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CSG and CRDS by HMRC

Hello

Getting confused about french CSG and CRDS….so many contradictions

Is a UK tax payer entitled to :

- Claim foreign tax credit relief : Clearly a confusion between article 2 and 24 of the treaty. The first defines what French Tax is (and that includes CSG and CRDS). The second does not (for the purpose of french tax credit relief in the UK…does not make sense at all. 

Also, the French courts ruled many times that CSG and CRDS are indeed taxes. shouldn't be then considered that the have to be credited against UK tax ? I mean 24, 2, c does/t work. they can't limit in 24 the list of french taxes once defined in art 2. 

- or, at the very least, deduct those "taxes" from his taxable income. paragraph 1 says UK tax on french income should be calculated on the same income on which the French tax is calculated….meanwhile the French impot is calculated on Gross-(CSG+CRDS)

 

Anyone has experience of that?

After and prior to 2010 when the New UK/France Treaty entered into force?

thanks !!!

for reference: 

Article 2,1,b reads : 

n the case of France, all taxes imposed on behalf of the State or of its local authorities irrespective of the manner in which they are levied on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amount of wages or salaries paid by enterprises, as well as taxes on capital appreciation; those taxes are in particular:

(i) the income tax (l'impôt sur le revenu);

(ii) the corporation tax (l'impôt sur les sociétés);

(iii) the social contribution on corporation tax (la contribution sociale sur l’impôt sur les sociétés);

(iv) the tax on salaries (la taxe sur les salaires);
(v) the “contributions sociales généralisées”;
(vi) the “contributions pour le remboursement de la dette sociale”;

2. This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the taxes referred to in paragraph 1. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws. 

Article 24, 2, c

(c) the taxes referred to in clauses (i) to (iv) of subparagraph (b) of paragraph 1 of Article 2 and, in respect of the taxes mentioned in those clauses, in paragraph 2 of Article 2, shall be considered French tax. 

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By zeutax
11th Jan 2014 11:43

it is about French Income of a UK tax payer and taxed in the UK

Thanks vm

 
The issue here is about a UK resident who has french income. He pays french tax on that french income. He then pays tax in the UK tax on that french income and claims in the UK a credit corresponding to the tax he  paid in France.

 

The question is whether this credit claimed includes CSG and CRDS and other social contributions :

Tax payable in the UK on French Income

= UK tax on Gross French Income - Impot sur le Revenu paid in France - CSG and CRDS

 

or is  the CSG / CRDS are deducted from the French Income?

so Tax payable in the UK on French Income = UK tax on (Gross French Income - CSG / CRDS) - Impot sur le Revenu paid in France

 

or CSG/CRDS (paid) are just ignored...

so Tax payable in the UK on French Income = UK tax on (Gross French Income) - Impot sur le Revenu paid in France

 

thx !!!

 

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By zeutax
11th Jan 2014 15:02

anyone has a clue pls?

…seems uncommon?

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By mhtax
12th Jan 2014 14:11

not uncommon

There are many instances where some typesa of taxes are not allowable against UK taxes.The  US treaty for example only allows Federal not State taxes.

You do not say what kind of income your client has. Social charges are normally dealt with under separate agreements which deal with National Insurance.

. According to the analysis I linked to above, these charges are applied to far more than income taxes. It specifically states that it is not part of the income tax system but does say you can deduct some under certain circumstances:

""" Nevertheless, part of the CSG is deductible for income tax purposes (4.2% on pensions, 5.1% on salaries and other income), and there are some limited exemptions and reductions available.""

It must apply to all people with French income who are not exempt so I suggest you talk to a UK accountant specialising in French taxes. I am sure if you post a request there will be someone who can help. 
 In general terms when looking at foreign income you take the gross amount, compute the taxable element under UK rules for that type of income and include it in your tax computation. Then, as a separate issue, you look for any allowable credit under a Double Taxation treaty. Also, you can investigate the foreign source with that tax authority as there is often the opportunity to claim exemption from or repayment of the overseas tax deduction by registering with that authority   and making the necessary claim.

 

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By mhtax
12th Jan 2014 14:26

p.s.

Sorry - hit post too quickly.

What I am trying to stress is that if there is only a small amount of income it is not commercial to do other than ignore the Social Charges for return purposes. If it is large then it warrants proper treatment and you need to talk to a specialist. A quick conversation will help you find out if there is any remedy 

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By zeutax
12th Jan 2014 16:12

thx vm!!

clearly needs a closer look. the income is from salaries. and CSG/CRDS have been deducted in France at source.

""" Nevertheless, part of the CSG is deductible for income tax purposes (4.2% on pensions, 5.1% on salaries and other income), and there are some limited exemptions and reductions available.""

yes agreed. this is the case in France. But here we are looking at what tax is payable in the UK on that french income.

CSG and CRDS are applied to gross income in France. They are considered as taxes in France (court decision) but apparently, hmrc said it is not deductible nor creditable for income tax on french income. You are perhaps implying that they should be credited pursuant a FR/UK agreement, other than DTT and covering national insurance.

 

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By swatt66
06th Mar 2015 15:03

A non-resident in France should not be paying social security

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