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11/05/2008, 10:00 Lou Joined on 20/01/2006 Hautes Pyrenees - 65 Posts 110 Re: Exchange rate for Tax purposes I agree Ron. I've used the actual rate we got from the currency exchange people for my husbands pension - and an average of these amounts for the savings interest which we haven't transferred to France.  I feel this is a) honest and b) (as someone else said on one of the other threads I think) defensible, should I be asked by the Impots, as I have documents proving the rates throughout the year. They surely can't argue with that? The upside of this years low exchange rates will be, I guess, lower declarations and lower tax/social charges in 2009 - a small consolation perhaps? Lou    Report

12/05/2008, 20:57 Mikew Joined on 23/08/2004 Aigre 16 Posts 283 Re: Exchange rate for Tax purposes Phoned the local Impots, (Ruffec 16), to enquire what exchange rate to use for my tax return - use 1.3636 was the reply....    Report

12/05/2008, 21:16 Jay Joined on 26/09/2007 Posts 91 Re: Exchange rate for Tax purposes  Ron Avery wrote: "1.3636 is what the French News newspaper said, so that is what I have used"  IF that is what it says, it just goes to show what a load of c**p that paper is then.  You know its wrong unless you got all your income in December 2007. If you got income throughout the year,  using an average rate below 1.42 is taking the piss and you know it Ask in your local tax office and they will confirm the rate should be 1.363    Report

12/05/2008, 23:52 Ron Avery Joined on 29/11/2004 Aveyron 12 Posts 3,393 Re: Exchange rate for Tax purposes  Jay wrote:  Ron Avery wrote: "1.3636 is what the French News newspaper said, so that is what I have used"  IF that is what it says, it just goes to show what a load of c**p that paper is then.  You know its wrong unless you got all your income in December 2007. If you got income throughout the year,  using an average rate below 1.42 is taking the piss and you know it Ask in your local tax office and they will confirm the rate should be 1.363 Yes just like PatF did above in the Gers and got told it was 1.4237.  Where is youir local tax office Ruffec as well?? Like many others I have calculated the average rate and we all know that using 1.363€ is just not correct, but if you really believe that is the official rate and that the tax office understood your question, go ahead and underpay your tax, sociale charges and CMU.. Why not post a sensible answer, people will appreciate it more    Report

13/05/2008, 4:33 BobDee Joined on 17/08/2005 Reaup Lisse 47 Posts 118 Re: Exchange rate for Tax purposes Sounds blindingly obvious to me that Ron is correct. How though, does the tax office know from the 2042/2047 submission what rate you are using? Or is the rate only going to emerge if you get audited? This being my first year I have annoted the 2047 with the rate I have used (1,4245), just to pre-empt the question.  BobD    Report

13/05/2008, 6:04 Jay Joined on 26/09/2007 Posts 91 Re: Exchange rate for Tax purposes  Ron Avery wrote: Like many others I have calculated the average rate and we all know that using 1.363€ is just not correct, but if you really believe that is the official rate and that the tax office understood your question, go ahead and underpay your tax, sociale charges and CMU.. It's too late for me, I already used 1.4 on my form, but it seems to me if the tax office quote a figure then that is official and if you benefit from it all well and good, would you argue with a figure given by the UK tax office which worked to your benefit? We have friends in Deux Sevres (79) who took their paperwork into the office and were told to use 1.363 and yes, my local office, Ruffec (16) also uses this same exchange rate. Like Bob, I also enclose my P60 with the return as I was asked to do so by the lady in the office, I assumed it was something to do with my being taxed in the UK because, as you point out Ron, there is no requirement to do this. You seem to be getting a bit hot under the collar on this one Ron!    Report

13/05/2008, 7:33 allanb Joined on 04/09/2006 Posts 601 Re: Exchange rate for Tax purposes I'm with Ron on this.  The law requires you to use the market rate on the day when you received the income.  It is obviously possible to calculate an average which represents approximately the same thing (I come up with 1.453, and I'm sticking to it because I can document it if I have to.  It's not the only possibility.) Using a year-end rate for 2007 (when the £ fell by about 12% against the euro) is neither legal nor sensible, but if your tax inspector lets you do it, that's fine.  I strongly advise you not to do it unless - (1) your local inspector (not someone else's) has told you in writing that it's OK; and (2) you are sure that he knows that it's for income, not for asset values at the end of the year; and (3) you are willing to follow the same method consistently in future years, even if the £ goes back up against the euro. I don't know how likely it is that you will be audited.  But remember that you will have declared pension income which appears to be lower in 2007 than it was in 2006 - this in itself may provoke a question, because most pension adjustments are up, not down. And if it does happen, the auditor will not be the same person as the nice lady behind the desk who told you that the year-end rate would be just fine.    Report

13/05/2008, 8:15 Patf Joined on 23/08/2004 SW Gers Posts 2,330 Re: Exchange rate for Tax purposes Having said all that, the first year I filled in a return here I looked up the rate on the day I wrote and used that. Nobody questioned me about it. Nor did they ask me to show how I had pro-rated the british income etc before and after the end of the previous April.    Report

13/05/2008, 8:45 Jay Joined on 26/09/2007 Posts 91 Re: Exchange rate for Tax purposes Allanb said: "The law requires you to use the market rate on the day when you received the income." Logically you would have to total each income on the basis of when it was received and put down the exact figure, why then does the tax department use an annual figure and why are you breaking the law by using an average figure? "But remember that you will have declared pension income which appears to be lower in 2007 than it was in 2006 - this in itself may provoke a question, because most pension adjustments are up, not down." There is no logic in that statement. If, for argument sake, you have a pension of £1000 this year then, using the exchange rate you quote, you would enter 1453 Euro on your tax return. Assuming an inflation rise of 3% next year your pension would be £1030. Let's be optimistic and say the average exchange rate for 2008 to be 1.3, then your entry on next years tax form would be 1339 Euro. Are you saying the tax office is not aware of the fluctuating exchange rate/weak pound and would question every return where income has dropped? When we first moved here the exchange rate was 1.68, it is now in the region of 1.3 that is a drop of 380 Euro per £1000. "I come up with 1.453, and I'm sticking to it because I can document it if I have to.  It's not the only possibility" surely there is only one possible figure; if you are right then you are right! What other possibilities are there? ".....you are willing to follow the same method consistently in future years, even if the £ goes back up against the euro." Of course I am - ask the tax office then use the figure they provide, no problem.    Report

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