As the 2013 Avis have been dropping through the letterboxes of France, there has emerged a trend of higher income tax and prélévements sociaux liabilities being charged on income declared for 2012.
Firstly, many of the Tax Offices have been applying the treaty exemptions on Government Service pensions and UK rental income incorrectly or, in some cases, not at all, charging income tax and CSG/CRDS, when in fact none is due on these sources of income.
Secondly, whilst the correct income tax treaty exemptions may have been implemented, the Tax Office has charged the prélévement sociaux (CSG/CRDS) in error.
Thirdly, it seems many Tax Offices from Brittany to Cote d’Azur, for 2013 have changed the way in which they calculate the French income tax due on non-treaty exempt income eg the National Insurance retirement pension, other employer pensions and investment income. Many expats have received a 2013 tax bill which is far in excess of previous years’ tax bills – sometimes as much as 50-60% higher. This type of increase has come about because it was realised by the tax authorities that the treaty exempt income, whilst not actually bearing any French tax payable by the individual taxpayer, nevertheless should be taken into account in determining the marginal rate of tax on the rest of the taxpayer’s income. This means the French tax actually levied on all their other income is pushed up into the next tax band. The calculations for 2013 now take the treaty exempt amounts of income into account, resulting in more tax payable by the individual taxpayer.
If your Avis shows a much higher liability than last year, it could be due to any (or all!) of the above factors. If you require us to review your Avis, then please contact us on email at firstname.lastname@example.org or email@example.com We offer a fixed fee service and will provide a written quote for tax services.