Interesting analysis of the right to a General tax credit under
the Franco-UK Treaty, and others where no taxation has been taken
of the same kind in the United Kingdom.
Further evidence that as far as land and income from land
is concerned, the tax credit method is designed to grant an
effective exemption from French tax of any description on those
revenues, whilst retaining their British description and
Conseil d'Etat: avis 12-2-2020 n° 435907
The French tax credit equal to the CSG and the CRDS, which are
included in the definition of "French taxes" in the
Franco-British tax treaty of 2008, does not require that these
revenues be included in the tax base of a similar tax or
contribution in the United Kingdom: there are none. It was
only the French that had been insistng that a social security
contribution can be treated as a tax.
Under article 24, paragraph 3 of the Treaty,
any double taxation of revenues of
United Kingdom source which is received by individuals
resident in France is to be eliminated by imputing on any French
tax arising a tax credit of an amount equal, in the case of income
from land, to the French tax corresponding to the income
(General tax credit method).
In an advice dated 12th February, 2020, the Conseil d'État laid
down as a principle that the revenues giving rise
to this tax credit are those included in the United Kingdom tax
base irrespective of whether the French resident were exempted from
them because of their status or activity.
On the other hand, there is no requirement that the revenues be
subject to an effective taxation.
The Conseil d'Etat adjudicated that
the prélèvements sociaux, which are defined as
French tax under the Treaty open up a right to the General Tax
Credit. No stipulation in article 24 of the Treaty
subordinated the benefit of the French tax credit for a French
resident to any condition that a similar contribution had been
levied on these revenues in the United Kingdom.
Note that the treatment of land and income from and under the
Treaty is carefully conceived so as to grant an effective exemption
from tax in the state of residence of the receiver, whilst
retaining the character of income at its source.
This is of great importance for any French residents with
British source agricultural income and the exemption of British
agricultural land from the French ISF and now the IFI.