There are of course cross border agreements in place between the UK and France which make life complicated when it comes to where to bank your income from your property and which side of the Channel to pay any taxes and social charges due on it. There are various legal ways of renting out property in France and you need to make sure you are up to-date on them. This is best done by contacting a notaire who will draw up the lease best suited to your requirements.
When visiting a gendarmerie once to sort out a stolen mobile phone I saw a poster which stated that everyone in France has a right to a roof over their head, no matter what. This means that the law is generally on the side of the tenant so it is in your best interests to be legal and above board, not only with an appropriate lease or contract but also with the correct payment of taxes.
Another thing to be aware of in this technological age is that it is difficult if well nigh impossible ‘to stay off the grid’. Concerns over money laundering have meant that both the French and the UK government have made it obligatory that they are informed by bank managers of any suspect activity in peoples’ accounts. Moreoever they can get access to private bank accounts if necessary.
1. You are tax resident in the UK and have a holiday property in France.
If you intend to rent it out as a holiday home then you need to declare the income from it in both France and the UK on your two returns. You pay income tax on the revenue in France and it will be deducted from your UK obligations.
2. You are tax resident in France and have a second property
which you rent out as a holiday home (gite etc). This is classed as a business now and you have income tax to pay on the profits and possibly social charges. This latter is dependant on the amount of income and on how much of a percentage these revenues are of your total income. If you are not certain of how to go about this then take professional advice. Since July 2010 you face a fine if you don’t declare your activity to the Mairie as well!
3. You are tax resident in France and rent a property out in the UK.
This is, not surprisingly, the reverse of situation n° 1. You fill out tax returns in both countries and pay any taxes due in the UK.
4. You are tax resident in France and have a second property to rent out in France on a long term basis
(a year’s lease furnished or 3 years unfurnished). If you are over state retirement age then the question of what you pay in social charges is dependant on your own particular situation – you need to seek professional advice. The revenues from the let have to be declared on your tax return. There are choices to be made here according to what is most advantageous to your circumstances.
5. Lastly, those people who return to the UK
and choose to rent out their property in France. They become tax resident in the UK again but nevertheless as the property is in France the tax is payable in this country. You need to fill out a special déclaration for leaving the country as well as a non-residants’ tax return. If you are renting out your property on a long term basis then the tenant will necessarily become tax resident in France. One of the obligations of being tax resident is to prove where your domicile is and if you are renting the property than you have to state who the owner is!
Jeremy & Stephanie Godwin
Transmanche Accountancy
02 43 03 20 94
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