French tax

[Neat]

Hello, I am currently undergoing an extremely stressful and (in my opinion) unfair tax investigation by the French authorities and I would like to know if anyone here may be able to help me in some way.

I am English and have lived and worked as an expat since 18 years old and have only lived in the UK for a year since that time, although I did visit he UK for about 2 months per year and bought a property in London during this time. My wife who was UK based happened to be visiting the south of france just over 5 yrs ago and fell in love with a lovely french farm house. I flew out to see it when I was on leave and as she loved and wanted the house and I had very limited time I agreed to buy it and the next thing I know we're being marched into the estate agents signing contracts and handing over 10% deposit!!

Once I had time to think it through I knew we had made a big mistake and would have serious trouble making ends meet after raising the deposit and the purchase taxes. I tried to back out of the purchase only to be told that I had signed a binding contract and had to go through with the purchase or I would lose the full amount of my deposit 50,000 euros!

Anyway to cut a long story shorter I purchased the house and two years ago due to financial difficulties (trying to meet the payments on the huge french mortgage) I was obliged to sell our house in the UK and my wife moved to France and took a job for a local estate agent. The next thing I know is that the tax authorities are after me for tax evasion and want an astronomical sum from me in back taxes!! I feel that this is hardly fair as I work overseas in a very difficult and physically demanding job often working 14+ hr days for 7 days a week for on average 9 months a year 12 weeks on 4 off.

I do not consider myself a French resident have never had access to any French services and spend minimal time there maybe 3 months a year maximum. I do pay local property taxes etc. and am incredulous that they would consider me in any way a legitimate target for taxation.

I have lost a huge amount of money on this french house and would have sold it years ago but could not afford to lose the 30% capital gains tax they would demand from me as a non french resident. If the french tax authorities win I will be obliged to sell the house and will probably it seems still be obliged to pay then capital gains tax and will have lost everything that I have worked for over 20 years. I am devastated and desperate can they do this to me and can I do anything at all to fight them?

I'm considering trying to find a competent tax lawyer but don't want to pay what little I may have left to lawyers and realise that it may be better to take the hit however hard and accept that I've hit rock bottom.

Any advice?

[Bevdeforges]

How far back are the French tax authorities hitting you for taxes? Is it back to the purchase date of your house in France (5 years) or back to when your wife moved to France (2 years)?

I'm sure giantpanda will weigh in here shortly - and as he seems to have some legal knowledge, he will surely have more information for you. But from what you've said so far, I suspect they may have a case for at least the 2 year period.

Residency for tax purposes normally is determined based on your "primary center of interest" which is a squishy concept based on multiple factors. One of the key factors, however, is normally where your family is located - so that if you work outside the country, but your wife is living (and working) in France, then you are considered to be tax resident in France, even if you only spend a few weeks or months a year there.

If they are contending that your French residency goes back 5 years, it may depend on how much time your wife spent in France during those years. Simply owning property in France doesn't make you tax resident there, but if your wife was physically in France more than 183 days out of those first couple years after you bought the house, you may be stuck owing for the 5 years.

Other factors to consider - did you pay income tax (and/or social contributions) in any other country during the period the French are investigating? did your wife receive any social benefits (health care, child allowance, unemployment) during the last five years, and from what country did that come? Do you pay social insurances in any country through your employer?

One tough issue you are up against is that, in France, there is no option for separate taxation of spouses. If your wife is considered resident in France (as it seems she is) then your "household" is taxable in France (unless, of course, you are considered legally "separated" by court order).
Cheers,
Bev

[giantpanda]

Originally Posted by Neat

Hello, I am currently undergoing an extremely stressful and (in my opinion) unfair tax investigation by the French authorities and I would like to know if anyone here may be able to help me in some way.

I am English and have lived and worked as an expat since 18 years old and have only lived in the UK for a year since that time, although I did visit he UK for about 2 months per year and bought a property in London during this time. My wife who was UK based happened to be visiting the south of france just over 5 yrs ago and fell in love with a lovely french farm house. I flew out to see it when I was on leave and as she loved and wanted the house and I had very limited time I agreed to buy it and the next thing I know we're being marched into the estate agents signing contracts and handing over 10% deposit!!

Once I had time to think it through I knew we had made a big mistake and would have serious trouble making ends meet after raising the deposit and the purchase taxes. I tried to back out of the purchase only to be told that I had signed a binding contract and had to go through with the purchase or I would lose the full amount of my deposit 50,000 euros!

Anyway to cut a long story shorter I purchased the house and two years ago due to financial difficulties (trying to meet the payments on the huge french mortgage) I was obliged to sell our house in the UK and my wife moved to France and took a job for a local estate agent. The next thing I know is that the tax authorities are after me for tax evasion and want an astronomical sum from me in back taxes!! I feel that this is hardly fair as I work overseas in a very difficult and physically demanding job often working 14+ hr days for 7 days a week for on average 9 months a year 12 weeks on 4 off.

I do not consider myself a French resident have never had access to any French services and spend minimal time there maybe 3 months a year maximum. I do pay local property taxes etc. and am incredulous that they would consider me in any way a legitimate target for taxation.

I have lost a huge amount of money on this french house and would have sold it years ago but could not afford to lose the 30% capital gains tax they would demand from me as a non french resident. If the french tax authorities win I will be obliged to sell the house and will probably it seems still be obliged to pay then capital gains tax and will have lost everything that I have worked for over 20 years. I am devastated and desperate can they do this to me and can I do anything at all to fight them?

I'm considering trying to find a competent tax lawyer but don't want to pay what little I may have left to lawyers and realise that it may be better to take the hit however hard and accept that I've hit rock bottom.

Any advice?

Hi!

I can certainly try to entangle your situation, if I understood it;

See my questions on the private email.

In all cases as soon as you work in France, you are a French fiscal resident, and that means you have to do a tax return. And you can be a fiscal resident in many countries.

Now if you are independent or have , then things get much more complicated because you also have to register for URSSAF and pay social charges and of course income tax.

If you go back some years, it gets a little complicated, because then you only declared in one country, and there was a " fight " on the question in which country you have to declare.

Yours,

giantpanda

[giantpanda]

Dear Neat,

Just found you had no private mail address on your file.

Can you fill it or write a private mail direct to me; click on the name, and you have the link

Yours,

giantpanda

[Neat]

Originally Posted by giantpanda

Dear Neat,

Just found you had no private mail address on your file.

Can you fill it or write a private mail direct to me; click on the name, and you have the link

Yours,

giantpanda

I am very interested to hear what you have to say. How do I add an e mail address to my profile? I actually thought that I had as I'm receiving e mails from the site.

[Neat]

Originally Posted by giantpanda

Dear Neat,

Just found you had no private mail address on your file.

Can you fill it or write a private mail direct to me; click on the name, and you have the link

Yours,

giantpanda

Hi Giant Panda, I am unable to find your mail address

[giantpanda]

Originally Posted by Neat

Hi Giant Panda, I am unable to find your mail address

Hi!

To send me a PM ( Private Mail) , click( left ) on the heading " Giantpanda ", and choose the correct field ( out of the 4 proposed).

Yours,

giantpanda

[Bevdeforges]

Originally Posted by giantpanda

To send me a PM ( Private Mail) , click( left ) on the heading " Giantpanda ", and choose the correct field ( out of the 4 proposed).

Of the options proposed, select "Send a private message to..." At that point, you may be offered a choice between sending an e-mail to giantpanda and sending a private message. (Due to some spamming runs on the forum, we've had to limit private messaging to members who have posted a certain minimum number of "genuine" posts - but you still should have the e-mail option for contacting established members like giantpanda.)
Cheers,
Bev

[Neat]

Originally Posted by giantpanda

Hi!

To send me a PM ( Private Mail) , click( left ) on the heading " Giantpanda ", and choose the correct field ( out of the 4 proposed).

Yours,

giantpanda

I only have 3 options, view profile, add to buddy list and find all posts by!!!!

[Bevdeforges]

Try again - I think you're almost at the "magic number" of posts that should turn on the PM function...
Cheers,
Bev