Optimal time of year to move to France tax-wise
 

Me again!
I know the French tax year runs form 01Jan to 31 Dec>
Has anyone any suggestions of when the best time is to actually become officially tax resident in France (ie have to fill in a French tax return)...
What date would be the one that dictates when this happens? Say for example I start renting a place in France in September I will only have been in France for say 4 months of that tax year - do I need to fill in a return for that year or is it the following year when this is necessary?
I have a government occupational pension so I know this has to continue being taxed in the UK so dates aren't that important as far as that pension is concerned.
I do have 2 small pensions which I feel I should cash in, or at least take the 25% tax free lump sum, before I am liable for paying French tax on this?
Also I have a fairly substantial ISA which is all tax free while I am tax resident in UK but I will have to declare (and pay tax on) should I cash it in once I am liable to French taxes.
I assume I can continue operating my UK bank account once I am France resident bu I am not allowed to keep ISAs open?
Apologies if this is as clear as mud but if anyone can decipher what I am getting at and has some advice I would be very grateful!

Re: Optimal time of year to move to France tax-wise
 

Hi Bazzer
Not much response to your question.
I believe that you are taxed on a split-year basis where your tax liability is treated differently by HMRC.
Perhaps if you Google that then you will find an appropriate response.
I have checked and there are several links discussing this on the net.
HTH

Re: Optimal time of year to move to France tax-wise
 

Hi Cyrian
yes - not a huge response!
But thanks for replying.
I am probably rather dim on these matters.
It's just that when I was considering a move to Portugal there was a definite date in the year which was the cut off point before you needed to consider yourself a tax resident for that year - can't remember exactly but it was something like if you were actually in Portugal on say December 31st then you were liable for the whole of that year and needed to furnish details for those previous 12 months even though you weren't actually a resident then so the advice was to plan your move for say 01st Jan ...
I have spent lots of time googling but I struggle to comprehend as you probably gathered!
Thanks again

Re: Optimal time of year to move to France tax-wise
 

Agree with Cyrian. I believe you simply tell the UK the date you left the UK and HMRC will treat you as tax resident up to that date, and tell France the date you arrived (ie the same date; France will probably ask for proof, the UK probably won't) and the fisc will treat you as tax resident as from that date. There is no advantage that I can see in trying to arrange things so that your liability begins or ends bang on the start/end of a tax year in one or the other country.
French income declarations are submitted in early May, and the window for making declarations will be announced from Feb onwards. I think that for your first declaration you'll still need to go to your local tax office and collect the forms you need - they'll ask you a few questions to establish which forms you do actually need. If you moved to France mid December for instance they may say, don't bother filling in a form this year, leave it until next year. Different tax offices seem to have their own policy on this. But you need to contact them and do what they say, that way your back is covered and there won't be any comeback later.
Saying all that, tax and other public services are being increasingly moved on line. To date I don't think it's been possible to do your first declaration online but next year it might be. But I would recommend that as a newcomer to France you go to the tax office to introduce yourself. The online system is excellent and very user friendly but would be confusing if you're not already familiar with how tax declarations work in France. The tax office will also help you to fill the forms in if you ask - and many people do ask, not just Brits, it's a service they provide for free each year.
For the rest of your questions you seem to be thinking along the right lines - UK tax-free savings initiatives such as ISAs, premium bonds and lump sums are not tax free in France so you will have to decide how to arrange things. There's nothing to stop you keeping your ISAs but the interest will be taxed.

Re: Optimal time of year to move to France tax-wise
 

Thank you very much EuroTrash
I shouldn't be so feeble but all the red tape is pretty daunting!
I have done all my own tax returns in UK for a good 8 years now (I was inadvertently inspected because of undeclared funds I held in Channel Islands which I naively thought were exempt because I had earned that money while a non-UK resident and the interest earned was negligible!) and am terrified of doing it wrong while being too tight to employ somebody to do it for me!
Thanks once again

Re: Optimal time of year to move to France tax-wise
 

I totally understand that, Bazzer. I work as a translator and I frequently get letters to translate from the French tax authorities relating to tax inspections, and I certainly wouldn't want to be in the shoes of the recipients of those letters.
However you will find that the staff in French tax offices are generally extremely helpful and pleasant. If you take along all your papers and explain your situation, they'll help you to fill your first tax form in (even do the whole thing for you if you ask), and also help you to understand how it works so that you can do it yourself next time. In fact if you declare online and your situation hasn't changed, the form will come up pre-populated so all you need to is change the previous year's figures to the new figures.
I got the lady at the tax office to fill in my first return for me, then I started doing it myself but for 3 or 4 years I took it in for them to check before submitting it. It wasn't until I started using the online service that I felt confident enough to submit it without asking them to check it first.
I guess the flipside to the fisc making such a big effort to do its bit in being approachable and helpful and making tax transparent, is that if they then find you haven't reciprocated by declaring what you should, it comes down on you like a ton of bricks.
However France has recently conceded that "to err is human" and has ruled that everybody has the right to make a mistake on their tax return. This is an important concession because it means you won't automatically be landed with eye-watering fines if the inspector finds an error but believes that you were acting in good faith and simply made a genuine mistake.
One thing to remember is that you must declare all overseas accounts, because this is something that results in big fines. It is made clear on the tax form, in fact I think you have to tick a box to say whether or not you have any overseas accounts so it would be hard to pass that off as an innocent mistake.

Re: Optimal time of year to move to France tax-wise
 

Again thank you EuroTrash
I worry too much I am sure
Pretty much all my banking is paperless so (here I am worrying again!) I wonder what fun I am going to have when I am expected to take all relevant paperwork to the tax office!
You have been very helpful

Re: Optimal time of year to move to France tax-wise
 

As usual, some good advise here.
Adding to ET's posts, not only must one declare all overseas accounts, but also declare any accounts that have been closed in that particular tax year.

Re: Optimal time of year to move to France tax-wise
 

Erm... do you not have a printer?
Virtually everything in France is online these days, as much if not more so than in the UK, and the authorities routinely accept printouts of downloaded EDF bills, tax bills, bank statements, healthcare attestations, etc etc etc.
Don't worry, be happy

Re: Optimal time of year to move to France tax-wise
 

Just to confirm their helpfulness. Suffering from chronic illectronism at the best of times, I was in a blind panic for this year's Tax Declaration, OH having passed away last year and the widow having to make two Déclarations, one pre- and and one post-death. The Tax fellow immediately did them both for me on-line, based on all the paperwork which I had taken along. With the new PAYE system, I'm hoping I'll manage on my own next Spring....

Re: Optimal time of year to move to France tax-wise
 

A further thought (worry!) - it looks like I will move to France in the second half of this year (October) and will probably also finalise the sale of my UK home roundabout then...
Big question - will I be liable for capital gains tax (in France) on the sale of my UK house? because I will have sold it and made profit (having owned it for 20 years!) during the year I start becoming eligible for paying tax in France.
Thanks in anticipation once again

Re: Optimal time of year to move to France tax-wise
 

I've since discovered that I was very naive to think that :thumbdown:
As Cyrian said, for the UK you need to get your head round HRMC's rules for split year treatment which is all far more complicated than I imagined.

As regards cgt on your UK house, if you sell it before you move to France I don't see why you would need to include it on your French income declaration. France doesn't levy cgt on the sale of principal residences. If the sale isn't finalised before you move, could be more complicated.

Re: Optimal time of year to move to France tax-wise
 

Under the UK tax system, there is an optimal time each year to stop earning.
It depends on how much you earn.
You have a tax-free allowance of £12,500 per annum ( wait for the uk budget ).
That in round terms is £1k per month.
If you earn £12k per annum then it doesn't matter when you stop but if you earn £24k per annum then you will have used up your £12,500 after 6 months.
I do not know how HMRC react with split-year treatment - if you perhaps get only a proportion of the annual tax-free allowance.
If you move to France in October then you would only be tax resident in France from that date. i.e. 3 months.

Re: Optimal time of year to move to France tax-wise
 

Split year treatment fries my brain.
Basically the problem is that you don't always qualify for it, and if you don't, you can be potentially classed as tax resident for the full year even if for part of the year you were in fact resident in another country. So for that part of the year you will be treated as dual resident and you have to declare your earnings in the other country to HMRC on top of your UK earnings. Of course there is the DTA to hopefully avoid double taxation but I guess it still all counts towards your tax free allowance. I don't pretend to understand it, but I understand enough to know that it's a nightmare if you don't have an accountant-type brain.

Re: Optimal time of year to move to France tax-wise
 

In that case, move at the end of March and you are not tax resident in the UK from April 6th.
You can then give your date of arrival in France as April and you will be treated as resident for 9 months of the tax year in France.
As far as UK tax is concerned, I never get an immediate or understandable answer from my accountant.
I recently asked him a tax question and after several days he answered a question I hadn't asked him.
I re-phrased the question and eventually got an answer of the type - maybes aye or maybes no.
:confused: