Parisien

First Post, searched for a similar issue but nothing quite fits! A number of years ago we were in position to buy a little pied a terre in Paris, for the first few years we visited regularly, friends and family too. As time passed we then rented out for a number of weeks on an Airbnb basis, as I already filed a tax return for small business purposes, noted foreign earnings section, dually filled in it too and paid HMRC their slice.

As further years passed, our friend in Paris suggested medium to try long term rentals for while, we naturally assured him we were paying taxes on income as good citizens, another few years passed and a new agent came on scene, enquiring if we needed help doing our returns for French authorities but then realised our mistake, hoping we'd then seek an appointment with tax office but COVID intervened!

So we need to have a face to face, we've records of returns and tax paid in UK, just wondered how they will react or costs/penalties might stack up when we do, or how things might pan out!

EuroTrash

I assume you've realised by now that you shouldn't have paid income tax in the UK on French rental income.
The French tax people are usually pretty helpful and they're used to Brits not understanding things. The fact you've been paying tax in the wrong place is better than if you hadn't been paying tax at all because it make it look more like a genuine mistake.
All you can do is go along with all your paperwork and explain the situation and see what they say. Worst case scenario, the fine for not paying your income tax on time is a percentage of the amount due, but I don't think it's a massive percentage. If the amounts are small there may be no tax due and therefore no fine.
Don't leave it too long because I read that the fisc are having a bit of a blitz on airbnb rentals, and it will look a lot better if you approach them first, rather than them contacting you first.

You will need to reclaim from HMRC, under the dual tax treaty, the tax you paid to them in error, good luck with that, but you will get there in the end.
This is quite a good summary https://www.french-property.com/guid...perty/taxation

Parisien

Thanks for that EuroTrash, it's now going back over 10 years, a hefty enough mistake to be honest. Just trying to see if anyone had a similar experience and what outcome actually was.

If it turned out to be just interest added to total, not so bad, just apprehensive if a punitive penalty was likely to be added or does it depends on which/who official deals with your issue?

EuroTrash

I doubt they'd go back 10 years. Five maybe. For many tax "issues" there is a kind of amnesty date after which they officially draw a line and don't pursue it.

I don't know about interest, maybe there is that as well. When I said the fine is charged as a percentage of tax due, I did actually mean the punitive penalty, not interest. It's not a flat rate penalty. If a person is legally obliged to submit a tax return but they don't, they will be fined in proportion to how much tax they should have paid. If they were on a low income and it turns out they were not in fact liable to pay any tax, the fine will be zero. If it turns out they should have paid a stonking great tax bill, then they will have to pay a stonking great fine on top.

Helen1964

Parisien
I suggest that instead of going to the tax office and alerting them to your (good faith) mistake, you simply start declaring the rental income in France from now on.
Golden rule in all dealings with the Fisc: don’t raise your head above the parapet.

EuroTrash

Except in this case there is no longer a parapet to duck below because online platforms such as airbnb are now obliged to automatically pass on details of money earned by their users each year.
https://news.airbnb.com/fr/transmiss...evenus-airbnb/

Parisien

This was 6/7 years ago Airbnb type rentals , not sure when new regulations came in, just trying to do right thing, but if all of a sudden I become public enemy no 1, may not be so smart!

Was hoping to hear from some one who had similar experience of "coming clean" (does that concept exist in France?) and then deciding what's best to do.

EuroTrash

Not quite the same situation but this poster came clean and reported that he had found the process very un-traumatic.
Registering with Tax Authorities

Annetje

When my husband passed away I was thrown in the deep end with paperwork. I had never seen a French or English tax return in my life.
Since I had the previous years as an example, I decided to go for it. The French one was not that complicated so I sent that off to the tax office.
Then the English one arrived and I took that on as well. Whilst completing that, I realized I hadn't seen anything about a rental income we received from the UK;
After research I found out my husband had "Forgotten" to declare it anywhere.

Correcting all that was well above my paygrade so I found an expert in France and one in the UK to help me through this.
The UK one had a natter (negotiation) with the tax office and basically they arranged it so that I wouldn't have too much trouble. NO penalty to pay.

I was more afraid of the French one I must say because forgetting to declare a taxable income for +/- 9 years had to give some remarks somewhere, however ...
The expert told me the French taxes don't go back further than 3 years so she filed "correction declarations" for the last 3 years at the tax office herself (me dutiful trotting along), she explained my situation and, after a little while, I got a tax bill for the last 3 years and NO penalty at all. The letter they sent to me mentioned that it was not my fault and since I took action as soon as I could so they decided just paying the taxes would do !

OK, the experts were not cheap but worth every penny !

HTH

Helen1964

A few years ago a bunch of us at work - all Brits - realised we should have been declaring our UK bank accounts in France. Most of us simply started declaring the accounts from that point onwards but one lady took it upon herself to call the tax office and inform them that, through ignorance, she had not been declaring her UK accounts in previous years. First, in order to make an assessment, they required her to submit significant amounts of paperwork, specifically documentation from her RBS bank certifying interest paid on each account for each of the past 10 years. To complicate matters, the interest payments had to relate to the French tax year, not the UK tax year and it took her a long time to persuade RBS to come up with the correct paperwork (their standard certificates of tax paid on bank interest related to the year from 6 April).
Then she had to wait months before hearing what the tax office planned to do. Initially, they wanted to impose a very hefty fine but she pleaded with them and eventually they relented and and reduced the amount. It was a very fraught few months for the lady concerned.
As you can see from the previous posts, however, other people have had far more positive experiences. I think it depends on who happens to be dealing with your case.
Personally I would just declare the income in future and not draw attention to the fact that I’d been declaring it to the wrong country in the past.

EuroTrash

That seems to be 2 completely separate issues though. Firstly she hadn't been declaring the existence of the accounts. Secondly and probably more seriously, she hadn't been declaring investment interest.
Everybody has the right to make a genuine mistake and have it corrected with no penalty. It's written into French law. https://www.impots.gouv.fr/portail/p...atiere-fiscale
In the OP's case, since he hasn't actually saved himself anything by paying tax to the wrong country, there's no obvious reason to think it was anything but an honest mistake.

Parisien

Thank you for replies, it takes a weight off my mind, when travel restrictions ease will make arrangements and get things sorted, hopefully by years end, though should I put it in writing first to arrange well in advance?

Helen1964

I think EuroTrash is right and you won't get into trouble. I do think, however, that the tax office will want oodles of paperwork.

Not sure how the tax office will react if you write to them now, saying you intend to meet with them face-to-face and sort the matter out "hopefully by year's end". I suspect they'll want it sorted out before then.
If you're planning to deal with the matter yourself, I would wait until you're in a position to travel at short notice and then contact them to make an appointment.
Or - and this is definitely worth considering - do what Annetje did and employ a French accountant to talk to the tax office on your behalf and file the necessary "déclarations rectificatives". Possibly it can all be done without your even having to be there.

Best of luck. It would be really helpful if you could come back later and tell us what the outcome was.

Parisien

I will take that on board, my new Paris based agent hopefully will know the ropes and pitfalls, will involve him too.

Yes, will feed back, not quite sure when, but the forums advice has been invaluable.