What exactly do I need to tell the French taxman about my assets at home

What exactly do I need to tell the French taxman about my assets at home
You must declare all accounts to the French taxman. Photo slokkete/Depositphotos
The French tax declaration season is about to open, but how much do you really need to tell the French taxman about your affairs outside of France? International tax specialist Jason Porter explains some essential information.

What happens in May?

May is the time of year people need to submit their tax returns in France for 2018 income. This is compulsory for everyone, even if your earnings are now taxed at source under the new pay-as-you-earn system. But there have recently been huge changes to the French tax system, and this has inevitably caused much confusion, especially among British people living in France.


All assets and income must be declared in France – even if you have already paid tax on it in the UK. Photo: AFP

But the French tax form only covers my income in France, right?

Wrong. There has always been uncertainty among the British community in France over what UK source income they should declare on their French tax return. Most jurisdictions operate on the basis that if you are resident, then you declare your worldwide income, and if you are not resident you only declare the income which is actually sourced in that jurisdiction. If that was it, then you could pay tax twice – in the UK and France – on the same income.

The Double Tax Treaty between these two states is designed to eliminate this possibility.  As an example, tax paid in the UK on UK rental income is available as a tax credit against the French tax liability on the same income.

Unfortunately, many UK nationals living in France appear to be under the impression they do not need to declare UK source income in France, as they have already declared it (and paid tax on it) in the UK.  This is not the case – all non-French income still needs to be declared on a French tax return. 

The commonest areas of non-declaration are around UK source rental income, UK bank interest and other UK investment income (dividends, etc., from shares and securities in companies and funds).  In particular, ISAs are commonly missed off French tax returns. Whilst they have tax efficient status in the UK, in France you would “look through” the ISA vehicle, and declare the underlying dividends, interest and capital gains on your French tax return.

What about bank accounts at home?

The French government has recently taken steps to further strengthen its fight against tax fraud, extending the disclosure regulations to also cover non-active bank accounts.

You must now declare all non-French bank accounts and life insurance policies, even if you have not deposited any funds, earned any interest/gains or made any withdrawals. The penalties for failing to declare a foreign account are the same whether it is active or not (and these can be substantial).

This has now become even more real with the CRS (Common Reporting Standards) exchange of financial information between states.  

We are already seeing evidence of French tax offices calling UK nationals in for interviews to discuss their non-declaration of foreign bank accounts, rental income, and capital gains, based upon information provided by UK financial institutions to the French tax authorities.

What are the recent changes about?

This is all happening at a time of a fundamental change in the basis of taxation in France.  

Most other developed nations introduced a form of “Pay-as-you-Earn” taxation many years ago.

France had always rejected this as an unacceptable intrusion of privacy. For several million households who already pay 'on account' (over 10 months) provisional payments of income tax to which they may be liable in the year, based on the tax they paid in the previous year, this is not a tremendous change, but there are many who do not utilise this system.

From January 1st 2019 French tax residents have been subject to a monthly withholding tax on their income for that year.  The sum payable will be as advised on your income tax notice for 2018 (based on 2017 income). The taxpayer will incur penalties if the tax authorities are unable to collect the tax, for example due to insufficient funds in an account.

So do I sill have to do the declaration if I am taxed at source?

Yes, for the moment anyway. As usual, everyone is obliged to make a tax return on their 2018 income this May, and whilst a full tax assessment will be carried out, no tax will be levied, provided the levels of income correspond to the income declared in the previous three years – 2015, 2016 and 2017.  

The 2018 income declared will be neutralised by the CIMR tax credit – (“Crédit d’Impôt de Modernisation du Recouvrement” or “Tax Credit for the Modernisation of the Recovery”). Exceptional income and excessive increases in current income will not be neutralised by the CIMR and will therefore be taxed.

When do I need to pay up by?

Tax declarations will be open on line on Wednesday April 10th with the deadlines varying depending on where you live in France. The deadline for anyone filling out the paper version of the tax declaration is May 16th, with the deadlines for those filling them out online slightly later.

Any balance of tax due must be settled by the end of the year (penalties will apply for non-payment). Or, where applicable, the tax authorities will refund any overpayment.

Jason Porter is Business Development Director of Blevins Franks Financial Management Ltd.



Member comments

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  1. This article was posted two years ago. Is there an update for the 2020 tax declaration?
    Nigel Stubbs

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