Another working in the UK/ living in France thread

[rory]

Hello all,

I'm a first time poster having only just come across this forum. I've poured over a lot of the previous threads covering working in the UK while living in France and I'm still a little confused(!). I appreciate that getting advice from the experts is always the better option, but I've had just as much fun trying to find said experts, so in the meantime, I was hoping to get anyone's insights or experiences to back up (or destroy) my view on this.

We are moving down to France in July, primarily so my better half can return to be near her family and friends having put up with being in the UK for the last 10 years. However, I will still commute back to the UK during the week, generally travelling on a Monday and coming back on Friday. My wife will also return to work in France as well. Unfortunately, due to the somewhat bleak UK housing market and being unable to get a buyer, we are now renting out our UK house and will be renting in France for the foreseeable future (or until the property market here turns the corner again).

So, as far as I can tell, my salary will be taxed at source in the UK, including N.I payments, which I will have to declare in France, but will not be re-taxed upon. As the rent on our house in the UK will not cover our mortgage here, we will not be liable to any UK tax on that, although I'm a little unsure of the implications of this in the French authorites' eyes. I will also need to get hold of an E106 (or E109?) to cover health in France. My wife will be liable to tax in France and will pay the usual social security payments through her french employer.

One question I had was when taking looking at what the UK counts as days in the UK for residence, is travel to and from included?

I've always gone on the assumption that our case was not particularly out of the ordinary for 'euro-commuters' but I'm happy to be corrected. I'd be really grateful if anyone's got any similar experience they could share or to point me in the right direction.

Thanks all in advance.

[Sprogster]

Under the new rules that came into affect on the 6th April, 2008, you are ordinarily resident in the UK for tax purposes if you are present in the UK at midnight for ninety days or more.

[Chancer]

Yet another one to add to the already confusing array of measures for residency/domicile.

Lets hope that this one is definitive and all the others are redundant.

Anyone that has tried to get a black and white decision out of the the centre for non residents will understand why I wont be holding my breath[:)]

[Sprogster]

Domicile is a different kettle of fish, as it is extremely difficult for an individual with a UK domicile of origin to shed it and acquire a foreign domicile of choice.

For example, you can live abroad for years but if you maintain links with the UK, such as family, business or investment interests, club memberships and regular visits, then it is likely that HMRC will take the view that you are still UK domiciled, notwithstanding they accept you are non resident.

Why this is all relevant is that liability to UK IHT is based on domicile and not residence.

[Ginger]

Hi Rory, I can't help out with the number of days for UK residence as I'm trying to find that out myself, but I can tell you that if your wife works in France you will not be entitled to an E109 and your wife will have to pay cotisations to the French healthcare system. If you are paying tax and NI in the UK you are not entitled to healthcare in France except what is covered under your EHIC.

Bonne chance

[Will]

It's actually quite easy to get the official HMRC guidelines on residence and domicile. You can download the current version from http://www.hmrc.gov.uk/pdfs/ir20.pdf.

As far as travelling days are concerned, they were never counted up to a short time ago, but following one particular piece of case law, HMRC can now include them in the 90 days in cases of dispute. You also need to bear in mind if planning to spend more than half the year in France that although you may be UK tax resident under the 90-day rule, that may not necessarily apply to social security residence, so you could be expected to pay French health and social security charges.

[AnOther]

[quote user="Ginger"]If you are paying tax and NI in the UK you are not entitled to healthcare in France except what is covered under your EHIC[/quote]I admit I don't really know what effect a working wife has on the equation however this statement as it stands is definately NOT true.

If the wife is resident in France but the husband not then you may be correct but if both are French resident and the wife is not working then, subject to the usual NI contributions based qualifying criteria, the working husband will qualify for a workers E106 issued by HMRC covering them both.

Trust me, I know, this is precisely my situation [;-)]

 

[Chrisb]

Us, too, Ernie - exactly as you describe.

Chris

[Will]

Ernie and Chrisb - the original post then went on to say "My wife will be liable to tax in France and will pay the usual social security payments through her french employer." So I take that to mean that she will be working and living in France. In that case, Ginger is perfectly correct and the OP will not be eligible for E106 or E109, his healthcare in France will be via the EHIC. The EHIC is actually rather wider in scope than the old E111 and should cover all normal needs.

Just like you, I know - that is exactly our situation.

 

[AnOther]

Thanks for the clarification Will.

Do I presume that you are not considerd French resident then ?

 

[Will]

I meet residence qualifications for both France and Britain. So under the double taxation agreement I pay tax in Britain (and NI) but declare it as part of our joint income in France.

[AnOther]

[quote user="Will"]I meet residence qualifications for both France and Britain.[/quote]So how does that work, is it not one OR the other [8-)]

 

[rory]

Thanks for all the replies. It's a muddy minefield all this. Does the EIHC cover you in the same way as an E106 or E109?

I understand the dual residency thing. France would see me as residence with primary residence (plus family) being in France, whlie the UK would see me as residence through days spent in the UK (just). Residency is in the eye of the beholder!

In parallel, I was trying to get through to the International Pensions gang in Newcastle but had to leave a number for them to ring back on because of high call numbers. So, once I get a response from them, I shall post an update here.

Thanks again.

[cooperlola]

The EHIC regs are HERE  To my mind, if you read the entitlement section, it clearly states that it is not available to those who live abroad even though, as Will says, its scope is wider than old E111 used to be.

"Who is eligible for an EHIC?

People who are ordinarily resident in the UK are entitled to a UK-issued EHIC. It is not valid for people who are going to live abroad. "

So, yes, the EHIC is a minefield.  If you can get a workers' E106 then I would do so, if I were you, as I feel it's far less open to any local interpretation of the rules and regs.

[Will]

If you work, and pay NI, in UK then you are 'ordinarily resident'. One of the old forms that the EHIC encompassed was the E128, which was what you had to have in conjunction with the E101 if you were working and living in France on assignment from a UK employer (though some cases, like civil servants, seafarers and offshore workers, get worker's E106 - like Ernie - or some other special arrangement). The E128 gave full access to the French health system exactly like an E106, with the possible exception that not all CPAMs would issue a carte vitale, though that does not stop you claiming refunds. As far as I know the EHIC works the same way under these circumstances, though I have never had cause to test it.

However, if you spend more time in France than in Britain you could well be expected to join, and pay into, the French social security system. How this would work is even more of a minefield. In theory you may be able to 'piggy back' on to your wife's entitlement. but as you are working yourself that is not likely to be allowed, unless you could arrange to become unemployed between visits to Britain. Otherwise, I guess you would need to persuade the authorities to give you an E106. But you would probably only get that for your first stay in France, retuning to Britain to work would cancel it out and in order to get another you would need to have more than just a few months of continuous NI payments. As the rules on E106 in France have changed recently I doubt if anybody can give you a definitive answer. You may well find yourself having to get private health insurance to cover you in France, like other 'inactive' people under state retirement age with under 5 years residence and without E forms.

To return to Ernie's question, it appears to be perfectly possible to count as fiscally resident in two or more countries. Here is what IR20 (see my earlier link) says:

1.4 It is possible to be resident (or ordinarily resident) in both the UK and some other country (or countries) at the same time. If you are resident (or ordinarily resident) in another country, this does not mean that you cannot also be resident (or ordinarily resident) in the UK. Where, however, you are resident both in the UK and a country with which the UK has a double taxation agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement...

Domicile is quite a different concept, that is where the 'either/or' situation arises. This gets confusing because the French have different residence qualifications from the UK, and they tend to regard residence and domicile as much closer in concept - almost interchangeable.

In the situation under discussion, things can get further complicated by the fact that UK taxes a couple as individuals, whereas in France you are taxed as a couple. For reasons like this, I would always recommend using a good accountant or tax adviser with knowledge of both French and British systems, even if your affairs seem simple.

Edit - second paragraph added

 

[cooperlola]

Thanks Will.  This is a subject which I'm grappling with at present, as we have a poor lady whose husband works for a company which is registered offshore and nobody, but nobody, can come up with a difinitive answer about where their health contributions should be paid (the company - although a large, British, reputable one - doesn't make any employers' contributions to anybody, hence the root of the problem in this case.)

I agree entirely about seeking professional help.  Although they occasionally get it wrong too, at least you have some protection if they do.

[AnOther]

Coops, if you're talking about NI contributions does it matter what the employer does or doesn't pay, it's the employees contributions which entitle him/her to an E form is it not [8-)]

In my own case, about 3 years ago and with the express intent of reducing employee NI, my company transferred us all to a shell company in Guernsey which immediately subcontracted us back to the original company in UK. Ultimately it's made not one iota of difference to me personally, the only difference being that technically I work for a Guernsea company, but I still pay full employee NI and got my E106 in the normal way.

My company still pays some NI, not sure how much, but obviously the saving was substantial enough to warrant moving to Guernsea for !

One interesting side effect is that I could if I chose now be paid tax free but that would mean both leaving the pension scheme and foregoing the company contribution plus free 4x salary 'death in service' life cover so I've decided against that particular 'perk' [blink] [blink]

 

[Russethouse]

Are you sure ErnieY, I once had a problem claiming unemployment benefit ( I had just returned from working abroad) as my previous UK employer had not paid anything.

[AnOther]

But had you paid anything ?

I spent several years abroad on a nil tax code but still paid class 3 voluntary contributions. When I returned to UK for a few months between jobs, and for no other reason than that I could, I claimed unemployment and although they were adamant that I wasn't entitled I just filled in the forms anyway and left saying "send me the money when you've sorted it out" and a Giro followed some weeks later !

That was all in the early 80's though so I don't know if the rules have changed, I've not had occasion to claim a penny from anyone since [;-)]

 

[AnOther]

Seems class3 does not entitle one to UB, maybe something changed when it went from being UB to Jobseekers Allowance ?

[IMG]http://i127.photobucket.com/albums/p123/biskitboyo/NI_Table.jpg[/IMG]

In brief, the different classes of contribution are:

• Class 1: paid by employees and employers

• Class 2: paid only by people who are self employed;

• Class 3: paid as voluntary contributions by people who wish to protect their right to a state pension and who do not pay enough contributions in another class;

• Class 4: paid mostly by self-employed people in addition to Class 2 contributions. Payment of Class 4 contributions do not count towards benefits. Class 4 NIC depends on the level of your profits and is collected via self assessment.

 

[AnOther]

Edited - double post !

[cooperlola]

The individual in this case has asked several times if he can pay NI contributions in the UK and thus qualify for a workers' E106, but the answer has been a flat no.  As the ship is registered in the Bahamas, the company is not liable to pay the employers' part of the "stamp" - as it was called back in my day - and thus, he can only pay voluntary contributions, which are fine for pensions but not a lot else.  Being resident in France, of course they cannot use the NHS, and as his wife is due for an op' in a fortnight, and has chronic health problems anyway, no insurer will cover them.

They cannot join an employment scheme in France, as technically, the company is outside the EU and thus none of the mariners' rules applies either.  The only option now appears to be to pay for the op' and the wife's ongoing treatment but, as you will appreciate, in that direction, financial ruin potentially lies.  Sadly, the situation has not been helped by the fact that their former CPAM allowed them to join CMU,  and pay in, but - since a very recent move to another department here - the new CPAM is now saying that the previous one was in error.  Whether this is or is not the case is the subject for some debate, of course, but one can see why, after 3 years' of paying CMU contributions without a hitch, this has come at a terrible time for them - especially as they have only months to go before achieving 5 years' residency.

This is a, frankly, heartbreaking situation and I'm running out of ideas - although there are still a few avenues which we are exploring, but time is running out.  If anybody has any bright ideas - all suggestions are gratefully received.

[Will]

Cooperlola - that explains what was, quite honestly, a rather mystifying situation.

It is well known in the maritime business that ship owners, operators and managers save a lot of money on taxes and social security contributions if their vessels are registered outside Europe and, as is often the case, owned and managed through foreign subsidiary companies. Certain countries are extremely lax in the standard of the ships themselves as well as employment law: most of these 'flags of convenience' are well known and ships sailing under these flags tend to be targeted by port state control inspectors when they visit many countries. For more reputable but still spendthrift operators, the Bahamas is one popular place of registration (which was frequently used by the likes of P&O before they returned to the UK flag); other flag states which allow cash to be saved without necessarily compromising safety standards include Liberia and the Marshall Islands.

Seafarers are a special case in EU law, but as you say, if they are based outside the EU they cannot benefit from these concessions. I would agree that your individual's original CPAM was probably incorrect in taking contributions from somebody in that situation. Some other seafarers with families in France were, I know, included among the few people who, under the previous system, were expected to have private health assurance, as they were not eligible to join the CMU. 

Edit: this link gives the EU policy on special arrangements for seafarers. http://europa.eu/scadplus/leg/en/lvb/l24189.htm
Ironically, the French flag is highly attractive, as France makes very generous concessions to French shipowners employing nationals onboard their ships, such as a total refund of employer's social security charges, which is permitted under EU subsidy restrictions. Which is why Brittany Ferries tend to have French crews, unlike the multinational personnel on other operators' ships.

[cooperlola]

Thanks Will, not hopeful, but helpful!  How then, did seafarers who had chronic and pre-existing conditions ever get private health insurance?  Or do they just pay up?

[Will]

I really don't know the answer to that. I would imagine they were covered by their employers while at sea, which would reduce the risk, but permanent insurance would still be needed for their families living in France, naturally. The private insurance requirement would only apply, of course, in the case of non-European employers, as in your individual's case.