Dual Taxation Agreement.

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    Dual Taxation Agreement.

    I have property in the UK which I rent out and submit tax returns. I also have a Property in France which produces a small rental income. Obviously I had to submit a French Tax return done by a French Accountant and the result was that under the French Tax rules after expences I only had to pay €26 in French Tax.
    So when I do my UK tax return presumably I will have to enter the rent recieved (less expences) but how do I show it in order for me not to be taxed on it twice.

    #2
    In the UK you need to convert all income and expenditure into sterling on the date they were incurred. And then add up your income less expenditure. This will be a different result from the French result owing to differences in tax law, and the exchange rates. If it is a profit, say £200, apply the UK tax rate (20%), and then calculate the UK tax due £40. Then offset the €26 (converted to sterling at the date you paid it = say £19) against your tax payable, leaving total tax payable of £21.

    In the event that it shows a loss for UK purposes, of say £100, then you get relief for the French tax as expense relief. So say €26 = £19, your total tax loss for the year is £119.

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