Double taxation treaty

buttarfly

Hi guys,

I was just wondering if anyone has been able to get a mortgage while under the double taxation treaty, and therefore only paying tax in the foreign country.

My partner is employed by a University in France but works in the UK and has always lived in the UK. He gets paid in Euros into a French bank account, which then gets transferred to his UK HSBC account. He therefore only ends up paying tax in France.

I've spoken to a local broker, and all the lenders he's contacted have said they will not consider his wages He is strictly classed as paying tax, but the amount he pays is £0.

Has anyone had any luck or got any tips? The University he's employed by is unable to pay straight into a UK account as the grant money is to be used in France.

Thanks!

holly_hobby

If he's a UK citizen paid by a French university, is this some kind of stipend/research post ?

Is this a full time permament role ?

If no, and its a timebound position, research or otherwise, when will the position and his income from the French uni come to it end ? What will he do then ?

This and the fact that he'll be assessed under UK regs and pay his mge in GBPs is further complicated by the fact that he's paid in euro's (albeit its transferred into a UK bank as GBP), as his actual income (upon which affordability is actually based) is obviously completely exposed to exchange rate volatility (unless the uni make provision for this ?).

This will naturally affect and greatly expose him (on an on going basis) to a fall in his equivilent net GBP income if the euro has a bad day at the office, at the time of conversion (of course it can also go the other way, if the euro is strong at point of receipt and conversion, but lenders won't be looking at it that way, only ever on the negative to minimise exposure).

If the Uni won't or can't pay him under a contractual GBP arrangement (ie he's paid a set GBP salary, and they absorb the euro exchange rate fluctuations from their end to meet the monthly equivilent), which will erase the volatility of his net gbp income, and may make him much more attractive to UK lenders - I do think given all the variable, that he will struggle to find a home .

So, you/your broker need to start thinking outside the box, and perhaps given the euro and income source issue, it may be worth they/you approaching a French based bank, say Bank Nationale de Paris (BNP), whom also have a presence here in the UK, and have had so for many yrs.

The situation however may be complicated by the fact that your parter although paid in euros and employed by a french company, paying french tax, is not actually a French national. However, their French arm may still be able to assess his application/affordabilty under his French employment, and the property as an overseas UK pch. (which given that they lend the other way round, UK citizens funding a european property purchase (France and central Europe), albeit via sterling income, may be worth a punt .... certainly nothing to lose I would suggest). Or they may be able to process the app as a straight standard UK citizen .... the above is a suggestion as to how given the euro element, it may be managed internally .... of course a decent deposit, of at least 25% will also oil the wheels with this, esp as I say given the euro involvement.

Anyhoo, here's some links to assist ....

UK BNP portal
http://www.bnpparibas.co.uk/en/individuals/overview/

French BNP portal
http://www.bnpparibas.com/en/about-us/core-businesses/retail-banking/personal-finance

Of course there are other european banks in the UK, such as Santander etc, but the above is giving you an idea on what the real underwriting issues will be - and whilst I can't promise success it's somewhere else you can refer to bottom the whole thing out as much as possible.

Hope this helps, wish you well

Holly xx

ethank

buttarfly wrote: »

My partner is employed by a University in France but works in the UK and has always lived in the UK. He gets paid in Euros into a French bank account, which then gets transferred to his UK HSBC account. He therefore only ends up paying tax in France.

This does not sound legal as if your partner is living here, he is resident for UK tax purposes and should be paying it here. Your partner is not paying NI contributions from his salary which is also not legal.

Is he by any chance a home worker, with a French employment contract and the University does not care where he is working??

holly_hobby

Great point, setting aside the mortgage guidance, yes he should be delcaring the income and French tax paid, via his annual UK self assessment, generally under a remittance basis, which means French tax already paid will be taken account of by HMRC, and effectively he won't be taxed twice ( if there is a double taxation treaty in place -which there is with France).

As he doesn't have a UK employer, from memory he will have to independently register with HMRC for their NI direct payment scheme.

Not my area of expertise, so the above is for just comment.

Hope this helps

Holly x

PS - yep, have dug this out for your partners ref, if he isn't already abiding by this and self assessment on his french employers income -

HMC basic o/seas income tax guidance
http://www.hmrc.gov.uk/migrantworkers/tax-non-uk.htm

HMRC NI gudide - for those whose employer does have to operate a PAYE scheme
http://www.hmrc.gov.uk/nic/work/embassy.htm#e

buttarfly

holly_hobby wrote: »

If he's a UK citizen paid by a French university, is this some kind of stipend/research post ?

Is this a full time permament role ?

If no, and its a timebound position, research or otherwise, when will the position and his income from the French uni come to it end ? What will he do then ?

Yes, he is a post doctoral researcher. It's full time, contracted for two years until October 2015. He's not sure what he will do afterwards, either stay in academia or get an office job.

holly_hobby wrote: »

So, you/your broker need to start thinking outside the box, and perhaps given the euro and income source issue, it may be worth they/you approaching a French based bank, say Bank Nationale de Paris (BNP), whom also have a presence here in the UK, and have had so for many yrs.

Thank you, I have sent them an email, may also give them a call tomorrow.

Thank you so much for all of this information, I will definitely try and look into more French banks that may have branches over here, as well as Santander and HSBC.

buttarfly

ethank wrote: »

This does not sound legal as if your partner is living here, he is resident for UK tax purposes and should be paying it here. Your partner is not paying NI contributions from his salary which is also not legal.

Is he by any chance a home worker, with a French employment contract and the University does not care where he is working??

Hi ethank. He is in the process of declaring the income, just waiting for the Unique Tax Reference number (goodness knows when that will actually arrive..!).
He works as an honorary staff member at a University here in the UK, and the University in France know he works here.

holly_hobby

He may have further issues re his current position known to be ending next yr in 18 mths or so in 2015.

But ok, you seem to have the rest in hand let us know how you eventually get on.

Holly xx