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taxation on UK income

taxation on UK income

Old Nov 26th 2020, 5:47 pm
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Default taxation on UK income

A very naive question - thanks if anyone has the patience to go give a quick reply.
A UK friend who is going to become resident in France has told me that the French will only tax you on your income generated in France - not on your UK/worldwide income.
Sounds too good to be true? Is it?
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Old Nov 26th 2020, 6:01 pm
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Default Re: taxation on UK income

UK Government pensions - firemen; police etc are taxed in the UK.
UK State pensions are taxed in France.
UK rental income is taxed in the UK but needs to be declared on your tax return.
All income needs to be declared in your French tax return where you declare the income and any tax already paid.
Under the UK - France double taxation agreement you should not be taxed twice for the same income.
You may have to pay social charges (NIC) on overseas income.
Other countries may have similar taxation agreements which may vary from the UK agreement.
You have to declare your worldwide income / assets on your French tax return.
There is a property wealth tax.
There is a section dedicated to overseas income in the tax return.
The French tax authorities are very proficient at tracking down people who don't fully declare their income / assets.
HTH
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Old Nov 26th 2020, 6:57 pm
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Default Re: taxation on UK income

If you are non-resident in France, you are only liable for tax in France on your French-sourced income.
If you are resident in France, as cyrian says you declare your worldwide income in France, and any income that is taxable elsewhere is treated as per the relevant DTA.
Your friend may also need to be made aware that France also levies what's often called "social charges" on certain types of foreign income. These social charges are not to be confused with social security contributions, which are a different thing entirely; social charges are used for various purposes including paying off France's national debt, funding the health service infrastructure, subsidising social and solidarity schemes etc. The way social charges are levied is quite complicated, with different rates and various exemptions, but for instance if a person lives in France but travels back to the UK to work as a salaried employee, they would probably be liable to pay social charges on their salary in France, over and above income tax paid in the UK.
Info about social charges here:: https://www.blevinsfranks.com/news/a...s-changes-2019
but the rules keep changing and I don't guarantee this is fully up to date. Also, in some cases EU citizens or people who are covered by another EU social security system are treated more favourably for social charges - I assume Brits will lose this advantage after the end of transition, but haven't seen confirmation one way or the other as yet.
So taking things all round I think your friend is overlooking a thing or two. If they read the France-UK tax treaty they can find out how their own sources of income will be treated.
As you say, it would be a bit too good to be true.


Last edited by EuroTrash; Nov 26th 2020 at 7:00 pm.
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Old Nov 27th 2020, 5:56 am
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Default Re: taxation on UK income

Originally Posted by cyrian View Post
UK Government pensions - firemen; police etc are taxed in the UK.
UK State pensions are taxed in France.
UK rental income is taxed in the UK but needs to be declared on your tax return.
All income needs to be declared in your French tax return where you declare the income and any tax already paid.
Under the UK - France double taxation agreement you should not be taxed twice for the same income.
You may have to pay social charges (NIC) on overseas income.
Other countries may have similar taxation agreements which may vary from the UK agreement.
You have to declare your worldwide income / assets on your French tax return.
There is a property wealth tax.
There is a section dedicated to overseas income in the tax return.
The French tax authorities are very proficient at tracking down people who don't fully declare their income / assets.
HTH
Clear and precise, absolutely perfect and informative. May I ask just one question, well two I suppose!! You say the U.K. state pension is taxed in France. Does that mean the pension is taxed in France if it is 'delivered' to France i.e; into a French bank account? The second part of the same question: If the state pension is paid into a UK account is it subject to French tax? (I accept that the French authority would have to be informed or they, presumably, wouldn't know!!!)
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Old Nov 27th 2020, 6:09 am
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Default Re: taxation on UK income

If you live in France your UK state pension is taxed in France because that's what the tax treaty says. It makes no difference whether the pension is paid into a French bank account or a UK bank account.
It's not taxed at source. The (euro equivalent of) the pension amount must be declared in the appropriate box on your annual declaration of income. Whether or not you actually pay tax on it will depend on the usual factors (total income, household composition etc).

Last edited by EuroTrash; Nov 27th 2020 at 6:17 am.
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Old Nov 27th 2020, 6:28 am
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Default Re: taxation on UK income

Originally Posted by KJMW View Post
Clear and precise, absolutely perfect and informative. May I ask just one question, well two I suppose!! You say the U.K. state pension is taxed in France. Does that mean the pension is taxed in France if it is 'delivered' to France i.e; into a French bank account? The second part of the same question: If the state pension is paid into a UK account is it subject to French tax? (I accept that the French authority would have to be informed or they, presumably, wouldn't know!!!)
The UK State pension is not taxed but taxable in that it counts towards your taxable earnings.
In the UK, if your State pension is below the personal allowance of £12,500 then no tax is due but your tax code is adjusted to reduce your personal allowance accordingly.
If you have other income, e.g. a private or Govt pension, then the modified tax code reduces the tax-free element of the other income.
i.e. you pay more tax than anticipated on that additional pension etc to reflect the money received from the State pension.
If you are resident in France then either your UK State pension is managed by France or if paid direct to you, then you have to declare it as overseas income in your French tax return where the FISC will include it in your gross income for tax purposes.
In the EU, a person could have accumulate pension rights in several EU countries.
If your relevant tax authority is France then each country where you have accumulated pension rights should liaise with France to pay their proportion to the FISC who will manage these and pay you a pension made up of each separate pension entitlement.
This assumes that you are also receiving a French State pension.
Yes you need to declare all income (including State and Govt pensions) and tax already paid from the UK in your tax return.
The FISC will not be happy if you don't and will come down hard on offenders.

Last edited by cyrian; Nov 27th 2020 at 6:32 am.
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Old Nov 27th 2020, 7:35 am
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Default Re: taxation on UK income

Originally Posted by cyrian View Post
The UK State pension is not taxed but taxable in that it counts towards your taxable earnings.
In the UK, if your State pension is below the personal allowance of £12,500 then no tax is due but your tax code is adjusted to reduce your personal allowance accordingly.
If you have other income, e.g. a private or Govt pension, then the modified tax code reduces the tax-free element of the other income.
i.e. you pay more tax than anticipated on that additional pension etc to reflect the money received from the State pension.
If you are resident in France then either your UK State pension is managed by France or if paid direct to you, then you have to declare it as overseas income in your French tax return where the FISC will include it in your gross income for tax purposes.
In the EU, a person could have accumulate pension rights in several EU countries.
If your relevant tax authority is France then each country where you have accumulated pension rights should liaise with France to pay their proportion to the FISC who will manage these and pay you a pension made up of each separate pension entitlement.
This assumes that you are also receiving a French State pension.
Yes you need to declare all income (including State and Govt pensions) and tax already paid from the UK in your tax return.
The FISC will not be happy if you don't and will come down hard on offenders.
Again, a clear answer. Thank you very much.
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Old Nov 27th 2020, 10:19 am
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Default Re: taxation on UK income

Many thanks for the clarifications! Would it be broadly true to say (keeping it to UK/France income):
1. You declare all your UK/France income to the French.
2. They calculate the tax that would be due under French tax laws.
3. Then any tax paid in the UK is deducted, producing your French tax demand.
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Old Nov 27th 2020, 11:08 am
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Default Re: taxation on UK income

Originally Posted by nigel.b View Post
Many thanks for the clarifications! Would it be broadly true to say (keeping it to UK/France income):
1. You declare all your UK/France income to the French.
2. They calculate the tax that would be due under French tax laws.
3. Then any tax paid in the UK is deducted, producing your French tax demand.
Yes, basically (although the calculation is a little more complicated than A minus B).
re 3. This of course assumes that tax was correctly paid in the UK. If tax has been paid in the UK on income that is in fact taxable in France not the UK, then France will bill you for the full amount due and it's up to you to reclaim from the UK the tax that was paid, either in error or sometimes because paying tax and then reclaiming it is unavoidable because of the way the system works (or that's how it used to be, maybe things have changed).

It sometimes happens that the amount of French tax due is lower than the amount of UK tax paid, in which case obviously there is no more tax to pay but unfortunately you don't get a refund.
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Old Nov 28th 2020, 9:13 am
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Default Re: taxation on UK income

Originally Posted by nigel.b View Post
Many thanks for the clarifications! Would it be broadly true to say (keeping it to UK/France income):
1. You declare all your UK/France income to the French.
2. They calculate the tax that would be due under French tax laws.
3. Then any tax paid in the UK is deducted, producing your French tax demand.
Point 3 ; I believe they deduct tax calculated on the amount that you would have had to pay in France, not on the tax paid in the UK. (It's complicated but it works).
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Old Nov 28th 2020, 9:43 am
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Default Re: taxation on UK income

Originally Posted by Annetje View Post
Point 3 ; I believe they deduct tax calculated on the amount that you would have had to pay in France, not on the tax paid in the UK. (It's complicated but it works).
Yes that is right . Also be aware that to have your UK state pension paid free of tax in the UK you must download a form from the HMRC website get the French fisc to stamp it to show that you are fiscally resident in France and send it off to HMRC It is worth doing this financially especially if you have other UK govt pensions/benefits
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Old Nov 28th 2020, 7:34 pm
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Default Re: taxation on UK income

Originally Posted by Annetje View Post
Point 3 ; I believe they deduct tax calculated on the amount that you would have had to pay in France, not on the tax paid in the UK. (It's complicated but it works).
Annetje, isn't that what I say in 2/3.? They calculate according to the French tax laws, then deduct the tax already paid in thr UK.
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Old Nov 28th 2020, 9:42 pm
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Default Re: taxation on UK income

I think the point is, it's not the actual amount of tax paid that they deduct. It's the amount you would have been liable for.
It may be that because of the way the UK tax system works, you didn't actually pay that amount of tax in the UK. You might even have paid no tax at all (for instance as a non resident your taxable income in the UK may have been your personal allowance). But that is the amount that is deducted.
That's my understanding, but having never been in this situation I could be wrong.
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Old Nov 29th 2020, 6:41 am
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Default Re: taxation on UK income

Originally Posted by nigel.b View Post
Annetje, isn't that what I say in 2/3.? They calculate according to the French tax laws, then deduct the tax already paid in thr UK.
No, they don't deduct the UK tax.
Like ET says, they deduct the amount of tax you would have had to pay in France. This can be better or worse.
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Old Nov 29th 2020, 10:11 am
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Default Re: taxation on UK income

Annetje, but where does the Double Taxation Agreement come into matters?
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