French Tax Laws

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French Tax Laws


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Old 19th May 2009, 05:58 PM
 
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Default French Tax Laws

I am an Indian working in France for last 1.5 years. I have understood that French law considers all incomes worldwide for calculating tax even for expatriates resident temporarily, but more than 183 days in a year, in France. The logic is not clear, since I am not bringing into France any of my incomes coming out of investments in India. As per Indian tax laws, all amounts brought into India through official banking channels are not taxable if you are a non-resident (i.e. resident in India for less than 180 days). Could someone advise how French law looks at the income outside France and what mechanisms are available to verify the sources ?

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Old 19th May 2009, 06:26 PM
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If you are resident in France in a given tax (i.e. calendar) year, then you must report all worldwide income. There are a number of devices in place to avoid double taxation of income coming from outside France. But initially, all your worldwide income is considered in order to determine your tax bracket.

For some income, if there is a tax treaty between France and India, you are granted a tax credit equal to the French tax on the income. For other income, you receive a credit for tax you have paid elsewhere on the income.

France apparently does compare tax returns with various countries with which they have tax treaties, though I don't know much about just how and how often this is done. I have also been told that when a foreigner dies in France, their tax records may be exchanged with their home country in order to find various accounts that may not have been declared properly - whether in France or in the home country. This obviously may not affect you, but I know of a few heirs who were pretty upset when the French government wound up seizing undeclared foreign accounts.
Cheers,
Bev

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Old 20th May 2009, 08:43 AM
 
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Thanks, Bev. Just to elaborate further, does worldwide income include interests from bank deposits and dividends from share inverstments ? Normally, these are tax payable at source in India. Your bit about the French government siezing undeclared accounts is creepy - but I suppose it's something to be seriously kept in mind. Have a great day and cheers to you, Rg

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Old 20th May 2009, 10:16 AM
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Quote:
Originally Posted by rgpillai View Post
Thanks, Bev. Just to elaborate further, does worldwide income include interests from bank deposits and dividends from share inverstments ? Normally, these are tax payable at source in India. Your bit about the French government siezing undeclared accounts is creepy - but I suppose it's something to be seriously kept in mind. Have a great day and cheers to you, Rg
Yes, worldwide income does indeed include interest from bank deposits and dividends from share investments. However, you only need to declare worldwide income. On the form for declaring "foreign" income there is a listing of the countries (India included) along with the amounts withheld in those countries for tax on these items - and an explanation of how the tax credits are calculated for French tax purposes. Ultimately, you aren't double taxed on your foreign income - but you do need to declare it.
Cheers,
Bev

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Old 20th May 2009, 04:58 PM
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Hi,
According to the France/India double-taxation treaty, which is available via Google, interest and dividends arising in India to a french resident can be taxed in both countries, but France must give credit for tax paid in India ,against the tax which is charged here.

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Old 21st May 2009, 08:02 PM
 
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Originally Posted by parsnips View Post
Hi,
According to the France/India double-taxation treaty, which is available via Google, interest and dividends arising in India to a french resident can be taxed in both countries, but France must give credit for tax paid in India ,against the tax which is charged here.
Thanks to both of you for your valuable advice. Meanwhile I have landed into fresh trouble - my apartment got burgled yesterday and today, I have made a depot de plainte with the commissarait de police - a gruelling 2 hours en francais..whereas I speak only few words of proper francais.. now onto my insurance company...

Rg

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