Hello.
Long term lurker, long term resident in France but working part time in the UK.
I have what I think is an unusual situation summed up as who gets my tax first!
Already doing two tax returns, tax resident in both countries and use a French accountant for the French return. My situation is …
French tax year 2024 due mid 2025.
UK tax year 2024 due end 2025.
UK dividend receipted october 2024.
My French accountant is saying France will get 1st dibs on the tax owed for the dividends but my question is how do i not overpay in the UK. I am aware of the double tax treaty and am familiar with HMRC pages online however they seem to be aimed at UK treatment of foreign income not UK treatment of UK investment income but having already paid some tax in France (albeit at a lower rate that I would pay in the UK).
Any input gratefully received unless it is to just say speak to a UK tax expert (which will come in due course!!). I am hoping I offset the tax already paid in France and pay the balance remaining in the UK.
Hello and welcome. It is not a UK tax expert that you need, they will not necessarily have a clue about what other countries impose.
As France insists that their residents are taxed on world income, they will, as your comptable says, have first dibs and allow the double taxation agreement to be brought into play. You really need a comptable who understands the double taxation agreement between France and the UK as there is so much riding on your actual position with things like paying witholding tax and social charges. This is what I do and all I can advise. Maybe someone else can concisely tell you waht is what - let’s see…
Perhaps I’m too simplistic but I only declare things that are properly taxed in the UK in my UK tax return. I only include income from work carried out in UK (which I no longer do), Uk property rental and Gov’t pension.
So dividends which are paid gross are declared here.
And an Irish holding that is net and has withholding tax automatically deducted so I declared here too.
But now you make me doubt myself! I will have to check, which is a pain as I’ve just refiled all the papers for this year’s French return having done my spreadsheet.
One can pay tax in both countries (as I do) but I don’t think you can be ‘tax resident’ in both because your country of residence is where you spend the most time.
Fyi, whilst it’s not that common, there are definitely scenarios where people can genuinely be dual tax residents. Typically they might have homes, personal lives and substantial assets in both countries - often fairly wealthy people! Or those that work a lot of time in both countries.
Almost without exception, every tax treaty I’ve ever looked at contains the so-called ‘tie-breaker’ clauses to help both the taxpayer and tax authorities determine which country has the closer fiscal ties. That in turn allows countries to determine which country has first ‘dibs’ at taxing a particular source of income or gain, and which country has to give credit for that tax. Grossly simplifying, but you get the picture…
Thanks for the input but still looking for an answer!
I am tax resident in both tax jurisdictions and I got my dividends gross, I am comfortable with the French tax return and agree that France gets first dibs however more concerned that whilst I pay what I owe to HMRC I do not overpay to HMRC.
I do think I need a UK tax expert as whilst HMRC regs are relatively clear (in the way only HMRC can define clear) areas like article11 which talks dividends melted by mind a little yesterday!
I will continue my quest and if I get clarity will update this, plenty of reading ahead.
p.s. thanks George1 I agree, article 11 on dividends is pretty clear on the first dibs question.
Hi Bob. I’m making a rash assumption that although you say you’re resident in the UK and France, you have closer fiscal ties to France (see my post above). In other words, the UK only gets to tax the UK dividend at the maximum of 15% and France will tax it at your marginal rates less credit for any tax actually paid in the UK up to 15%.
In terms of timing/cash flows, for an October 2024 dividend, your 2024 income year (2025) French return would be filed this spring/early summer will presumably lead to the tax being paid this autumn in installments. On the basis you won’t have paid any UK tax on the dividend (as they’re paid from post tax income of a company) you’ll pay the full whack of French tax. You then file your UK return to 5 April 2025 by 31 Jan 2026 and pay any UK tax due on the dividends, up to a maximum of 15%. You then have to potentially refile your French return to include the UK taxes now paid, and assessed
Nowadays they are generally paid gross in the UK as they should come from after-tax company profits. People don’t also generally need to report them on UK returns due to the availability of annual allowances and the special dividend allowance (£500).
Appreciate it George, not rash at all and your understanding is per mine (and yes my life is in France i.e. wife/house etc). Now I just need to consider which form for HMRC, i am a little ahead of time but like to prepare
The fun never stops and I appreciate anybody still listening!
I am not a dual resident rather have tax residency in both, i qualify as UK tax resident due to the RDRM11560 rule alongside 1 other ‘time in the UK type’ rule.
Live in France, hotel in the UK whilst working PAYE, so i believe i do not qualify for dual residency.
I do benefit from the DTA.
My expectation is that HS263 covers it meaning I likely need to complete SA106, I hope that I just have to declare to HMRC what has been paid in France and it offsets what would have been due in the UK.
As an aside it would be very interesting to see whether HMRC is a net gainer or net loser iro DTA as the French taxman will receive a fair chunk of revenue from me simply through the timing differences between the tax years whereas it seems reasonable to have to pay dividend tax on UK assets in the UK (like my PAYE).
I’m afraid this makes no sense. From the UK’s perspective, you are either a resident of the UK or a non UK resident.There is no other status.
If you haven’t already done so, you need to definitively determine your UK residence status using the Statutory Residence Test. That will lead you to either dual UK and French residence, or UK non residence, French resident status.
If you are a UK resident, then assuming you are also a French resident, you are a dual resident. Back to the guidance already provided.
If, alternatively, you are now not a UK resident, then life becomes rather simpler and you simply report to HMRC UK source income eg earnings for UK duties, dividends from UK companies etc.
The French tax reporting situation remains largely unchanged, regardless of your UK residence status, assuming at all times you and your home life.(your wife, house etc) remains in France.
The French have indeed taken first dibs of the dividend tax and will be setting up a payment plan for me starting in sept … yay.
I am now looking into what I expect to be a drawn out process with HMRC about having already paid said dividend tax in France, using the online portal HMRC are saying I owe a chunk of tax (before any conversations around dual tax) for which I will be trying to offset what I will already have paid in France. I think a combo of SA109 and HS302 are required, there was me hoping I could fill in a box and attach a form on my self assessment.
So for those still listening I am confused by the HS302 examples on restricting the maximum rate of UK tax applicable
e.g.
french tax paid on UK dividends = 20.3% (I have an S1)
UK self assessment tax rate = 39.35
Couple of questions, do I not just enter an amount of French tax paid on the form with proof?
Anybody recommend a UK tax self assessment guru I can use for this year only, I do not expect to ever take dividends of this value again and other years have been easy to complete the self assessment.
Hi Bob, thanks, it’s always useful to see updates following earlier exchanges…
The main issue is that what you have currently paid/will pay in French tax on a UK dividend is largely irrelevant as far as HMRC are concerned. The dividend is UK source which means that the UK has taxing rights limited to 15% (under the treaty) and France will tax the lot, less a credit for 15% UK tax.
You therefore need to persuade HMRC, using the Non resident page of your self assessment,.and HS302 that their ability to tax the dividend income is limited to the treaty rate of 15%. This is on the assumption you can prove to them that as a dual tax resident you have closer ties to France. (Forget other % rates for dividends - that’s a set of calculations you don’t need for this purpose.)
Ultimately the treatment of the dividend will be identical - whether you are a dual resident with closer ties to France, or a UK non resident/French resident.
At the end of the day, when the ‘smoke of battle’ has eventually cleared, your typical £100 UK dividend will have suffered 15 % UK tax, which will be directly creditable against your full French tax liability on that same dividend… Fortunately as you have an S1 there are no additional CSG/CRDS charges.
That’s correct. Complete HS302, scan and upload it into SA Online using the functionality of attaching other documents, as I rather doubt SA online contains a form HS302.
I would simply enter on page 4 of HS302 the gross £ dividend, then in the next box the 15% figure, then show what that gives you (ie the actual 15% of gross dividend) and add in Article 11 (being the dividend article in the treaty). You’ll also need to show what the UK tax would have been without the treaty, the difference between that and 15% is the amount of ‘partial relief’ you are claiming on HS302.
No, it’s irrelevant to the UK calculations which focus entirely on the UK tax due
