What do I do with bank justificatif?
I have received from my bank a justificatif a produire aux services fiscaux.
The form contains a list of codes with explanations and seems to suggest that I should enter some codes (2AB, 2BG, 2DH, 2EE et 8TA) in 2042 or 2042C of my declaration. It also states that the form is à joindre a votre declaration de revenus. Am I correct in assuming that I merely write in the codes as suggested and attach the form to my
declaration? K.S.
The French banks issue each year forms to provide figures that should be inserted in your tax return - the main form of which is the 2042 or the 2042C (the latter is for employees). One of the forms is the form that you use to insert the figures, and the other one as you have correctly identified is simply to return to the tax office with your tax return.
It is the figures, not codes, you insert on the form. For example, 2AB refers to section 2, box AB - this is where you should insert the relevant figure from this part of the form.
International bond tax declaration
My husband and I hold an international bond in Dublin in the form of unit trusts and cash. The investment has done very well from its inception in March 2009 and we have taken an income of £34,800 and made gifts totalling £4,000 to our children during the French tax year of 2009.
Do we just declare this income and the gifts on our next tax return or must we declare the total gains of the investment?
The bond is an “offshore” one, but not a dodge from HMRC and “chargeable gain” information is sent to them by the investment company. A.V.H
When you withdraw funds from the investment bond, a chargeable event certificate is issued by the insurance company, confirming the amount of the gain included in the withdrawal that is taxable.
It is this profit figure that you declare to the tax authorities – totalled for any withdrawals over the year.
Profit that is made within the contract and which is not withdrawn stays in the contract, and has no liability to income tax.
As for gifts made to children, these do normally need to be declared, on form 2735 (a form for “manual gifts,” that is gifts of money or shares etc, but not real estate and not done as formal donations via a notaire). Should you die, they will become relevant for establishing the final share that each child is entitled to from your estate.
This does not necessarily mean that there will be inheritance tax to pay. If the total donations to the children in the last six years is below a certain threshold then no tax is due. There is the separate threshold for donations of cash, but the gifts referred to would leave you under it.
Why am I paying CRDS on pension?
I ENJOYED your reply in the March edition on the subject of French taxes payable by retired expats in France. The information you gave coincided with my own position with the exception of French social charges. You stated that pensioners who have joined the French health care system using the UK E121 certificate will not be subject to French social charge on pensions, which is not my experience. Can you clarify? J.J.
The three social charges CRDS, PS and CSG are as a general rule chargeable on all income that is liable to be assessed and taxed in France. However, the state old age pension is paid in consequence of you having paid National Insurance contributions in the UK and, in the UK, once you reach retirement age and draw this pension, you are no longer liable to National Insurance.
The European Court found that France’s social charges were an equivalent to National Insurance and that it was incorrect to levy social charges on income which was being paid to a taxpayer due to social charges having been paid by them during their working life.
The French have accepted this except in respect of liability to the CRDS, as they say liability to this still applies if the taxpayer is a financial liability to the French social security system. Fortunately, once someone is entitled to the UK state pension, they also benefit from free healthcare funded by the UK via E121 form. So, if you have the state pension and the E121(or your spouse or civil partner has one) and you are not a liability in any other way to French social security, you are not liable to the CRDS.
Assuming you have an E121 and no other French social security benefits, you should write to the tax office sending a copy of the E121 (or ask them to check the fact you have one with the health authority, and give them the number on your carte vitale), and direct them to note 17 in the Notice (accompanying notes) for the foreign income form 2047. This should ensure that things are corrected for you. Otherwise, you should contact a professional to sort the matter out.
Can I offset my share losses?
Two companies trading on the UK stock exchange in which I had shares have gone into administration. Can these losses be offset against the dividends I receive when I have to fill in my tax returns? R.C.
No - in the same way that you cannot claim for drops in value of stocks. If you could sell the stocks, then the losses would be accumulated and available for use against other gains, but this is not probably of any assistance to you.
The only other way in which tax relief can be given is if the investment was made through some business start-up scheme or such-like, but not as an ordinary investor.
