The deadline for the tax declaration (La Déclaration des Revenus) is upon us with Tuesday May 19th marking the day when all paper applications must be submitted, although those who file them online have an extension depending on where they live.
Most will have already filed their tax returns but there will plenty who as always, leave it until the last minute – quite understandably given the rigmarole can be a daunting a experience for expats in France, especially if they are new to the country.
When it comes to making the declaration there are certain things you need to remember. Some may seem obvious, but many are forgotten and may lead to problems further down the line.
To come up with a list of the key points to remember when filling in your 2013 declaration forms we have enlisted the help of David Hardy, a regional manager from the independent financial advisers Siddalls, based in Merignac, near Bordeaux, south west France, and Jonathan Pawsey from Charles Hamer financial services, based in the UK, both of which offer advice on all matters related to French finance.
Declare your worldwide income: Many people who have moved to France are under the misconception that when it comes to declaring income it’s only what you earn in France that you have to show the French taxman, but its actually your worldwide earnings that you have to present.
So that means the income you are getting through renting out a property, back in California or Cornwall. It also means the pensions you are being paid back in the UK for example and the interest you are earning on your bank accounts. In short, every penny that comes your way, no matter whether it’s been taxed already in your home country, has to be declared.
“There are some people who will think that if their income is taxed in the UK, then they don’t have to declare it here in France, but it’s not true, you have to tell them about your world-wide income,” Siddalls regional manager David Hardy tells The Local.
“I think there’s a bit of ignorance around the rules and some people just decide not to declare it, but we advise all our clients to declare everything,” Hardy said.
It's worth remembering that the EU SavingsDirective allows European countries to exchange information about individuals and if French authorities discover you have investments/savings income that you haven’t declared, then they tax authorities may be in touch, says Hardy.
Charles Hamer's Jonathan Pawsey adds: “One of the biggest mistakes our new clients have made in previous years when taking the DIY approach is ignorance of what they needed to disclose, over and above the simple income received or gains made.”
It's worth bearing in mind that French authorities can take action retrospectively too.
“Any temptation to omit foreign income from your returns should be avoided. You are more than likely to get caught in the end,” Pawsey says.
There is no real need to panic about declaring certain income like UK government pensions for former teachers, nurses etc to the French tax man, Hardy says.
There is a double tax treaty between France and the UK, which prevents certain income from being taxed twice but these figures need to be declared so they can calculate the rate at which any other income should be taxed. If you declare a UK government pension, rental income from Britain (which have to be taxed by the UK) in France you will be given a tax credit here.
Declare bank accounts:
One of the things that expats in France have to do, but often forget is to own up to any foreign bank accounts you have. Now you might not think this is important, but remember what happened to former Budget Minister Jérôme Cahuzac. Ok, he had €600,000 hidden a Swiss bank account and he was the budget minister, but the point is, you just have to declare them.
This involves picking up form 3916 or Hardy says: “You can do this on a separate piece of paper.”
“You just need to list the account’s details, including when it opened, the name of the bank, the name on the account etc,” he says.
When it comes to bank account’s it’s important to remember that any interest you earned on you accounts back home, also needs to be declared as income.
“Remember that income and gains from ISAs as well as pension lump sums are all taxable in France and need to be disclosed irrespective of the fact that they are tax free in the UK,” French financial expert Pawsey says.
Remember its household income:
Whereas in the UK you pay tax as an individual, in France you are taxed by household. So if you are a married couple or if you are “pacsed” (civil partnership) then you should make one joint declaration rather than two. If you got married half way through the year you can now declare one common declaration (unlike three in the past) for the whole year.
And if you have any children living with you that are earning then you’ll need to declare their earnings too.
Visit the tax office if you need to:
The thought of visiting a French bureaucrat in person to get help on filling in your tax form, might fill many with dread, but both advisers say it could be well worthwhile. For a start if you are filling in your first tax declaration then you’ll need to go down to your local tax office anyway to pick up the correct forms and while you are down there, Hardy says, it’s a good idea to join the queue and get some help from a member of staff if you are unsure.
“They are generally very helpful and will just be happy to see another expat who needs help, as long as you have all the information they need. They will give you important information although you can’t assume they can speak English, however,” Hardy says.
By doing it with someone who hopefully knows what they are doing the next one will you fill in should be a lot easier. Visiting the tax office in person to get help may be easier and more advisable than trying to enlist an accountant who will probably be snowed under at this time of year.
Alternatively getting help may save you more in the long run.
“If you don’t fully understand the paperwork get a professional to do the returns for you,” Pawsey says. “A few hundred pounds or Euros of professional fees are well worth the investment against the risk of tax overpayment by thousands or later fines for non disclosure. Once you know the ropes properly you can be more confident in adopting a DIY approach in future years
But if you want to go it alone then at least read all the instructions, Pawsey says.
“Read and understand all the accompanying notes to the various tax declarations before completing the returns themselves. The biggest mistake we come across when addressing new client previous returns is overpayment of tax due to misinterpretation of the nature of their income, placing figures in the wrong boxes, doubling up and not claiming from a raft of tax credits and reliefs,” he says.
The table below shows the different deadlines for online declarations depending on where you live.
What forms will you need?
Whilst the Déclaration des Revenus comprises a variety of forms, according to circumstances, here are some of the main forms that apply to expatriates. You' ll also be able to download forms from www.impots.gouv.fr
This is the main tax form, which you will receive if you are already in the system. You should use this to declare your worldwide income and gains.
Form 2042C (Complementary)
This is an additional form which is required if you have received income from furnished letting or chambres d’hôtes, or where you have paid tax in the UK that needs to be offset against French tax.
This is an additional form for any income received outside of France. Foreign income must be declared on this form, as well as on Form 2042.
This form covers details of any bank accounts located outside of France.
And finally what about exchange rates?
Some tax offices advise people to use the £/€ exchange rate at the end of the year. In theory, you should have kept a note of the exchange rates applicable to your sterling-based income as you received it.
However, for income which is received regularly such as a pension, for instance, the authorities will accept the use of the average exchange rate for the year – details of which are made public from various sources, including the official French revenue website previously noted.
If you have a question about exchange rates, Hardy says, then this is one area where a member of staff at your local tax office can help you with.