Yes - any income received from the rental of a French property needs to be declared in France whether received in £ or Euros.
No - Any letting income generated by the French property owned by a resident in France or the UK, no matter where it is paid or received, is always, first and foremost, taxable in France.
Secondly, if the owner is resident in the UK at the time, the income will also always be taxable in the UK.
Through the double tax treaty any tax paid in France may be offset against tax due in the UK applying to the same rental income. If the tax paid in France is more than that due in the UK, then no tax will be paid in the UK.
The tax treaty therefore ensures that in total no more than the highest rate of tax of either country is paid, this being shared between the two.
Yes - any income received from the rental of a French property needs to be declared in France, regardless of whether the lettings activity is returning a profit or a loss.
If turnover is less than 32.600€ you have the option of adopting either the Regime Micro-Enterprise or the Regime Simplifié method of accounting.
If turnover exceeds 32.600€ then the Regime Simplifié method would have to be adopted.
Whenever total income for the year is less than 32.600 Euros, unless the taxpayer opts for an alternative method of calculation, the tax office will apply the "Regime des Micro-Entreprises", whereby for a UK resident tax at 20% will be applied to 50% of income.
The obvious disadvantage with this route is that losses cannot arise. If there is a mortgage on the property and if depreciation is available, actual expenses for furnished holiday letting are likely to exceed 50% of income, especially in the early years.
If turnover is expected to be more than £3,000 per annum and if a mortgage is in place, this is the usual method we adopt for our clients.
Compulsory when turnover exceeds 32.600 Euros, or applicable by option, the regime requires simplified accounts to be drawn up and presented each year, with tax being assessed against actual income and expenditure incurred.
Losses can therefore arise to be carried forward, (for a maximum of 10 years), as well as excess depreciation which can be set against future profits indefinitely.
As a result an altogether more tax efficient approach can be maintained.
The accounting regime which requires the least amount of paperwork and the least number of French tax forms to be completed is the Regime Micro-Entreprise.
This is where 50% of income is taxed at a flat rate of 20%, regardless of actual expenditure. It is only the income which is declared.
Yes - we can adopt the Regime Simplifié regardless of your level of turnover.
The following are list of allowable expenditure items:
All of these elements need to be on each individual invoice in order to make them valid, as required by the French tax office.
Under the Regime Simplifié any profits after allowable expenditure are taxed at a rate of 20%
Under the Regime Micro-Entreprise 50% of turnover is deemed to be profit, with this being taxed at a rate of 20% - example 10.000 Euros turnover @ 50% = 5.000 Euros @ 20% = 1.000 Euros tax.
Yes - we have numerous clients whom we complete their annual SCI returns as well as their individual tax returns.
Over the past few years the amount of information which is being passed between the UK and French tax offices has increased dramatically, leading to both tax offices becoming increasingly aware of holiday homes in France.
We have also found examples of unwitting tenants letting it be known they are not enjoying the property free of charge, or of people in the local towns or villages making the local tax offices aware of rental property.
This can and does lead to retrospective "Taxation d'Office" and recovery procedures whereby a tax assessment is issued automatically based on what the local tax office deems as being the typical profit that could be expected to be obtained from seasonal holiday lettings, (ignoring normally allowable expenditure such as mortgage interest), plus late interest charges and penalties, irrespective of the true income and expenses undergone.
The French tax year runs from the 1st January to the 31st December.
For French residents the annual French tax returns usually need to be declared by the 31st May.
For Non French Residents, if under the Regime Simplifié the initial tax forms needed to be submitted by the 31st May with the additional forms to be declared by the 30th June.
Under the Regime Micro-Entreprise the accounts needed to be submitted by the 30th June.
This does change from year to year, but usually there is an income tax bill sent between September and December. However, there is normally a bill sent in February and May for 1/3 of the previous year's invoice, with the balance being paid or refunded between September and December.
Our charges are dependant on the accounting method that you choose: