International tax laws are contained in the Double Tax Treaties.
Whilst these strive to avoid double taxation, their main aim is in fact to determine firstly the country having first rights to apply their laws to the taxpayer, and then to whom exactly these rules apply.
The Treaty then lists sources of income and the rules that apply to them in whether or not they are assessed and taxed in the country of origin or in the country or residency.
In most cases this is successful but, for example, in the case of foreign taxed interest, if the interest is paid to the taxpayer net of foreign taxes, then it is this net income that is declared in France and taxed … resulting in more tax overall being due than if the income had been received gross (without any UK tax deduction).
One of the current issues, however, is the social charges, these being charged on the basis of the French Social Security Law. The reason these are currently an issue is that there are some seven sources of taxable income or gains to which these charges – for one reason or another – do not apply. And as the uncollected social charges on these sources could amount to some 8 billion euros annually, evidently the French are keen to recoup these charges.
However, as a result, income which is not assessable in France is being assessed, and games are being played in including income for the social charges, calculating the charge, and then deducting
it since currently it cannot be charged and so until an EU pilot case from 2014 is concluded.
In 2015 there was a case in the EU Court of Justice that decided that social charges could not be applied in France if the taxpayer had already paid social security charges in another country.
Unfortunately the tax offices seem already to have seized on this principle and have begun applying the reverse … if no social charges have been paid in another country then income and gains can be made liable to the social charges in France, or at last some of them depending on at the actual nature of the income or gain.
We seek to defend the rights of taxpayers, whether French resident or not.