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Clarity promised on tax rules

Officials have promised speedy clarification of how they will treat UK rental income and government pensions this year

SENIOR French tax officials have promised Connexion a speedy resolution to the problem of social contributions on UK rental income and government pensions.

As we state in our 2013 French Income Tax helpguide, grey areas remain over how tax offices treat these incomes, especially where they have not been subject to any actual UK tax.

These income kinds are assessed for tax in the UK – although no tax may be due if someone’s income falls below the first taxable UK band. In the past they were considered exempt from French income tax and related social contributions; under the latest UK/France double tax treaty they are considered to give rise to a tax credit for French tax instead.

Last year however many readers reported the income was subject to French taxation, with the social contributions being the main issue reported to us – levies like the CSG or CRDS, which are in addition to income tax and used to involve a separate statement/bill (though this year there will be a single combined one).

Where they were levied, some readers said they made successful challenges and had reimbursements, but others were turned down. Others reported these incomes remained tax-free.

Officials told Connexion earlier this year that these variations were probably due to regional differences in interpretation of the rules for cases where the income was not taxed by the UK.

Now senior Finance Ministry officials say that – after Connexion’s repeated requests for clarification – they are fully aware of the need to clarify their policy on this point.

They will take a decision before the deadline for this year’s tax declaration and communicate it to The Connexion, they said, so we can inform readers.

Instructions will also be given to all of the tax offices, so they apply the same rules.

Our Income Tax helpguide gives suggestions on how to declare these income types, based on an analysis by tax professionals. However we would advise people with these incomes, especially if they do not expect to pay UK tax on them, to check our website for updates which we expect to make in the coming weeks. We will be giving further information on the best way to declare them and how the income will be treated by French tax offices as soon as we have clarification from the French Finance Ministry.

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