Thursday, May 31, 2007

French Tax and UK registered cars

Today is the last day to submit the French tax return. The French system requires that worldwide income is declared on this very complicated set of forms. Some income from other European countries is taxed at source and will not be taxed again in France, an example is a military pension, which is taxed in the UK, but must still be declared in France if one is a resident and needs to file a tax return. This years return is for income from the year 2006. If you have lived in France for part of 2006, then you must declare for that part.

Many people think that because they pay UK tax in the interest from their UK bank, it does not need to be declared here, that is not the case. The UK tax can be claimed back from the UK tax people and French tax must be paid. I suspect that with the closer co-operation of Europe wide tax authorities, that these people will get caught out in the near future.

In France a married couple are not taxed as individuals, as in the UK, but as a unit. The personal allowance is doubled and the income of the couple is only taxed once that total is reached. This means that if only one partner has an income then both partners allowance will count before any tax is paid.

The other bonus in France is that one can claim tax credits for certain house improvements, one of these is the installation of a wood burning stove or solar water heating. 50% of the cost of the materials can be claimed back on the tax return. This encourages people to be environmentally friendly.

Many people that I meet here try their best to avoid something or other. The prime example is car registration. I see many cars out and about France that still have UK plates on them with a tax disc that is over a year out of date. I don’t believe that these people have an MOT either. Some buy French insurance and may put the car through the French equivalent of the MOT, but they are still not legal. To drive a UK registered car anywhere it must be UK road legal, and if you move to France to live then you have one month to start the importation process according to French law. Why do they do it? Because they think that they can get away with it forever. I am looking forward to the crackdown and hope these people will end up with huge fines and their vehicle confiscated.

I would advise anyone living here to seek professional advice on any of the subjects covered and take no responsibility for any inaccuracies in this post.

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