Are French tax charges on foreign property rental income correct?

Reader question: I live in France and declare my income here. I rent out an unfurnished property in the UK, with a net income of €8,563, which I declare in the UK where it falls below the tax allowance, so I pay no tax. However, my recent French tax statement shows a charge of several thousand euros, which seems high. Would it be better to declare under the micro-foncier regime?

Under the France-UK double tax treaty (the same holds for the France-US treaty), rental incomes from the UK for a French tax resident are assessable only in the UK. 

The amounts need to be declared to France, but only so France can ‘take the income into account’ to remove the advantage of a declarant benefiting from personal tax allowances in more than one country. 

France should award a tax credit equal to the French tax that would otherwise be due.

Read more: Understand French tax rules on furnished rentals

Tax treaty rules

This can in some cases cause other incomes to be subject to higher tax bands than otherwise, but if the tax bill was solely or mostly due to the rental income, this sounds incorrect. 

It may also be that you are being charged social charges (CSG and CRDS) on the income, which is also incorrect, as these also fall under the treaty rules.

The income should be declared in the foreign income section 2047, including in section 6, for ‘tax credit’ income and should also be carried over to box 8TK in the main declaration. 

The notes to the tax forms also ask that it be declared in the ordinary boxes for the relevant kind of income (for this, if the income is under €15,000 it is generally simpler to do it in the boxes for micro-foncier rather than using form 2044).

If errors have been made, it is possible to contest this up to the end of the second year after the year when a tax payment fell due.