Expats in France and Tax

[a340fo]

I know this has come up in the past, but in the light of some recent tax investigations by the Revenue, does anyone living out in France have any top tips for dealing with Gordon Brown's henchmen?

I think I'm within the rules of non-residency (90 days etc) , but have been asked to prove it...

Any info gratefully received.

:cool:

[aviate1138]

a340fo said in part....

"I think I'm within the rules of non-residency (90 days etc) , but have been asked to prove it..."

Aviate says.....
I thought you had to Declare non residency at the start to avoid the taxpersons nibbling at your heels....

Aviate 1138

[Daysleeper]

If your in BALPA talk to them for the contact details for FRY's (tax experts) you get a load of bumph for free , its a couple of hundred quid for them to do your tax return for you.

The living abroad thingy is quite complicated now.

[Boss Raptor]

From experience;

If you are registered tax resident in another country then you are allowed 90 days in the UK. Some other countries such as Ireland, Spain, Portugal, Malta allow you to be tax resident but if you are not in the country for more than 6 months a year your tax rate is 0% (and as such under dual taxation agreements you are not liable to UK tax unless it is property related or you have been in the UK more than 90 days then the dual taxation comes in and both tax authorities share/have a claim on your taxation, this is complicated to explain further) - this is the one I now use and am resident in Malta.

However if you remain tax resident in the UK then you are claiming 0% tax rate under the 'Foreign Earnings Deduction' and as such are only allowed 60 days in the UK, beyond which you are liable to ordinary taxation.

If you are 'non resident' for tax purposes then you must provide your evidence of tax registration and residency in your alternative country. You may then end up on the slippery slope of paying French tax...you cannot be in tax 'limbo' and registered nowhere.

[Le Pen]

Hello,

Just haveing a bit of a rumble with the Revenue at the moment......

It seems that if your MAIN residence (house where your wife and kids live) is in the UK it does not matter how many days you spend outside of the UK, unless you are a non resident.

As for the French Tax thing.... Its not so bad. I pay about 2% tax on declared earnings. :}

Love

LP

[Boss Raptor]

Yes Le Pen that is the 'except where considered Ordinarily Resident' clause which is completely flexible at the Revenues' benefit...they deem that in your case as u have a wife and family in the UK you are 'ordinarily resident' in the UK for tax purposes. You may however then make a claim on the 60 day foreign earnings deduction rule and/or if you have been taxed in France which has a dual tax agreement with the UK offset some if not all of your tax liability as paid in France on French tax rates.

The factor here is pre-planning knowing exactly which direction you are taking...if as most people seem to do you go in half prepared then you either drop yourself in it and/or make things worse for yourself...and the Revenue aint going to give you any hints either...and if you have a house and family in the UK they know they can harass and collect from you as well...

I dont have a wife or family and have a house in Malta so dont have that problem :E

[DishMan]

Daysleeper is right.

I've used WT FRYs on and off since 1987 for advise on various things encountered by expats. However they are TAX Experts for ex-pats.
They visit major European Cities couple of times a year. Usually do a presentation at the British Embassy Paris for the Chamber of Commerce...

https://www.wtfry.com/website.html


Anyway, I would suggest you give them a call pronto.
HIGHLY recommend.


Rgds

DM

[74world]

Hi a340fo,

I can not speak for the others, but I work for a British company, but I am living in France.

Since I spend less than 89 days per year in UK, I pay O taxe.
Also I am not subject to any taxe in France, so there too it's O.

Hope that this can help you!

Cheers

[a340fo]

Thanks for the useful info, guys.

I moved to France but still have property in the UK. I guess the crux of the matter is this "ordinarily resident" thing. Someone said you have to prove your property in the UK is "not available for your use".. Any ideas how stiff the grey suited Gordon Brown wannabees are on this point? What sort of proof do they look for?

Once again, thanks in advance for the info...

:bored:

[Boss Raptor]

i.e. your property is rented out...in which case they can and will tax you on this property income regardless

To me your description is that you are still 'resident' in the UK for tax purposes and therefore must attack this current situation as claiming the 60 days foreign earnings deduction (although I did hear rumour that this has been removed as well)....unless you are of course properly registered as resident and taxed in France (or any other country)

YEP JUST CHECKED WITH AN ACCOUNTANT FRIEND FOREIGN EARNINGS DEDUCTION REMOVED IN 1998 - SO NO LONGER AN OPTION

I believe French pilots have an agreement whereby they are exempted tax if out of country x number of days, therefore you should investigate this as u would be better 'tax resident' in France. However this may well clash if u have a British employer...get complicated.

In terms of proving you are 'non resident' in the UK, which in this case I do not believe you are, you must provide your registration of residency and tax registration in the appropriate country...trying to pre-date this isn't going to go well with the new taxation authority/country of your choice.

Unless through air tickets, passport stamps, company rosters etc. you can prove you were in the UK for less than 90 days in your past tax year (365 days) and are registered 'resident' for tax purposes elsewhere you will be taxed at full rate.

Take professional advice to resolve this current liability and pre-plan/decide your future tax position and residency choices.

[great2fly]

74world

quote:
"Since I spend less than 89 days per year in UK, I pay O taxe.
Also I am not subject to any taxe in France, so there too it's O"

Interesting - can you or anyone else explain how that is possible?

Great2fly

[tartan 42]

I have been living in France for a few years now - resident in France paying French tax.

The first thing to do is decide (and agree it with the Inalnd Revenue) on whether you are "normally resident" in the UK or not. This will depend on a number of factors ranging from how many days you spend in UK or France, where your main property is (that you actually live in), is your spouce and kids with you, where do you get paid and in what currency etc etc etc. There is a good booklet you can request from the Inland Revenue that lists all these points - tick appropriate boxes and at the end it tells you if you are normally resident or normally no resident.

Both Britian and France operate on a world-wide income basis. Thus, if (like in my case) you are normally resident in France, you would pay French tax on world-wide assets, including income generated in the UK on things like interest from savings, rental income from renting out your house etc etc. It can be a little complicated when considering things like income from savings as the UK deduct basic rate tax at source and thus you then have to claim that back in the UK as you have paid tax in France on world-wide income. Not majorly complicated - you just need to know about it.

In your case, it is a little too vague to be able to answer specifics. I would say, if you are paid in France in Euro's by a French company and that is your main place of work - you might want to check quickly where your normal residency is (and if it is in France you will need residency permit). If it is a UK company, paying you in GBP and you staill have your family in the UK etc - then you are probably still UK resident.

If you have specific questions - I can try and answer (but without any come-back of course). Always check with a lawyer for your own safety.

Get the booklet to be sure !
t-42

[airship]

Interesting - can you or anyone else explain how that is possible?

Well, an important distinction should be made here concerning tax avoidance and tax evasion. And ignorance is no excuse! You should also know that as a UK citizen in France, you are given the same rights as a Frenchman and you will have to declare your WORLDWIDE income whether or not it is remitted here...!

There are still some provisions for certain categories/industries in France but the bulk of these special entitlements were removed in the late '90s. And all of them require income tax declarations to be made in France in order to benefit from the provisions.

Here's the EU official website in English which may help Info about France for UK citizens (http://citizens.eu.int/en/en/fr/origdest.htm) . Click on living or working, then click on taxes...

You should appreciate that the French generally are masters in both tax avoidance and tax evasion, given the high rates of income taxes here coupled with insufficient controls on benefit collection. However, I understand that a married, working couple with children here pay less than they would in UK, while a single person without dependents pays significantly more.

A good example that I can quote is that of a friend of mine, a UK citizen who had been employed aboard a large yacht based here in the S. of France for many years. Having a French girlfriend and living together in rented accomodation, he had never attracted the attention of the French taxman. A local bank showed no reluctance in opening a "non-resident" current account, the only point being that he would not normally be able to provision this account except from a source outside France. The problems started a few months after they decided to buy a property jointly under both names with a mortgage...! Suffice to say that while the taxman had been willing to treat as valid (undoubtedly because they give special consideration to the importance of the local yachting industry here), his "offshore or non-resident" status while working and living aboard a non-EU flagged vessel even if the vessel was based in France for 9 months of the year, the moment that he was co-signature on a mortgage made him a defacto resident with all the implications. Strangely enough, he now declares an income and his employer pays French social security deductions on his salary. The important point here is that what has been declared is a fraction of the real salary, the rest is deposited outside France...

[Le Pen]

OK,

1. I am UK based (for work purposes) and paid in the UK.
2. I live in France where I own a home and live with wife and kids.
3. I pay FULL French tax (UK tax code NT)
4. I normally spend 20 days a month outside France for my job.......

Heres the Question...

Should I be paying FULL french tax as I am out of the country so much and if not how do I go about claiming the tax back??????

Each year with my tax return I send a letter explaining this and attach a copy of my postings for the year.

However this seems to be ignored and get whacked for the FULL 2%.

Any thoughts???

Love

LP

[chippy63]

Le Pen,
There is a french tax break for days spent working outside France, it's called "Prime d'expatriation". Your employer reports the income relating to periods of work overseas to the tax authorities and your tax bill is (theoretically) reduced. I have just completed my first full tax year in France, so I'm not exactly a fountain of knowledge about it.
I'm not at all sure how you would apply this very valuable tax break to a UK source salary; could you get a certificate from your employer setting out foreign business trips? PM me with a fax number and I will fax you the wording my company uses.
In crude terms, your saving is: (gross salary) x (percentage of time working overseas) x (top rate of tax suffered). You might want to get advice; compare the cost of the advice against your potential tax savings, but bear in mind that if you can get it established that you are entitled to the break, the advice is a one-off cost.

[74world]

Hi Le Pen,

I am in your situation, I am officially based in UK but I spend less than 89 days per year so I am not paying a pounds in UK tax.

I am living in France and paying O income tax, for info my other colleagues living in France are paying O tax also.....

Cheers.... :p

[Le Pen]

Chippy,
Thanks PM on its way.

74world,
Do you declare an income in France??? If so how do you let the French tax auth's know you are out of the country?

Love

LP

[74world]

Hi Le Pen,

Yes, I do declare my income in France, also in UK......

The French authority is aware up to the last pound I earn, it doesn't make any difference to me since I am not paying any tax.

For your info, the same deal applies to the people in the merchant navy...............O tax!

Cheers.

[chippy63]

Hi, Le Pen, no luck on the fax no, any way, the document reads like this:
Chippy received EURX in respect of foreign travel required by us. It has to be reported on the tax form 2042C in box 1 DY or EY.

This allowance relates solely to chippy's requirement to travel outside France on business, and is determined by the number of days spent outside France.

chippy's taxable income is therefore (total salary)- EURX = (taxable salary) and is shown in box 1 AJ or BJ of form 2042.

cheers and good luck, chippy

[Le Pen]

Thanks chippy,
You are a star! :ok: :cool: :D :ok: :E :ok:

LP

[Boss Raptor]

74 World - In the UK the Merchant Navy crews are still allowed to claim under the 'Foreign Earnings Deduction', mechanics that I have detailed above, which was abolished for the rest of us in 98...Therefore assume you are claiming as not in the UK 90 days and so 'non resident' and not being caught regardless as 'ordinarily resident' in the UK as some of the other guys have been.

or is it that you are on the 0% tax rate which is allowed to flight crew in France, so declaring your incoming as 'taxed' in France and as such not liable to be re-taxed in the UK?

Can you just clarify your exact position and what grounds your accountant is using in making your tax return to exempt you tax when you declare in the UK as this would help the others attack the situation?

[74world]

Hi Boss,

Sorry but I am not an accountant, all I can tell you is that I've been in the UK system for almost 4 years and have paid O tax..... if you want to know why, it's because I spend less than 89 days per year in UK.

In my current company about 70% of the pilots are living outside UK for this reason.....why pay tax in UK when we can avoid it!

About 20% of the above 70 are living in France, and guess what, paying O tax also!

In France I do not use any accountant I normally go to the tax office and ask to be "help" with the tax return, and they are very helpfull, all I have to do is show my payslips and tax return from UK and "voila"!

If you want to try my accountant in UK send me a PM.

Cheers....

:p

[Boss Raptor]

Thats great from that I can surmise;

You are tax resident in the UK and registered as such, however the IR do not consider you 'ordinarily resident' therefore yr exemption is based on the 90 day rule (the 'ordinarily resident' bit is catching most people)

As you are tax resident in the UK, declaring for tax in the UK with no income in France you are not liable to French tax...

[charlus]

The answer is on this site:
www2.impots.gouv.fr/conventions__-fiscales/ru68.htm
It's the international fiscal convention signed between UK and France. Read article 15 and 16.
All these conventions agree that crew members pay taxes in the country where they are based, whatever their residency is.