French tax return for income received abroad

THE end of May sees the deadline for the submission of details about your income to the French tax authorities.

If you make your declaration online then you have a little longer, and if you are already registered in the system and employed, then it could be just a case of checking the figures and confirming them.

However, a question that often pops up is how to handle income received from abroad, here French lawyer Guillaume Barlet, of Bank House Investment Management, passes on some advice about the exchange rate used.

"If any income taxable by the French tax authorities was received by a taxpayer’s household (you, your spouse or your dependents) outside metropolitan France and overseas departments and/or in a non-euro currency, declaration n°2047 must be completed.

The issue is to determine the amount to declare when the nominal amount of income was not made in euro.

If the income was received as part of a commercial or trading activity, known as bénéfices industriels et commerciaux, the French tax code provides that assets in a foreign currency along with payments and debts denominated in foreign currencies should be valued at the close of each tax year based on the last exchange rate.

Differences on exchange and conversion (gain or loss) stemming from these assessments compared to the amounts initially recorded are taken into account in order to determine the taxable income for the year.

Any other income received in a non-euro currency and taxable in France must be declared in euro. The amount in euro is calculated according to the exchange rate recorded with Banque de France on the date of reception of the payment.

As a measure of simplification, the tax authorities tolerate that the euro amount be calculated according to the average exchange rate throughout the tax year in question.

Regardless of the method adopted, the calculation must remain the same for all non-euro income and expenses."