tax on that income in France or not depends very much on your circumstances. Rental income is always taxed in the country f origin as are pensions derived from employment by central or local government (civil service, military, police, teachers etc but not NHS). Then a Brit would need to look at HMRC’s Statutory Residence Test to determine whether they are fiscally resident in the UK & required to pat tax in the UK on all UK income. In the most extreme case you can spend 350 days in France & just 16 days in the UK but still be UK tax resident.
The UK-France Double Taxation Convention (commonly called the Dual Taxation Treaty) ensures that you are never taxed twice over & tax paid in one country is credited in the other. https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3
Thanks for the explanation. I should have guessed that just paying tax where you live was much too easy! No doubt this arrangement provides remunerative occupation for civil servants, accountants and others. . . .
The Statutory Residence Test is designed to catch the international super rich who claim to be resident in some tax haven then spend their time in their multi-million pound properties in London.
