It’s that time of year again where we all must start thinking about submitting our French tax returns.
Here are my 5 top tips for completing your tax return.
Viewing posts categorised under: Tax in France
French Tax Returns
By Michael Doyle - Topics: France, Tax in France
This article is published on: 7th March 2023
07.03.23
1. Gather all necessary documents: Before you start preparing your tax return, make sure you have all the necessary documents, such as your income statements, receipts for deductible expenses, and proof of any tax credits you may be eligible for, the figures taken from your bank account(s) and the relevant exchange rate(s).
2. Choose the right form: France has different tax forms for different types of taxpayers, so make sure you choose the right one. In general most people will need to declare their income on the main form (2042) and its related forms (2042C and 2042 pro), the 2047 for all foreign income and the 3916 for foreign bank accounts and investments.
3. Fill out the form accurately: Take your time to fill out the form accurately and completely. Make sure you provide all the required information, including your income, expenses, and any tax credits or deductions you may be eligible for. Remember to declare all bank and investment accounts as any omissions can lead to high penalties.
4. Submit the form on time: The deadline for submitting your tax return in France typically falls in May each year. Make sure you submit your form before the deadline to avoid any penalties.
5. Consider getting professional help: If you are unsure about how to fill out your tax return, consider getting help from a tax professional. This can help ensure that your return is accurate and that you are not missing out on any tax benefits.
This is also a great time to review your own financial planning needs.
Due to recent uncertainty in the markets many people are keeping their money in the banks.
Purely for illustrative purposes (as inflationary pressures are currently decreasing), if inflation did persist at say 7% for 10 years your spending power would halve over this period. Inflation across Europe has been higher than this throughout 2022.
Now is a good time to speak with your financial advisor.
Tax credits in France
By Katriona Murray-Platon - Topics: France, Tax in France
This article is published on: 9th January 2023
09.01.23
Happy New Year! I wish you all a very happy, healthy and prosperous year in 2023! I hope you all had a nice Christmas. We made it to Disneyland in spite of the train strikes in France and then onto the UK for our first British Christmas since 2018! It was good festive fun!
As from 15th January 2023, the tax office will pay you a 60% advance on some tax credits and tax reductions. These include the tax credits/reductions for charitable donations, home help costs and childcare costs. This will be 60% of the amount declared in 2022.
In my last Ezine, I mentioned the fuel allowance. Now, since 22 December 2022, there is an allowance of between 50 and 200 euros for those using logs or pellets to heat their homes. This is for people with less than 2260 euros income per month for a single person or 4750 euros for a couple with 2 children. You will need to request this payment by going to this website https://chequeenergie.gouv.fr/beneficiaire/eligibilite.
Since 1st January, receipts and bank card receipts will only be printed if you specifically request them. Also, from 1st January, companies (Entreprises individuels and SCIs) can do their own formalities online on formalites.entreprises.gouv.fr
No need to throw out your equipment when it breaks down. From 15 December 2022, it is even cheaper to repair your household appliances. There is a now a government allowance of between 10 and 45 euros off the price of repair depending on the type of appliance which works out to be around 20% of the repair costs. This only applies to appliances that are no longer covered by their warranty. For more details and to find an approved repair company go to: https://www.ecosystem.eco
Finally, in Spectrum news, from 16th to 20th January I shall be joining my colleagues for our annual conferences at the Gleneagles hotel in Scotland. As you know my name is Scottish and my father and his family are from Scotland, so I am very much looking forwards to going there and celebrating Spectrum’s 20th anniversary!
After five full years in the business I am beginning to get a sense of how variable each year can be. We have had three very strange years from covid and lockdown, to coming out of lockdown and getting vaccinations and then last year the war in Ukraine and inflation. Some analysts suggest that inflation may subside in 2023 but stop short of actually predicting this. Nobody has a crystal ball but I know what I do have that’s important which is my family, my friends and my clients. I’ve got you and you’ve got me, so whatever 2023 holds, I know that we can see it through together!
All the best for 2023.
Financial update in France
By Katriona Murray-Platon - Topics: France, Tax in France
This article is published on: 6th December 2022
06.12.22
The fuel allowance, tax returns & retirement planning
So here it is, Merry Christmas! I hope that you are having fun or planning to do so. There is much to organise before the end of the year, so before you get too wrapped up (excuse the pun) in Christmas preparations, I wanted to fill you in on some bits of news/financial points for the end of the year.
Given the increase in energy bills, the French government shall grant two one-off fuel allowances to help people pay their energy bills. Around 12 million homes will receive a one-off energy cheque. If you are eligible for the fuel allowance you should receive this €200 cheque automatically,. If your taxable income (revenu fiscal de référence par unité de consommation (RFR/UC)) is greater or equal to €10 800 € and less than €17 400, you will receive a cheque for €100. This cheque will be sent automatically from the end of December, you do not have to do anything to get it.
For the homes using “fioul domestique” : If you have already received the energy cheque for 2022 and you have used it to pay for your heating from a “fioul domestique” supplier you will automatically receive another cheque for €200 from November 2022
If you haven’t received this yet or you want to check whether you are available there is a website here https://chequefioul.asp-public.fr/ and through this you could receive a cheque for between €100 and €200 depending on your situation. If you haven’t received any cheques and you can’t make a request on this website you can contact them via this website: https://chequeenergie.gouv.fr
For those of you thinking of replacing your heating system with something more energy efficient, since the 29th October, the lower income households could receive €5000 of state aids (instead of €4000) and other households could get up to €4000 instead of €2500.
The annual social security ceiling (plafond annual de la Securité social) which is used to calculate various retirement contributions and the maximum allowed amount of benefits and French pensions has increased to €43,992. A monthly maximum of €3,666 will apply from 2023. This is the first time that this has increased in three years!
Please note that you have until 14th December to correct your 2021 tax return on your personal account on the impots.gouv.fr website. After this date you will have to correct it using a paper return.
The 15th December is the last day to pay the taxe d’habitation for second home owners in France. You have 5 extra days if you pay online or by direct debit.
If you are self-employed in France and earn over €5000 per annum, you will have to pay CFE. This is a local tax and is based on the rental value of the space you use for your business. If you don’t rent premises for your business, you have to pay the minimum CFE and this will be calculated on your annual turnover. It all depends on the rate applied by your local authority. The CFE must be paid by 15th December. You can also spread the payments out over the year.
Finally, if you are still actively working in France and are likely to do so for the next 10 or 15 years or more, and you pay tax at least in the 30% tax bracket, it may be worth opening a PER. If you already have a PER, and you have some money to invest in it, make sure you do this by the end of the tax year, ie 31st December 2022. If you are in the 30% tax bracket, 30% of the amount you invest in the PER can be deducted from your tax (41% if you are in this tax bracket) up to a maximum amount of 10% of your net taxable income from the previous year and up to a maximum amount of €32,419 in 2022.
2022 has been a brilliant year for me, my best so far, and I have been so happy to welcome lots of new clients.
I want to thank all of you for your time and attention to these newsletters and your kind comments. I especially want to thank all my clients for entrusting me to set up their investments. As always if you have any questions on the above or any other matters please do get in touch.
I shall be away from 18th to 28th December, first to Disneyland Paris and then to the UK for a good ol’ British Christmas with my family. I will be checking emails and can do phone calls if necessary.
I wish you all a very Happy Holiday season and look forwards to speaking to you next year!
Regards
Katey Murray
Partner
The Spectrum IFA Group
Mob: 06 81 61 78 44
Tel: 09 53 28 88 22
Children and taxes in France
By Katriona Murray-Platon - Topics: France, Tax in France
This article is published on: 4th November 2022
04.11.22
I am the proud mother of two wonderful boys. I love my children very much, but in addition to the joy they bring to my life, they also bring tax advantages. Admittedly the tax benefit is probably less than the overall expense of having children, but one must count one’s blessings!
Let’s take a couple earning €60,000 per annum.
The current tax brackets for 2022 are as follows:
| Income | Tax rate |
|---|---|
| Up to €10,225 | 0% |
| From €10,226 to €26,070 | 11% |
| From €26,071 to €74,545 | 30% |
| From €74,56 to €160,336 | 41% |
| Over €160,336 | 45% |
*These tranches are likely to increase by 5.4% in 2023.
If they have one child? their tax is reduced by half a tax part. Whereas alone they were in the 30% tax bracket, with one child their income is divided by 2.5 to €24,000 per person, which puts them into the 11% tax bracket. Their tax bill would be €3,788 instead of €5,844. The child has saved them €2,056 of tax. If they had a second child, and on the same income, their tax would be €3,226. The second child has therefore saved them €562 euros.
In addition to lowering your taxes, if your child is under six and goes to a child minder or nursery, 50% of these costs, up to a maximum of €2,300 per child may be deducted, so a maximum tax credit of €1,150 per child. This is a tax credit, so in our example above, the couple would pay only €926 in taxes.
After six years old and until they go to high school, as delightful as they are during this time, there are no tax advantages. From high school onwards there is a small tax reduction of €62 per child in high school, €153 per child in sixth form college and €183 per child in higher eduction (provided it is non-remunerated studies).
However when they are in their 20s and pursuing further education, this is the time to look at whether you are better to keep them in your tax household or take them out of your tax household and deduct the money you give them to pay for their studies, accommodation and food etc. I remember, when I was a tax lawyer, suggesting to a lady who had four sons, that she should remove her youngest son from her household – she looked a bit shocked! I meant of course that she should take her son out of her tax household, not kick him out of her actual household. It is quite common for children in France to remain at home during their university studies. The money given to an older child is deducted from the household income before it is subject to tax.
For an adult child to be considered part of your tax household, they must be under 21 on 1st January of the tax year (so 1st January 2022 for the tax return done in 2023), or be under 25 years old on 1st January 2022 and in higher/further eduction as at 1st January 2022 or 31st December 2022. There are also various conditions for children living with an adult relative.
So if we look at the couple above and both their children are at university. In 2021 they could have deducted up to €6,042 per child from their income which would have reduced their tax to €3,021 for the two of them without the children instead of €3,226 had the children been included on their tax return. For 2022, according to the Draft Finances Bill, this deduction is increased to €6,368 per child. For the full reduction to apply, you must be able to prove that the child needs this money, that they are unable to work or, if they have a student job, that they earn less than the minimum wage. You can deduct up to this amount but you have to be able to prove the expenses if so requested. If the child still lives with you, you can deduct their accommodation and food bills, up to €3,592, without need to justify these expenses.
Once your child is removed from your tax household, this will mean that they have to do their own tax return and declare the financial help that you are giving them. However, if they are earning less than the first tax bracket (€10,225 in 2021, €10,777 in 2022) then they won’t have any tax to pay.
For any questions on Children and taxes in France or on your general financial planning in France, please do get in touch via the form below:
Have you completed your tax returns in France?
By Katriona Murray-Platon - Topics: France, French Tax Changes, Tax in France
This article is published on: 3rd June 2022
03.06.22
The tax season is almost over! Those of you living in departments numbered 55 to 976 still have until 8th June at 11.59 pm to submit your tax return online or if you have engaged an accountancy firm to do your tax return they also have another week or so to submit any returns. I would not advise trying to contact an accountancy firm at the moment because they are very busy and they won’t be able to start working on your tax return until the deadline has passed. The best thing is to have a go at it yourself and then correct it later in the year. Your initial return, submitted by the deadline, will result in a tax statement. If you decide to amend the return, you will get an initial tax statement and then later an amended tax statement.
Once you have done your tax return you can expect to receive your tax statement as follows:
- If you submitted it online and you have paid too much tax or exactly what is owed you will receive your statement between 25th July and 5th August.
- If you submitted by post and you have paid too much tax you will get your statement between 29th July and 31st August;
- If you submitted your tax return by post but you have paid exactly the right amount of tax you will get your statement between 2nd August and 31st August;
- If you submitted online but there is still tax to pay you will get your statement between 29th July and 5th August,
- If you submitted on paper and there is tax for you to pay you will get your statement between 5th August and 26th August.
If you have paid too much tax you should get the reimbursement around these periods. If you have tax to pay it should be taken from your bank account automatically. If not you have until 20th September to pay online. The money won’t be taken out of your account until 26th September. If you owe more than €300 tax, this amount will be taken in four payments between 26th September and 27th December 2022. If the amount due is less than or equal to €300 then this amount will be taken out in one payment on 26th September. Please remember that during September the 9th instalment of your monthly payment of income tax will be taken on 15th September, so you may have two tax payments in September (and in the following months if you owe more than €300).
A situation was brought to my attention about Capital Gains Tax on the main residence when you leave France. There was a court case in 2017 which reached the French Constitutional Court regarding the exemption from capital gains tax for the main residence. Whereas a French resident may vacate his/her main residence and has 12 months to sell it for it still to benefit from the main residence exemption, according to this decision if you are no longer French tax resident at the time of sale you lose this exemption on the capital gains.
Furthermore under Article 150 U, paragraph 2, line 2, of the French Tax Code the capital gains from the sale of a property are exempt from tax “for the sale of a property situated in France where the seller is an individual, not French resident, a national of a Member State of the European Union or another State which is part of the EEA having agreed with France an administrative assistance agreement to fight against fraud and tax evasion and provided that the person was tax resident in France continuously for at least two years at any period before the sale. The exemption mentioned in the first line of this second line applies only to one property per tax payer and up to €150,000 of net taxable capital gain, to sales carried out:
a) no later than 31st December of the fifth year following the year in which the seller ceased to be tax resident in France,
b) with no time restrictions, when the property is freely available to the seller at least since 1st January of the year before the sale”.
It is this section of the French Tax Code which could, according to some Notaires, no longer apply to British citizens selling their French properties and returning to the UK since Britain is no longer part of the EU. I have spoken to two Notaires about this and neither seemed to be bothered about it. But Notaires can take different views on things. So if you (or someone you know) are planning to sell what is currently your main residence in France and move back to the UK make sure you clarify exactly what you have to do with your local Notaire and do not move back to the UK and establish UK tax residency before the sale is complete.
After a busy month of May with many people contacting me with tax questions, I am looking forward to a more normal month of June and getting out in the sunny weather to see clients. So if you would like to arrange an appointment or need to speak to me about any matters please do get in touch!
UK pensions and tax treatment in France
By Andrea Glover - Topics: France, Tax in France, UK Pensions
This article is published on: 13th September 2021
13.09.21
I have had several queries over the last few months about the tax treatment of UK pensions in France, whether they are being received as a regular income or where clients have or are about to take a one-off lump sum to pay for a large purchase. Many of the queries were relating to the completion of French tax returns, but we are also seeing a large number of queries where advice is being sought on French tax treatment of pensions prior to a move to France.
So, in this article, I am going to go back to the basics and go through the different types of UK pension scheme and their tax treatment in France for French tax residents.
UK State Pension
As a French resident, the UK State Pension is taxable in France (not the UK) and where an S1 is held, no French social charges are payable. It is important to note that the UK State Pension can be paid directly into a French bank account, in euros, although the amount will obviously fluctuate due to exchange rates.
Government pensions
UK government pensions are dealt with under the UK/France double tax treaty and apply to those who have previously worked in the Armed Forces, Civil Service, Fire Service, Local Authority, NHS (with exceptions), Police and Teaching amongst others. A full list is available at www.gov.uk/hmrc-internal-manuals/international-manual/intm343040 to help you identify if your pension is classified as ‘government’.
Under the double tax treaty, UK government pensions are taxed at source in the UK. The pension income still has to be declared in your French tax return, but a 100% tax credit is given so that the same tax is not paid twice. It is important to note, that such pension payments are taken into account to calculate your overall income and could have the effect of increasing the rate at which other sources of income are taxed.
Qualifying government pensions are exempt from social charges.
Private pensions (occupational, stakeholder, SIPP)
Pension payments received from UK private pensions are taxable in France (not the UK) if you are French resident and again, where an S1 is held, the payments are exempt from social charges.
Annuities
Annuities are more complex and advice needs to be sought to establish the type of annuity held, as annuities can be interpreted as investment income in France rather than pension income.
Allowances
Amongst other allowances relating to pension income, there is a general 10% tax abatement on pension income (with the exception of qualifying UK government pensions) with a minimum of €394 and a ceiling of €3,858 (applicable to 2020 tax returns and subject to change). The allowance is per taxpayer, although the ceiling stated is per fiscal household.
The allowance only relates to tax and not social charges, where applicable.
Lump Sums
Lump sum pension payments are an area for discussion in another article. Other than qualifying UK government pension lump sums, such payments (including UK tax free lump sums) are taxable in France.
I would always strongly recommend that you speak to a France based qualified adviser, familiar with UK pensions, before any firm decision is made to take a lump sum payment.
The tax and legal systems in France
By Amanda Johnson - Topics: France, Investments, Tax Efficient Savings, Tax in France, wealth management
This article is published on: 23rd July 2021
23.07.21
There are lots of reasons to love France …
… but the legal and tax systems aren’t high on that list!
How to manage wealth effectively, whilst minimizing administration, requires an experienced adviser with access to solutions purposefully built for the French marketplace, with due regard for t he local taxation and legal systems.
Because knowledge allows us to make better decisions, we invite you to watch the recent webinar with Quilter International.
The webinar considers financial planning options designed to help you keep more of your wealth for longer, ever mindful of the crossover with other countries, such as the UK.
As one of the leading providers of wealth management solutions, Quilter International works primarily with expatriates in around 40 countries, including France. Their speaker, David Denton, is a Fellow of the Personal Finance Society and Trust and Estate Practitioner, and has spent almost three decades in wealth management, training professional and lay audiences world-wide, on the subject of wealth preservation.
French Tax declarations in June – Trusts & Wealth Tax
By Katriona Murray-Platon - Topics: France, tax advice, Tax Declarations, Tax in France, Wealth Tax
This article is published on: 1st June 2021
01.06.21
Oh what a month of May! So despite the old adage of being able to do as we please, the weather clearly didn’t get the memo! May has been a whirlwind of enquiries and questions on taxes with lots of people requesting the Spectrum Tax Guide. Hopefully, by now most of you have filed your tax returns, but those living in department numbers 55 to 976 as at 1st January, still have a few more days, until 8th June to file theirs. Also, if you have appointed an accountant to do your tax return, they have a special extended deadline until the end of June to file all remaining returns.
If you had a go at your own tax return, but would prefer to hand it over to a professional either for future returns or to check that what you filed this year was correct, it would be best to try to contact them after the end of June. If you think you made a mistake on your tax return, you have until the end of the year to correct it. You will soon know if there is something not quite right with what you have declared when you receive your statement at the end of August/beginning of September. At that point, if you are quick you can submit an amended return before the payment deadline; otherwise you may have to pay the tax payable on the original statement whilst awaiting the amended return to be processed and a new tax statement to be issued, with any tax reductions if applicable.
This month, my family and I set off for our first mini-break since the lockdown in March last year. I have to say we were a bit nervous venturing out of our house, preparing the suitcases and worrying that we hadn’t forgotten anything. We stayed in the lovely village of Coux-et-Bigaroque, about 45 minutes east of Bergerac. In spite of the weather we were able to take the children to the Perigord Aquarium, the Caves of Grand Roc and the Chateau of Milande, formerly owned by the singer and entertainer Josephine Baker. Whilst I love visiting this chateau and the birds of prey show in the grounds, it always makes me feel a bit sad. It is an example of how someone with such talent and a kind heart didn’t have the right advisers to help her make the best financial decisions.
In June there is another tax deadline that still needs to be considered:
Which is that all Trust declarations need to be declared by 15th June. I wrote an article many years ago which you can find HERE
There have been no significant changes to the treatment of trusts since the law of wealth tax was amended to include only immovable property. A trust can be recognised in France and perfectly valid in France provided that it doesn’t go against public policy (ordre public) and in particular the rights of heirs under French law. Income from a trust is subject to income tax depending on the nature of the income (rent from an apartment or capital income) and can be subject to tax credits under a double tax convention. Trusts (excluding charity trusts and pension trusts) must be declared in France if any of the settlor, trustee or beneficiary are French residents or if the trust contains an asset situated in France on 1st January. According to a press release by the Ministry of Finance on 5 July 2016, 16,000 entities had been identified and notified as trusts to the French administration.
Another change this year is that the Wealth Tax declaration which normally had to be submitted by middle of June if you have assets over a value of €1,3million, this year has to be submitted at the same time as your tax returns by way of a tax form called 2042-IFI. Those of you resident in departments numbered 55 and above still have until 8th June to submit. If you French tax residents who came to live in France, after having spent 5 years abroad, you are not taxable on your non-French assets until 5 years after you became resident. Non-residents also have to declare if their French assets are over €1.3million.
Finally, 30th June 2021 is the deadline for Brits who were resident in France before 31st December 2020 to apply for their residency permit under the Withdrawal Agreement. If you haven’t already done so or know of someone who hasn’t, and they were resident before 31st December 2020, please do try and encourage them to go to the following website:
Tax in France – what needs to be declared
By Katriona Murray-Platon - Topics: France, French Tax Changes, tax advice, Tax in France
This article is published on: 6th May 2021
06.05.21
No-one needs reminding that 2020 was a year like no other. Our lives were changed in many ways and this had an effect on our finances. Luckily there were many government schemes and initiatives to help people overcome the financial difficulties suffered in lockdown and because of the health restrictions. However now that 2021 tax season is upon us, what now needs to be declared?
Salaried workers bonus is tax exempt
Last year some salaried workers may have received a consumer bonus which is exempt from tax up to €1000 (or €2000 if there is an interest agreement/“accord d’intéressement”) Public workers and health workers also received a bonus which is exempt up to €1500.
Overtime hours are usually exempt up to €5000 per year, however the exemption threshold has been increased to €7500 for those hours carried out between the beginning of lockdown (16th March 2020) and the last day of the emergency health state set at 10th July 2020. This applies to salaried workers in the public and private sector as well as those under special regimes. All exempt overtime must still be declared on the tax form and will be included in the tax income reference rate for the tax household.
The Ministry for Economy and Public Accounts has announced that the payments paid by companies to their employees to cover the costs of working from home are exempt from tax up to €2.50 per day worked at home and up to €50 per month for 20 days and €550 per year.
Salaried workers who choose to deduct their actual costs rather than applying the flat 10% abatement on their salaries, can still choose this options without supplying supporting documents however these deductions may not be so beneficial depending on your level of salary. As always it is best looking at both options and seeing which works best for you.
Charitable gifts in 2020
Although things were hard for many people last year, it was also a year, more than ever to help those less fortunate. Gifts given in 2020 to humanitarian organisations and victims of domestic violence result
in a tax credit of 75% of the amounts donated up to a maximum threshold of donations of €1000. Over this threshold and for donations given to other organisations (including political parties), the rules haven’t changed, the tax reduction is 66% for such donations and he maximum threshold is 20% of the taxable income. The excess can be carried over over the next 5 years and results in a tax reduction under the same conditions.
Independent workers
Companies and individual tradespeople benefitted a lot from the government help last year. Fortunately the financial help granted by the solidarity fund to companies most affected by the health crisis, the exceptional financial help to independents (CPSTI RCI COVID 19) and those paid by the additional pension schemes of independent professionals and lawyers (CNAVPL and CNBF) are all exempt from income tax. The other help from public or private entities are taxable if there is no specific legal provision that exempting them otherwise.
Auto-entrepreneurs and micro-entrepreneurs who were exempt from paying part of their social charges must include in their tax declaration the turnover figure that was not declared to URSSAF because of this exemption.
Home help tax credit – changes to the conditions
The home help services normally give rise to a tax credit of 50% of the amount paid out. These expenses are deductible up to €12,000 (plus €1500 per dependent and person over 65 years, up to a maximum of €15,000). However in 2020, during lockdown some of these services had to be temporarily suspended or even cancelled, or in certain circumstances could be carried out online.
If you employed someone carry out a service in your home, you may have benefitted from the partial compensation for the hours that your employee was unable to carry out during lockdown. These compensated hours cannot benefit from the normal tax credit and if you nonetheless paid your employee their salary even though they couldn’t actually work, this cannot be used for the tax credit (it is classified as a solidarity donation).
Exceptionally, some services, which in principle took place in the home, but were in fact carried out remotely because of the health crisis, still give rise to the tax credit under the same conditions as other home help services. These include online additional schooling support lessons and individual lessons (gym, music etc) given to adults or children. The Ministry of Economy and Finance has specified that these services “must have involved a minimum amount of effective interaction, implying a physical presence of the person supplying the service at one end of the screen/telephone line and the be specifically given to the person paying for the service at home”. This therefore does not include online group lessons or watching pre-recorded videos online. This derogation applies throughout the time that people were not allowed to go out either because of lockdown or curfew.
Professional landlords who waived rent
If you are a professional landlord and you waived the rent of your tenants for a commercial or professional premises rented to a company that was difficulty because of the Covid crisis, you can still deduct your expenses (ownership expenses and mortgage interest). You also can carry forward your rental loss, up to €10,700, on your overall income. The additional loss – and the part of the deficit arising from the mortgage interest – will be carried forward and deducted from your income over the following 10 years.
There is also a specific tax credit if you definitively waived rent for November 2020 only (not any of the other months in 2020). The tenant company must have employed at least 5000 employees and have been closed to the public (even if they were able to do click and collect) or to have carried out its business in one of the sectors of business that were eligible for the solidarity fund as listed in Decree no 202-371 of 30.03.2020 (hotels, travel industry for example).
Furthermore the tenant company must not have been in financial difficulty on 31st December 2019 or have been under court ordered administration proceedings as at 1st March 2020. The tax credit is equal to half of the unpaid rent if the company employed less than 250 employees. If the number of employees was between 250 and 5000, the 50% is calculated on the two thirds of the rent. If the tenant company is managed by an ascendent, descendant or member of your tax household, you must justify the cash flow problems in order to deduct your expenses and get the tax credit.
Voluntary retirement contributions
You can deduct from your total income the sums paid into a retirement scheme such as PER, PERP or Préfon up to the normal deduction limits. If you have opened a PER for your child (whether a minor or of age but still within your tax household) you can deduct the payments even if they payments were paid by your own parents (the child’s grandparents) Children have their own deduction amounts even though it is not necessarily stated on the tax return.
Are you a French tax resident who owns a house in the UK?
By Andrea Glover - Topics: France, Tax in France, UK property
This article is published on: 4th May 2021
04.05.21
UK Property Matters
I thought I would write this month about the topic I am asked most frequently about at the moment by clients and prospective clients, which is the subject of owning property in the UK as a French tax resident.
There are many reasons for deciding to keep properties in the UK when moving to France. Whether it be a ‘bolt hole’ to go back to for those that frequently return to the UK for family or work, or as an investment to generate rental income to supplement retirement.
There are several potential French and UK tax consequences to consider, when owning property in the UK, which I will cover in general terms by each specific tax area.
Wealth Tax
Wealth tax in France is called Impôt sur la Fortune Immobilière (IFI). The assets that are taxable under IFI are all worldwide real estate and investments in real estate which includes, amongst others, the main home as well as second homes. Business property assets are exempted subject to certain conditions.
The tax is triggered by eligible net property wealth of more than €1.3 million. For UK expatriates living in France, foreign assets are exempt from wealth tax for the first 5 years.
Capital Gains Tax (CGT)
As a French tax resident selling property in the UK, you are liable to CGT both in the UK and in France.
Since 2015, the UK has applied CGT on the sale of property of former residents noting that private residence relief, if applicable, is available for the final 9 months of ownership. It is only the gain from April 2015 that is taxable and the normal tax free allowance (currently £12,570) also applies.
French CGT and social charges are applicable in France on the sale of a UK property and are based on duration of ownership. Some exemptions do apply, for example when the property was the principal residence in the previous 12 months, although certain conditions apply.
Under the UK/France double tax treaty, UK expatriates can receive a credit in France for any UK CGT paid on the sale of the UK property, but they cannot offset any UK CGT paid against a social charge payment.
UK Property Rental Income
Rental income from a UK property, when resident in France, still requires the completion of a UK tax return.
As a result of the UK/France double tax treaty, income tax and social charges are not payable in France. However, it is important to note that this income is still declarable in France and is taken into account when establishing the tax bands applicable for all other declarable income.
Inheritance Tax on a Property Held in the UK
The subject of French inheritance tax is a complex subject that could justify an article in its own right, but in general terms, under the UK/French Double Tax Treaty on inheritance tax, the UK property would fall under UK inheritance rules and applicable taxes.
In summary, owning property in the UK has potential tax consequences in both the UK and France and as with all such matters, I would recommend that you seek the advice of a suitable expert in all circumstances.