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18/05/2008, 10:24 Ron Avery Joined on 29/11/2004 Aveyron 12 Posts 3,391 Re: Exchange rate for Tax purposes Ernie You are absolutely right (did i really write that)  but I think Cat has summed it up well.  I have little problem with exchange rates as I get my income in euros and it's only a pittance in savings interest that needs calculation, but there are some who have their pensions paid into UK accounts and draw it out of the hole in the wall as required so making it difficult to give a defined rate as there was the date that it was paid into the UK bank, the fluctuating Bank rate on the day, and the actual rate that they may have got for that transaction. In those cases using a end of year or a rate officially given by a tax office makes sense.  However although it may seem an advantageous rate to use as a blanket as the mean average is actually higher and it was 1.50€ at the start, anyone withdrawing significant money at the end of the year when the rate was 1.33€ or lower and using the official rate will be actually being paying more tax.  The so-called official rate will also set a bench mark for returns where  the recipient may have declared accurate tourist rates but could be seen to be understating income. Lets hope next yaer its both up,  a lot and stable so we do not have to worry about this. Why not post a sensible answer, people will appreciate it more    Report

18/05/2008, 11:04 Cat Joined on 21/01/2005 ------- Forum Moderator ------- Lot Posts 3,482 Re: Exchange rate for Tax purposes Yes, how silly of me, of course you are right Coops, the exchange rate on the day of receipt, not the day of exchange for euros. Another thing it is that by the time we actually pay our tax in France, the exchange rate is almost sure to have changed again, so we will be paying slightly more or less tax in real terms, depending on the rate at which we exchange/exchanged the sterling to euros to pay the tax   Cathy Always keep your words soft and sweet, just in case you have to eat them.    Report

18/05/2008, 13:48 allanb Joined on 04/09/2006 Posts 601 Re: Exchange rate for Tax purposes I think this would indeed be a useful topic for the FAQ, but for anyone brave enough to try to draft something, I have a few comments. Sunday Driver was quoting the law (the code des impôts), and what the law says is repeated in the instructions that come with the tax forms, which taxpayers are presumed to have read. The law does not give you any choice, and it does not prescribe a rate.  It prescribes a method of conversion, which may give different results for different taxpayers and for different kinds of income. Bob Dee was quoting from something or somebody called "infotax-southwest@dgfip.finances.gouv.fr".  I don't know who these people are, but they clearly haven't read the law, or even the pink tax forms.  There is no such thing as the "correct rate". Many tax offices publish a rate which they will allow you to use (not "tell" you to use) as a concession, to simplify your life.  I do not believe that a tax inspector can instruct you to do something that is in conflict with the law.  He may give you an alternative, that's all. I also think it's a mistake to assume that if your inspector says you can use 1.36 (or whatever) to convert your UK pension, you can necessarily use the same rate for everything.  Here's a test question: suppose you received a dividend or a taxable distribution of some kind, or made a taxable gain on the sale of an asset, in January 2007 when the £ rate was around 1.50 (happy days!) - do you think you would be entitled to convert that at 1.36?  I doubt it.  I could be wrong, but I wouldn't do it without checking. Finally, Ernie: I may be one of those you describe as "losing a sense of proportion", but it's not because I'm concerned about the effect on the national debt.  I just think there's a risk in giving inaccurate advice on a fairly important topic.    Report

18/05/2008, 14:11 ali-cat Joined on 15/12/2005 Charente Maritime Posts 1,113 Re: Exchange rate for Tax purposes Last year we made our first tax return for 2006 having become resident for tax purposes in late July 2006.  We have regular monthly income from pensions plus interest on savings which is calculated at the end of the financial year.  Our monthly income is received into our UK current account and 90% of this is transferred to our French current account at a pre-arranged exchange rate via a currency transfer broker. For 2006 I calculated the exchange rate on our monthly income as the rate given to us by the currency transfer company which must be correct as this is the actual rate received.  I felt justified in using this rate for the total montly income as the small amount not transferred just accummulates in our UK current account and to calculate it using a seperate monthly, annual average, or year end rate would just complicate things for little material difference.  As for the intrerest on savings - the interest was not calculated and credited to our account until March 2007. I could have not declared any interest received for 2006 however I decided to calculate the notional interest received in 2006 and applied an 'official' year end exchange rate to this. I intend to do the same this year for the monthly income (again transferred at a pre-determined rate for the year) and having set the precendent last year I will now have to again estimate the notional interest received for 2007.  Unlike last year however there has been so much fluctuation that I intend to apply the monthly exchange rates from HM Revenue & Customs to the calculated interest received. I'm not sure if this is helpful or should act more as a cautionary tale but If anyone wants the monthly exchange rates for 2007 - click on the link (I've checked them against the HM R&C site and they are correct). PS - In the context of these rates http://www.vatark.co.uk/exchrate.htm the year end rate of 1.36 looks a little unrepresentative. Mr Cat           Many years ago, cats were worshipped as gods. Cats have never forgotten this.    Report

18/05/2008, 14:51 ErnieY Joined on 05/12/2006 W of Cahors (46) Posts 4,148 Re: Exchange rate for Tax purposes It wasn't meant as an accusation Allan, just an observation that for many the amounts in question perhaps did not warrant the degree of angst being experienced over them so why not just calculate at the higher rate, call the job jobbed, and pop a cork   My doctor said one drink per day, I can live with that !    Report

18/05/2008, 14:51 Ron Avery Joined on 29/11/2004 Aveyron 12 Posts 3,391 Re: Exchange rate for Tax purposes Bob Dee was quoting from something or somebody called "infotax-southwest@dgfip.finances.gouv.fr".  I don't know who these people are, but they clearly haven't read the law, or even the pink tax forms.  There is no such thing as the "correct rate". That is the SW France tax office Allan, there used to a lady there who would answer tax questions in English, which is useful for the first years if your French is not good, but she has retired and another man has taken over, but I'm not sure his English is that brilliant In regards to your example Allan, I was making the same point re a significant income, say an annual interest payment to France received in December when the rate was 1.33€ being taxed at the "official rate" of 1.363€. Why not post a sensible answer, people will appreciate it more    Report

18/05/2008, 17:44 allanb Joined on 04/09/2006 Posts 601 Re: Exchange rate for Tax purposes  ErnieY wrote: It wasn't meant as an accusation... Not taken that way. ...just an observation that for many the amounts in question perhaps did not warrant the degree of angst... Undoubtedly true. ...pop a cork Done.    Report

19/05/2008, 18:28 jetlag Joined on 06/12/2005 Charente Maritime Posts 312 Re: Exchange rate for Tax purposes There's no telling who is giving correct info ref the exchange rate for tax purposes.   If anyone knows the correct rate for the Saintes area, it will be much appreciated many thanks Jetlag    Report

19/05/2008, 20:34 sueyh Joined on 06/10/2004 62 Posts 216 Re: Exchange rate for Tax purposes and Pas de Calais (St Pol sur Ternoise area in particular).....! Suey ps a friend of ours told me yesterday that they worked on 1.18....!!!!!!!!!!!!!!!    Report

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France Forum » Legal and Finan... » French Finance » Re: Exchange rate for Tax purposes

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