LesLauriers
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Posts posted by LesLauriers
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Thanks for coming back on the figures, I have been using my own spreadsheet to try and model the different outcomes and where I have made errors they have generally overstated the tax to be paid!Glynn very kindly copied me with an online spreadsheet which, if you download it, and change the figures to €300k and withdrawing €13.5k each year will show that no tax is payable from year 8. This is the effect of taking the couples annual allowance of of the withdrawal after the growth % has been applied. A factor I stated earlier I had misunderstood.The spreadsheet is here http://www.selfepargne.fr/assurance-vie/simulation.php?idrub=2[quote user="allanb"]If I understand you correctly, there is indeed a deferred tax liability on the untaxed interest, which will affect subsequent withdrawals - but the liability ceases to exist when you die. Correct. the taxable element would be 4.5% in year 1 but then 8.6%, 12.4%, 15.9%, etc, in years 2, 3 and 4?Correct though the figures I get are 4.31%, 8.26%, 11.89% and 15.25%.This calculation gives about 25% after 8 years, and if I keep going I get 47% after 20 years. Since you also came up with about 47% I assume I've understood that part correctly.PS: I suspect that my three questions are all related. Going back to one of your earlier posts, you said: [quote]Take a couple investing €300k in a capital safeinvestment at 4.5% producing €13.5k a year as a top up to a statepension. The taxable element is only 607€ as opposed to 13500€ outsidean AV. After 8 years the taxable element falls to €194.[/quote]This gives the impression that the €607 stays the same for 8 years, and then the €193 for the next 12, but I think these amounts are valid for one year only, after which they increase progressively.I have confused the issue by showing the effect on individual years - the taxable element increases each year.If so, I'm not saying that it negates the value of an AV, but it certainly means that the tax treatment of withdrawals is not as sensationally favourable as we might have thought.Take a look at the online calculator I think you will find that it is more favourable than the impression I have given you thanks to the effect of the annual allowance.[/quote]The calculator shows €300k invested withdrawing €13.5k a year (€256.5k total) to produce interest of €255.1k and a maximum tax payable of €2920 with a remaining balance of €262.4k so clearly better than the figures I used and shows that I have yet to crack the calculations in total. Edit - However it omits social charges?
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Why have an 0702 number?
• Getting a new mobile, but want a number you can take with
you?• Using your mobile for business and don't want to give
out your real mobile number?• Have to give out your number a lot, but would rather keep
your mobile number private?• Want one number for family and friends and another for
business, or new aquaintances from your social scene?...Sounds simple, but how does it really work?
All you need to do is select your number from the link below and Ophone will connect you.
0702 is NOT premium rate. When customers, family or firends dial
an 0871 number, they will be charged at K rate. K rate may vary depending on your phone provider, contact your phone provider for more details. -
My top of the head thoughts are;The PEA has it's place in financial planning as do straightford share holdings and savings accounts.For me it lacks the instant access (without closure) of the AV, and the inheritance benefits which are very important to our plan. The AV is more family orientated in my view.The tax benefit of tax (but not social charge) free after 8 years has to be weighed against the amount invested and return anticipated, along with your highest tax band generated by your other other income streams inconjunction with the AV's allowances.If you take the example of the couple investing €300k in a capital safe investment and withdrawing all the interest each year, I can only see tha AV winning.There will be circumstances where a PEA would be better than an AV but I would suggest that it occurs where there is a high net worth, corresponding investment portfolio and an aggresive attitude to risk. And no successors.Alternatively a PEA of intermediate duration coupled with or followed by an AV could suit some circumstances.Like all financial planning it depends upon your circumstances, your short medium and long term needs capital, income and life plan. Of course it helps to know exactly when you intend to die!
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Update to previous posting.
I had always taken theallowance of €9200 as a deduction from the amount withdrawn before applying thegrowth percentage to obtain a net taxable amount.
However the example shown inthe previous posting, which looks like a Blevins Franks document results inthis example after 20 years.
Glynn - yes you can add funds and or change investments at any time, within the portfolio of investments offered by your supplier.
If you withdraw all of your capital the calculation would be - (€'s withdrawn * % growth) less allowance of €9200 x tax rate applicable. In other words the longer you keep it the better otherwise it is taxed like any normal savings account but with the benefit of the allowances and tax free roll up. However after 8 years your maximum tax rate would be 7.5% plus 11% social charges regardless of the amount of interest accumulated. -
allanb,
If you look at my previousposting you will note that I revised my figures to take account of cumulativegrowth and then to take account of an error.
My figures will not by exactas I have only calculated to one decimal point but will be close enough to useas an example.
There is an element of“annual bonus” paid within these accounts and to be precise the figures usedassume that the investment is in place on 31st December and interestis drawn after 1st January a year and a day later to allow for thefull 4.5% to be paid.
After 8 years you areentitled to withdraw 9200€ tax free as a couple and I have counted this withinthe 8 years though the reality would be to make the 8th withdrawal 8years and a day after opening the AV.
The figures used assume thatinterest only is withdrawn and that the capital of €300k used, in this exampleis always left in the investment. The example also assumes a fixed 4.5% return,which will obviously be variable. When less than the annual interest iswithdrawn the investment grows substantially over a long period.
Using my corrected figuresand bearing in mind the above,
After 8 years the accounthas grown by €108k of which €15082 has been taxed and €92918 of accumulatedinterest which has not been taxed remains in the investment.
After 20 years the accounthas grown by €270k of which €35177 has been taxed and €234823 of accumulatedinterest which has not been taxed remains in the investment.
In this example by year 20the growth of the investment is 47.37% (270k / 570k =47.37%) and therefore thewithdrawal of €13500 less the allowance of €9200 equals a taxable figure of€4300 x 47.37% = €2036 which if taxed at the set rate of 18.5% (7.5% tax 11%social charge) gives a tax bill of €377 on a withdrawal of €13500.
If at that time yourstarting rate of tax were less than 7.5% you would opt to be taxed at the lowerrate.
If at any time you withdrawall of the investment the total interest is then taxed, it is only if youbequeath the investment to your inheritors that you avoid the outstanding tax.
I have a spread sheet whichI can e-mail you if you wish – let me know your e-mail by pm.
Asalways the value of your investment may etc The AV may not suit your particularcircumstances now or in the future. These notes demonstrate my understanding ofthe Assurance Vie; always seek professional advice to suit your owncircumstances. -
Oh dear - never post after a glass of wine with lunch!The real growth rate is 26.47% so €13500 - €9200 = €4300 at 26.47% = a taxable figure of €1138, which is better.You know how it is, you look at the figures and think - no that's not right!!See it pays to consult a professional!!!!
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Sorry Benjamin I need to edit the post 8 years figure to take account of cummulative growth.After 8 years the figures are withdraw €13500€ less €9200 = €4300 x growth of 36% = €4300 x 36% = €1548 which is subject to tax and social charges - my original figure of €194 was wrong!The fund has grown by €108k over the 8 years, all of which has been withdrawn giving a growth (interest) of 36%.
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[quote user="Benjamin"][quote user="Leslauriers"].Another thought - take a couple investing €300k in a capital safe investment at 4.5% producing €13.5k a year as a top up to a state pension. The taxable element is only 607€ as opposed to 13500€ outside an AV. After 8 years the taxable element falls to €194. By spreading the tax liability over a number of years they avoid being taxed in a higher tax band and are able to leave their capital to their successors.You do not have to leave the investment until maturity or death - in the example given the advantage is taken after 1 year and improves after 8 years.[/quote]Could you add a bit more bones to this, particularly the figures of 607€ and 194€.[/quote]The €300k has grown by 4.5% (300000 x 4.5% = €13500) , you withdraw 13500€, of which only the interest part is taxable, (€13500 x 4.5% = €607.5) therefore €607 is added to your tax return and is subject to tax and social charges.Once the investment has passed it's 8th anniversary a couple can withdraw €9200 tax and social charge free, so in this example they withdraw €13500 - €9200 = €4300 of which the interest part is taxable, so €4300 x 4.5% = €193.5 which is added to your tax return and subject to social charges.It's never easy to explain these things !EditBy year 8 the growth of the AV will be higher than than 4.5% but the effect on the bottom line is still advantageous.
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allanbYou are correct in saying that the advantage lies in both the inheritance tax and the fact that the interest rolls up without being taxed.The reality depends upon how you plan your income stream over a number of years, how much capital you have to invest and how long you can leave it before using all of your interest earned.If you have a large pension and little capital or indeed just enough that you need to draw down the interest each year then there are other ways of skinning the cat.However there is the advantage that after 8 years a couple can withdraw 9200€ a year free of tax and social charges.As previously mentioned you can invest direct and avoid paying commissions and this is what I now do. You are right to remain scepitical but for myself and many others it is a highly advantageous method of financial planning and the inheritance benefit means that when my wife bequeaths an inheritance to my daughter she will not pay 60% tax on the first €152k.Another thought - take a couple investing €300k in a capital safe investment at 4.5% producing €13.5k a year as a top up to a state pension. The taxable element is only 607€ as opposed to 13500€ outside an AV. After 8 years the taxable element falls to €194. By spreading the tax liability over a number of years they avoid being taxed in a higher tax band and are able to leave their capital to their successors.You do not have to leave the investment until maturity or death - in the example given the advantage is taken after 1 year and improves after 8 years.
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Opening an AV before you arrive will allow you to benefit in two ways (as I undertand it).1. Once the new UK / France tax treaty comes into force then the AV is not counted towards ISF (wealth tax) for the first 5 years of residence. This will only affect you if you have a gross worth in excess of 760k€.2. The limit of 152k€ per inheritor is removed and all of the AV can be bequeathed without tax, however payments into the AV after you are 70 may still be subject to restrictions/tax.Any of the major financial advisors can arrange to open an account for you whilst you are still UK resident.That's how I understand it, but having been here over 5 years and the UK/France agreement is still not in force it was of no benefit to me.
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No and 5.5% for renovation.
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Take a look at www.boursorama.com. There are a number of others available, however you should consider entry fees (frais sur versements), annual charges (frais de gestion), and fees for changing your portfolio (arbitrage fees) or making witdrawals (rachats).You can invest direct without paying commission and the annual charge is .6% for funds in Euros or .85% for stock market based investments.They also do free internet banking with free credit or debit cards, if you spend 1500€ every 3 months on the cards.Very much like the UK Isa - with no annual investment limit and preferential tax treatment in France.
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[quote user="cooperlola"]
As I say, I am no accountant. Also, I'm far from wealthy too. However, some inherited UK properties could be worth upwards of £250,000 these days and if you have been living in France for over 5 years, I am pretty sure from the evidence on the site and the article quoted above, that you'd be taxed here not in the UK. However, if you do not sell the property then, I agree, this could change things. You may only be taxed on any rental income, should you choose not to sell. However, if you should sell the property, would it be seen as a capital gain? These are the things I do not know as it is beyond my personal experience - I can only glean what Steve did from the French government tax website. I still think that when these sorts of sums could conceivably be involved, it is best to consult a professional because the penalties for getting this wrong could be horendous.
Like you, I'm sure you can't be taxed for having money which was yours before you got here - only on income from its investment.
[/quote]In the example you give:French inheritance tax would be payable upon inheriting the house.Rental income would be subject to UK tax and declared in France.French capital gains would be charged on the gain in price between inheritance and sale.Wealth tax would be applicable on 1st Jan following inheritance if your total worth was over 750k€And yes you are subject to wealth tax for having money which was yours before you got here - subject to ISF rules. -
Pugwash said "surely you cannot be taxed just for having it ?"Yes, you are taxed for "just having it".
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This appears to be AVG free in French:http://www.01men.com/contenu/4483/01men_telecharger-logiciels-windows-Securite/50226-avg-anti-virus-pare-feu
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Clair saidThe down side with Tempo or heures creuses is that you pay less at some times of the day/year but a higher "meter rental" rate.Standing charge for 18kva - Option Base 277.92€, Option Heures Creuse 442.21€, Option Tempo 223.53€ which is a lower "meter rental" in this example.For us the cost of electricity using this site http://www.epsic.ch/pagesperso/schneiderd/Instal/tarif.htm would be:Option Base 1946€, Option Heures Creuse 2053€ and Option Tempo 1146€ it all depends upon your usage, power requirement and heating systems but this site is good for working out the best scheme for you. If Tempo is no longer available to new consumers then your options are limited.
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10's
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To configure your Freebox.Go to www.free.frClick into Espace abonnésEnter your Identifiant and mot de passe (phone number and password)Go to the box bottom right marked FONCTIONNALITÉS OPTIONNELLESClick into Fonctionnalitiés de la Freebox (Wifi)Click into Fonction Wifi: configurerClick the box at the top marked ActiverEnter a name for your wifi (anything at all) (matchless?)Click on WEP Either enter a key (password) or click générer and one will be generated for you.Write down the name you gave your wifi and the key provided you will need these later.Click Envoyer and that's it.Switch off your Freebox at the mains, insert the card and switch on again. With a bit of luck it will work - I just could not get the Belkin card to work but it works well on any laptop with built in wifi. When the laptop picks up the wifi enter the key and that should be you.
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The proceeds of contracts issued before 1 January 1983 are entirely excempt from income tax and social contributions. Profit on contracts issued after this date are subject to income tax and social contributions unless the proceeds are used to purchase an annuity which is then subject to income tax and social charges.
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Rank
Organisation
Rate
Cost in £
1
4X Currency Corporation
1.4803
£111,463.89
2
TT Moneycorp*
1.4800
£111,501.49
3
Direct Currency Exchange
1.4785
£111,599.59
4
Caxton FX
1.4780
£111,637.35
4
HiFX
1.4780
£111,637.35
6
Escape Currency*
1.4770
£111,727.93
7
Currencies Direct
1.4762
£111,773.47
8
Travelex
1.4741
£111,932.70
9
International Currency Exchange
1.4730
£112,016.29
10
Foreign Currency Direct**
N/A
N/A
*Includes £15 transfer fee** Could not quote within the time frameResults of an independent mystery telephone shopper exercise carried out by Ipsos MORIon 27 February 2007 between the times of 3.35pm and 4.16pm to transfer 165,000 Euros.During these times the inter bank rate fluctuated between 1.4843 and 1.4849 (provided byxe.com). Ipsos MORI registered as a customer with each of the companies listed, and thequotes obtained were actual dealing rates not indications. -
[quote user="Bluebells"]Leslauriers, many thanks re the military war pension bit, whats your stance from knowledge on whether it should be declared as income or not, it seems a complete mess, one way or the other , thanks[/quote]The tax return form is very clear on military disability pensions
SOMMES A NE PAS DECLARER
- la retraite mutualiste du combattant ;
- les pensions militaires d'invalidité et de victime de guerre ;
SOMMES A DECLARER CASES AS à ES
- les sommes perçues au titre des retraites publiques ou privées ;
- les rentes et pensions d'invalidité imposables, servies par les organismes de sécurité sociale ;
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[quote user="chessfou"][quote]Also, is it possible to download the tax return online, this will be our first French tax return as we arrived in June 2006?[Bertiebe][/quote]No, assuming what I was told is correct.I wanted to submit online but was told that this is impossible for a first submission.My next question was can I download a tax return (after all it will be simply a form "vierge") but the answer was "no" - got to pick it up from the local Hotel des Imp/o\ts (or, maybe, mairie). [/quote]Most expats will need to ask for forms 2042, 2047 and 3916.For the second year you can register online.
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[quote user="Benjamin"]In our listing of income sources which we took along to the Impôts we called it Une pension d'invaidité du gouvernment G-B which was the best translation we could make at the time.We explained that the benefit was not taxable in the UK as it had been awarded before 1995 (or was it 1992?) but they insisted it was taxable in France.[/quote]I would take the view that AAH is not taxable in France as it is means tested. DLA may be on the basis that disability pensions (with certain exceptions such as military) are subject to tax and social charges and that DLA is not subject to means testing in France.Military disability pensions are tax free in France.On the point about varying advice from tax offices, this is taken from the latest tax newsletter published by PKF Guernsey"Unfortunately, it appears that a great deal of well-meaning expatriates have beenwrongly advised by none other than their local tax offices. Some even seem to state that thereceipt of foreign source income simply dispenses the recipient from filing a resident tax return.This is simply not true." And that's talking about the need to fill in a return or not!!!
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Feel free.
Where to stash your cash
in French Finance
Posted