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Rent and pension rules confirmed

A French tax credit, including for social contributions, should be applied to UK rental or government pension income

UK RENTAL income and government pensions should not attract French income tax or social contributions, senior French tax officials have clarified today.

This also applies to the above incomes where no UK tax was paid on them due to UK tax allowances.

The confirmation comes after officials at France’s central tax authority, the DGfip, said they would study the issue after Connexion flagged it up following numerous queries from readers (Clarity promised on tax rules).

As we explained in recent weeks, the matter has taken some time, due, officials say, to the complexities of analysing the legal effects of the UK-France Double Tax Treaty (Rent and pensions decision delayed).

Connexion initially sought to clarify that these income types, which are assessable in the UK, attract a credit for French tax and that, as the treaty specifies, this includes social contributions like CSG. There was widespread confusion on the matter last year following changes to double-tax treaty rules, with different tax offices taking different views – some imposing tax and/or social contributions and others not.

The officials confirmed the credit for French tax and social contributions on incomes which had been taxed by the UK but said uncertainty remained where the income had not been taxed due to UK personal tax allowances.

Now a senior official, following discussions with The Connexion, has stated: “We have progressed well on the subject, on the basis of your technical questions”. He invited us to talk to a press spokesman, who he said could inform further about this.

The spokesman, giving a response which he said “corresponds perfectly to your question”, said: “A tax credit will be applied if the corresponding income has been subject to income tax in the UK. It may also interest you to know that in cases where the UK tax is zero because of a tax allowance obtained in the UK (related to age or the level of other incomes etc) the tax credit removing French tax is maintained.”

The senior official told Connexion previously that once a decision was made it would be communicated to local tax offices, with priority to those where there is a substantial English-speaking community.

The spokesman said people using internet declarations may still make changes to their declarations with no penalty, if necessary. He added if people have any specific questions about their individual circumstances “their local tax offices are at their disposal to answer their questions”.

The Connexion will now be seeking clarification on how people who were incorrectly assessed on this issue in 2012 will be treated – and whether they will be able to make retrospective claims for reimbursement.

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