Since the early hours of this morning there has been mass hysteria in the comments section of one Telegraph article.
It appears that the government is cracking down on foreigners earning money and not paying every ounce of tax that they possibly could. Despicable, morally repugnant, etc., etc. Henceforth, measures will be taken to ensure that they contribute to the national debt the same as anyone else.
Telegraph readers are frothing at the mouth, spluttering incoherently, but generally all are agreed that foreigners should be able to earn anything they can, pay no taxes, and that this is abhorrent behaviour on the part of the government. Despicable, morally repugnant, etc. etc.
Confused? All will become clear when I explain that this time it is the British who are the foreigners, not an army of Polish plumbers…
British owners of holiday homes in France are to be hit with punitive tax rises under plans announced by the new Socialist government.
The French government is to charge them tax on the rental income of their holiday home. ‘How dare they single out the British’ scream the Telegraph readers, ‘isn’t that illegal under those EU regulations that we don’t want? (These are Telegraph readers mind!) – Who said they were singling out the British? They are targeting 360,000 second home owners in France, of whom only 60,000 are estimated to be British. More to the point, they will be charging them exactly the same as the tax paid by French residents on renting out a second home (tell me about it!) I wouldn’t care to accurately estimate how few second home owners in France presently declare any income to be taxed at any rate – a straw poll amongst some known to me this morning is that they ‘only let their home be used by friends and family and absolutely do not take any income in cash or kind whatsoever ahem *cough* ahem, they accept the wear and tear on their properties as part of their charitable duty to those dear to them’….’course you do Malcolm, ‘course you do.
From the comments: I have a friend who lets me stay in his French cottage every year.
Obviously as we are friends he lets me stay for free.
It has been a source of great amusement to us over the years that I also happen to employ him as a “management consultant” for a few days each year, the fee for which just happens to be about the same rate as a the rental on a French cottage for a week.
With every new Tax there is a loop-hole. The key is not to whinge and complain but to get creative….
The other cause for mass outrage is that in future the French government intend to charge those Britons with second holiday homes here the full rate of capital gains tax when they sell. Now lookee here, there is a very, very, simple way of avoiding paying CGT, you don’t need expensive accountants, fancy schemes, or anything else to tax your brains. You simply sell your house for the same sum that you bought it for, simples, eh?
‘But it is the inalienable right of every true blooded Englishman to make a profit if he has owned a house for longer than five and a half minutes. We shouldn’t be taxed on that profit’.
Er, why not? We are not talking about ‘your home’ here, we are talking about a second home. You surely wouldn’t support the idea that a Bangladeshi can come to England and buy and sell cars and not pay any tax on the profit, what is the difference?
”Yes, but I’ve done lots of work on the house, and besides, I’m supporting the local economy’.
Ah, so you have lots of invoices from registered French artisans for work done on the house? Well, you can deduct them from the tax due.
‘Er, no, I did the work myself’.
So, supporting the local economy meant buying lots of local wine, whilst you and the Polish plumber that you flew down here, installed the boiler that you bought in B & Q back in England?
‘But I put in hours of work myself, I stripped all the render off the house myself’.
So the ‘profit’ that you shouldn’t be taxed on is actually payment for your labour?
‘Well, yes, I guess it is, when you put it like that’.
Perhaps you would care to pay income tax, instead of the reduced rate of 31.5% CGT that is proposed?
‘No, I’m British, I ought to be able to come to France, put all my ‘black money’ into materials for my house, materials that I will buy in England, drive down here, sit round my swimming pool whilst my Polish labour works away, and scarper back to England without paying any tax on the profit, its my Yuman Rite innit?
Nobody likes paying tax. I certainly don’t. It may have suited the French government for some time to offer reduced rates of taxation to foreign nationals, but now it doesn’t. I don’t have a lot of sympathy for the Les hirondelles, as the hordes of second home owners who arrive every summer are known. You don’t get reduced rates of income tax or CGT in Britain for owning or renting a second home, why they thought they would do in France for ever and a day, beats me. Still, it gives the Little Englanders on the Telegraph something else to get upset about, and this should make it cheaper to buy property for those who want to come and live permanently in France.