Frequently Asked Questions
-
Do I need to declare the rental income I receive from my French property, even if it's in £ and received in the UK?
Yes - any income received from the rental of a French property needs to be declared in France whether received in £ or Euros.
-
I have been told that if I declare the French income in the UK, then I do not have to declare it France under the double taxation treaty, is this correct?
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.
-
How does the double taxation agreement work with regards to my French rental income?
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.
-
Do I need to declare the income even if my property is running at a loss?
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.
-
Do I have a choice in the accounting method I can choose?
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.
-
What is the difference between the Regime Simplifié and the Regime Micro-Entreprise?
-
Regime des Micro-Entreprises
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.
-
Regime Simplifié
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.
-
-
Which is the simplest accounting method I can adopt?
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.
-
Can I adopt the Regime Simplifié method of accounting even if I only have a small amount of turnover?
Yes - we can adopt the Regime Simplifié regardless of your level of turnover.
-
What items of expenditure can be offset against my rental income under the Regime Simplifié?
The following are list of allowable expenditure items:
- Local Taxes (Habitation / Fonciere)
- Utilities (Gas/Electricity/Water/Telephone)
- Publicity/Postage/Stationery
- Small Purchases less than 400 Euros per item
- Maintenance/Small Repairs/Cleaning
- Travel Expenditure
- Buildings & Contents Insurance
- Professional Fees
- Bank Fees
- Mortgage Interest
- Management Charges/Agent Charges
- French Mortgage Interest
- Large Renovation Works
- Furniture
-
What is deemed to be a valid invoice in France to be used as expenditure under the Regime Simplifié?
- The name and address of the invoicing company / individual must be indicated
- Your name and French address must be indicated (this includes invoices from stores such as M. Bricolage)
- The date must be shown
- For invoices incurred in France, the "numero siret" of the supplier must be shown - this is the number which confirms a company/individual is formally registered with the French tax authorities
- The invoice amount
- Details of the purchase/service
All of these elements need to be on each individual invoice in order to make them valid, as required by the French tax office.
-
What is rate of French tax will be applied to my rental income?
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.
-
Can you complete SCI returns?
Yes - we have numerous clients whom we complete their annual SCI returns as well as their individual tax returns.
-
How will the French tax office know if I am renting out my property?
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.
-
What are the dates of the French tax year?
The French tax year runs from the 1st January to the 31st December.
-
When do the annual tax returns need to be declared?
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.
-
When does the French tax need to be paid?
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.
-
What are the French accountancy services you offer?
- The preparation and presentation of an income and expenditure account for France & the UK
- The completion of the French tax returns (including registration of the lettings activity)
- The completion of the UK SA106 (supplementary UK declaration relating to foreign income)
- Choosing the most appropriate tax regime in France in accordance with the level of income generated and the likelihood of registering a profit or a loss.
- We also claim any tax credits in France to be offset against tax due in the UK on the same income.
-
What are your charges?
Our charges are dependant on the accounting method that you choose:
- Regime Micro-Entreprise - 1st year £250 + VAT, 2nd year onwards £150 + VAT
- Regime Simplifié - 1st Year £400 + VAT, 2nd year either £450 + VAT or £300 + VAT dependant on whether or not invoices are sent to us or our internal spreadsheet is completed.
- UK SA106 - An additional £100 + VAT per annum is charged if you also want us to complete the UK SA106 (supplementary form declaring income from foreign sources)
-
What other services do you offer?
- French Mortgages
- French Inheritance Tax and Succession Law advice and planning
- French Residency Planning
- Full UK Independent Financial Services