Trying to unravel our french tax

(Caryn England) #1

Good afternoon everyone,
I have been reading french-property.com guides on french tax,but I am still unclear where we stand, I would be extremely grateful if anybody could clarify please.
Our income comes from letting furnished property in the UK, we both claim our personal allowance and pay tax on the rest (in the UK). We declared this on our french tax return and no further tax was due (we have private health cover so no social charges).
We now want to rent out a furnished french property and are not sure if we will pay income tax and social charges here in France or not. If we obtain 10,000 euros per annum from the house,5,000 each, as this is less than 9,807 euros do we pay no income tax or are our UK earnings taken into consideration? If we pay no tax are we also exempt from social charges? If we have to pay income tax and adopt the Regime Real what social charges would we have to pay?
With many thanks for any help with this!

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(stella wood) #2

Hi Caryn… I thought all this had been thrashed out for you, some time ago.

ALL income has to be declared… that means income from wherever.

Rental Income (Revenue Foncier) has its own section on the Declaration…

Why not go back and speak with your local French Tax office… they will be able to help you…

As far as I am aware CSG is applicable to investment income/rental income… that sort of thing… I believe that if your income is below a threshold CSG may (in part) be refunded… but, as I say… your Tax Office will tell you all about it.

http://www.vie-publique.fr/decouverte-institutions/finances-publiques/protection-sociale/financement/qu-est-ce-que-csg.html

best of luck

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(Anna Watson) #3

I haven’t seen the previous thread that Stella mentioned, but:

sounds rather if you are expecting to make individual declarations in France, but if you are married or pacs’d you make a joint household declaration and you get the tax allowance for a two-person household. You don’t each get a single person’s tax allowance.

You were lucky with this because last year some people were charged social charges in spite of having private health cover and URSSAF refused refunds on the grounds that they were eligible for PUMA cover even though they hadn’t taken advantage. Seems to be a very grey area, see what happens this year.

But as Stella says, ask your tax office about the tax and social charges - it’s what they’re there for!

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(Caryn England) #4

Hi Stella,
Yes we appreciate all income has to be declared, I guess what I am asking is if we have claimed personal allowance on income in UK, can we also claim personal allowance in France on french income?
Social charges seem more complicated, perhaps we can sort the tax first

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(Anna Watson) #5

You don’t actually “claim” anything. You just write the figures in the boxes and the tax office does the rest.
Basically: you declare your total income and the fisc works out what tax would be due on it in France. The household allowance is offset against total income. Then, for any income that’s taxable in a different country, France credits back the amount of tax that would have been payable on it in France. Thus you are not taxed on anything twice.
So yes you are given your full household allowance in France, but it is not just offset against the French income, it is offset against all your income.
Again, you seem to be thinking that the two sets of income are kept totally separate in the calculation but they’re not, they’re all part of the same calculation and they’re all included in your RFR, the only thing is that an extra calculation is done on the UK rental income to give you your credit.

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(Jane Williamson) #6

We are just receiving our second rebate of social charges illegally charged by the french government because we are covered by an S1.

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(Jane Jones) #7

Tax and social charges are very separate things. We have french rental income, but because of the way our business is structured we pay little or no french tax (last year it was 80 euros). But we do have to pay social charges which are a LOT more!

However our overall revenu fiscal de référence is above the threshold (it includes our UK income too) so if yours is low then that could make a difference.

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(Anna Watson) #8

My understanding is that if social charges are due on a revenue stream, then they’re charged from the first euro. So in that sense they’re very simple, the only issue is which (if any) income streaams they are due on, which is less simple.
I declare tiny amounts of UK bank interest and social charges are calculated on that, although because it comes to literally a few euros, they don’t actually bother collecting it and it’s written off.

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(Jane Jones) #9

I was sort of responding to the reference to the 2016 URSSAF debacle, as the calculation that plopped (wrongly) through many people’s doors did levy the charge above the threshold only.

The revenue streams exempt from social charges are UK government pensions, and state pensions once you hold an S1. I thought, perhaps wrongly, that you would still have to pay social charges on other UK income streams such as rental income even if you held an S1. It may well be that if you are not affiliated to health system at all then this wouldn’t apply, but seems very un-French. As Anna says the view is taken that since you are eligible for PUMA you pay charges even if you don’t use it - and social charges are about much more than health. It could be that you have escaped so far as you have had no french income at all, so didn’t trigger the question.

Talk to the tax office …they know.

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(Anna Watson) #10

Don’t confuse the cotisation subsidiaire maladie (levied by URSSAF, goes towards paying your own personal healthcare so you’re not liable if you have an S1) with CSG/CRDS (levied by the tax office, classed as a tax and nothing to do with your own personal healthcare, and is what most people mean when they say “social charges”). They are two entirely separate charges, calculated differently, and according to personal circumstances you may be liable for one, or the other, or neither, or both.
You could say the only thing they have in common is that they are both apt to turn into a debacle :rofl:

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(Caryn England) #11

Thank you everyone for your replies and thank you Anna for clarifying, much appreciated.
According to David Yeates (french-property.com), UK rental income is not liable to tax or social charges in France,so I sincerely hope we don’t pay anything in future years,we have paid the UK tax man enough already!
So I understand we pay tax and social charges on any french rental income in France and that rate is determined by adding the french rental income to our UK income. I think our best bet is to try to register the french house with the french tourist board to try to reduce our tax bill as much as possible.

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(Fay Gotting) #12

Are Fonciers and Habitation classed as social charges?

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(Graham Lees) #13

No, entirely separate.

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(stella wood) #14

Taxe Fonciere is the Owner’s Tax…
Taxe d’Habitation is the Occupier’s Tax…

Sometimes the Owner is the Occupier… and sometimes they are different folk…

Social Charges are on certain forms of Income…

Non of the above is Income Tax (french)… that is something else…

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(Jacqueline de Marigny) #15

To enjoy the life and the amazing services in France, guess what ? People pay tax to fund them, and although I appreciate not wanting to be wrongly taxed I get very fed up with people trying to get out of contributing to this society positively. It just makes me understand why some French friends are quite affronted when they see UK people with a good income from UK investments and pensions still trying to find ways to get around paying tax on a French property that is bringing in an income.

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(Caryn England) #16

Forgive me Jacqueline, you are putting words into my mouth, I am trying to reduce my tax bill not getting out of paying it. I have never dodged tax in any of the countries I have lived in, but I confess I have never volunteered to pay 40% when I could have paid 20%, perhaps I am alone in this?

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(stella wood) #17

Caryn… I doubt you will be being charged 40% instead of 20%… if you told the Tax Folk your full situation when you saw them earlier this year. :thinking: :zipper_mouth_face: They don’t normally get things wrong…

How will getting your French Rental Property registered with the Tourist Board … affect your Tax bill… ??? could this be interesting for other folk ??

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(Caryn England) #18

The french tax office in Dax were extremely helpful. No I mean over 35 years working in the UK I have never volunteered 40% if I could pay less.
I believe that if a property is taxed under micro-entreprise rather than regime reel ,the standard allowance is 50% of gross income,but if the property is accredited (meubles de tourisme classes) it benefits from a higher fixed percentage cost allowance of 71%.The property has to be classed through the French national tourism development agency, Atout France. The property would have to be inspected by an accredited body from Atout France which would probably cost several hundred euros,but if it was accepted as a meubles de tourisme then the rental income would be taxed on 29% of gross rental income rather than 50%. I appreciate the actual rate of taxation depends on our individual circumstances (ie UK income) but this would potentially reduce our tax bill. Not a means of avoiding paying any!

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(stella wood) #19

Sounds as if you are gradually getting there… :relaxed::relaxed:

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(Jane Jones) #20

Do your calculations. Regime reel is more paperwork, but with allowances for things like depreciation you can end up paying less tax than using a micro-regime or equivalent. Depends if you like paperwork as you have to keep track of everything to make it work… however if you know your overheads will be low then micro is probably the way to go.

There are different organisations authorised to classify holiday rental properties. Look around as prices vary. Ours was 135 euros for 5 years.

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