1.2. Your Taxable Income

1. 1.2.1. Worldwide Income
2. 1.2.2. UK Pension Income
3. 1.2.3. Foreign Rental Income
4. 1.2.4. Foreign Savings Income
5. 1.2.5. French Savings and Investment Income

1.2.1. Worldwide Income

If you become resident in France you need to declare your worldwide income from all sources.

Accordingly, your personal income tax declaration needs to include salary, pension, rental income, investment income, interest on savings, and income from business activities, if not taxed through French company tax, (called Impôts sur les Societiés).

Some income is excluded, notably some French social security payments, certain French bank savings schemes, and there are some concessions for apprentices.

In addition, income earned outside of France taxed at source should also get relief under double tax treaty agreements.

Nevertheless, this foreign income will be added to your French earnings to form the base for calculating liability to income tax on your earnings in France. In short, it may increase the rate of taxation on your French earned income.

1.2.2. UK Pension Income

If you are resident in France, and in receipt of a State retirement pension, private sector pension, or annuity from the UK, it is taxable in France.

Initially, when you relocate to France you will be taxed at source by HM Revenue, so you will later need to make an application to be taxed in France, and to receive a rebate of tax paid in the UK.

You can apply to the HM Revenue & Customs to obtain tax relief at source so that your pension will be paid gross.

You can also contact their Centre for Non-Residents on 0044-151 210 2222 from outside the UK, or 0845 070 0040 from with the UK.

Of course, depending on your circumstances, it may not be in your interests to receive relief at source, although it is generally more beneficial to opt for your pension income to be taxed in France as rates of income tax in France are lower than that of the UK.

The ability to opt for taxation of your pension in France is not ordinarily available to those in receipt of a government or local government pension from the UK, whose pension will be taxed at source. You will not be liable for income tax in France on this income, although your net government pension will be taken into account for the purposes of calculating the tax rate on any French earned income.

Those in receipt of a public service pension that is taxed in the UK, need not be concerned about any risk to the taxation of their lump sum pension payment in France, although it may be taken into account for the purposes of assessing the rate of tax applied on other taxable income. We say 'may' because different tax offices seem to treat this issue differently!

If your own tax office considers they do wish to take it into account, you can ask them to roll the income over four years, on the basis that it is 'exceptional income'. However, if you have no previous tax record in France, they will have no basis for making an average assessment. They may be prepared to assess it on the basis of your first year income in France, and then review annually.

You should also read our consideration of your potential liability to the social charges in France, as your potential liability to this tax has a bearing on your overall taxation strategy.

1.2.3. Foreign Rental Income

If you become resident, but continue to receive letting income from property remaining in the UK, then this income is ordinarily taxable by the UK authorities, to whom you will need to make a tax declaration.

You will of course also need to declare the income to the French tax authorities, but you will receive a credit for tax paid in the UK.

However, you can make application to receive the income without tax deduction by HM Revenue and, depending on your circumstances, it may pay you to go for this option.

More details on relief in the UK for non-resident landlords can be found by visiting Tax Relief for UK Landlords

1.2.4. Foreign Savings Income

If you earn foreign savings or investment income, then this is taxable in France, although you will get relief against any taxation paid elsewhere.

You can also generally elect to have your foreign savings income paid gross to you, and you will then be liable to French income tax on the totality of this income. Either way, expect to have to pay the 11% social welfare levy on the net income.

In July 2005 the European Tax Directive came into force, under which members states agreed to exchange information about bank customers who earn interest in one country but live in another.

This means that if you hold savings in a bank account in the EU other than in France, the amount of interest earned on the account will be reported to the French tax authorities.

It is possible to hold an account 'offshore' where you can elect to pay a 'witholding tax' but you will still pay tax all the same!

You can read more about these regulations in our pages at European Tax Directive.

You may find that your bank will ask you for your French income tax registration number.