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A sad time for some…….. whilst others embrace the change

By Sue Regan
This article is published on: 5th April 2017

Now that Article 50 has been triggered, the UK has two years to negotiate its exit. There’s been plenty of speculation as to what may or may not happen and how the Brexit process will work, but the truth is no one really knows. Whatever your feelings are about the historic event of 29th March 2017, it is clear that there will be changes ahead. However, for the time being we are all EU citizens governed by EU law, and as far as we are concerned, it’s business as usual.

And, for those of us resident in France, at this time of year, it’s the Tax Return (Déclaration des Revenus) that is at the forefront of our minds.

As in previous years, the deadline date by which the declaration needs to be submitted to the French tax authority varies by department. For 2017 (income received in 2016) the dates for on-line returns are as follows:

  • Departments 01 to 19 – 23rd May
  • Departments 20 to 49 – 30th May
  • Departments 50 onwards – 6th June

If this is your first income tax declaration in France, a paper return is obligatory and these should be available from your local tax office or to print off on-line from early April. There is a single date for paper based returns, regardless of where you live in France, which for 2017 is 17th May.

For those of you who came to live in France during 2016, then you will need to make your first French tax declaration and declare all your worldwide income and gains, but only for the period since becoming resident in 2016.

Income and gains that might be tax-free in another country, for example, UK ISAs, premium bond winnings and Pension Commencement Lump Sums, must be declared, as all are taxable in France. Even for income that is taxable in another country, for example a UK government type of pension (i.e. civil service, military, police and teachers pensions, but not State pensions) and/or UK property rental income, the amount must still be reported in France and it will be taken into account in calculating your French income tax. You will then be given a tax reduction to take into account the fact that the income is taxable elsewhere.

It is also obligatory to declare the existence of bank accounts and life assurance policies held outside of France, even bank accounts with nothing in them! There are large penalties for not doing so.

Common Reporting Standards
Hopefully, many of you will now be aware of the existence of the CRS, which has been in operation since 1st January 2016 (not least because you may have been asked by your UK bank, or perhaps the institution that pays your private pension, for your French fiscal reference number). This basically means that all EU fiscal authorities and many others throughout the world (including the popular offshore jurisdictions of Isle of Man, Channel Islands and Gibraltar) are exchanging information on pretty much all things financial, concerning taxpayers living in one country who have assets in another country and/or income arising in another country. This includes investment income (e.g. bank interest and dividends), pensions, property rental income, capital gains from financial assets and real estate, life assurance products, employment income, directors’ fees, as well as account balances of financial assets.

No-one is exempt and therefore, it is essential that when you complete your French income tax return, you declare all income and gains – even if this is taxable in another country by virtue of a Double Taxation Treaty with France.

Finally, if anyone finds that they need to complete the pink 2047 form, this means that you have foreign income and/or gains to declare. If this is for any reason other than pension income and earnings, then perhaps you may benefit from a discussion to see if your financial situation can be improved by investing in something that is more tax-efficient for French residency.

Article by Sue Regan

If you are based in the Midi Pyrenees & Languedoc Roussillon area you can contact Sue at: Sue.Regan@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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