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Just been refused an E106 renewal


ericb
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I work full-time for a UK employer and like many spend some time in UK and some time at home, and some time at airports/hotels in between.

Have been covered on E106 for past couple of years (fully paid up NI) and am aware legislation has changed - the form asks you to explain 'working pattern' where I input 3 days/wk in UK office and 2 days/wk home/remote.

The response I've had basically says I am no longer entitled to cover and should be registered/paying my cotisations in France, then goes on to talk about E101s etc....

I know I can voluntarily opt-in to my cover (c8% of last year's earnings IIRC?) if I feel like it....

But why would I still be paying contributions in the UK?  I don't believe, that even as a non-resident, there is any way to become exempt of NI and Tax at source?

I know they've been clamping down on non-status/pre-retirees, but I work 52 weeks a year and pay full contributions (as does my employer) and have done so/will continue for years to come..

Any advice?

Thanks

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I follow that logic - the 3 days/wk overseas comes under 183 days so non-resident; fully aware of double taxation treaty and fact I have no choice where my tax is paid (UK registered employer, primary work done in UK, revenues and profits generated in UK).  Thought EEA members worked to 'reciprocal arrangements' for healthcare - I'd more than happily opt out of paying NI contributions and hand that money over to the CPAM...

Know of any good accountants/tax specialists?

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You may have to elaborate a bit but from what you have said so far I think it is the work at home bit which may have tripped you up.

If this is so than I think HMRC (and the French taxman) will be expect your employer to setup a French entity for you to work through and consequently pay French cotisations etc. I can imagine the chances of this happening are sub zero though leaving you in a catch 22 where you have no option to not pay UK tax and NI yet still expected to pay again in France.

You do need some professional advice.

EDIT:

As a crucial point was your E106 issued by DWP or HMRC ?

You might take a crumb of comfort that others share your plight but it seems that only the last poster has a half a practical solution [blink]

 

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The EU 'reciprocal arrangements' are a bit of a joke really. As there are so many different health systems in Europe, varying from the NHS model where all bona-fide residents are entitled automatically to health care, to the German and similar systems which is virtually state-supported private assurance, it is impossible to have a workable reciprocity system when you don't exactly the match the e-form criteria.

The simple option for you would be to have private medical assurance for France, but the French authorities will not allow that if you are a working EU citizen.

The simplest thing would be to do all of your work (or at least tell everybody that you do) while in Britain, and to arrange it so that you spend more time in Britain so that you pay NI there and can use the EHIC when in France (183 days is not necessarily relevant to fiscal residence but for social security residence it is). Dependants living in France should be covered under E109. There's nothing to stop you answering the phone or sending e-mails when in France, just don't do any actual work.

You do need a good accountant who understands both tax and social security, for working people, in both Britain and France. Most of those who advertise in magazines like Living France are only really concerned with the inactive who want to invest their lump sums wisely, and don't understand cross-border working and double taxation agreements for workers.

My first thought was that you might like to look into working in France via a portage company, but I don't think that in your situation the sums would add up.

(I am dual tax resident, working remotely for a British employer and spending time in both France and Britain by the way, so have some experience of this situation)

 

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[quote user="ErnieY"]

...I think it is the work at home bit which may have tripped you up...

how true this is - only it's HMRC who have done this - their form asks:  "please give a brief description of your working pattern in both the UK and abroad, for example two days a week in France, three days in the UK".  It's almost as if they are setting the trap to opt out of having to deal with cases like mine.  They also go into specifics about email/computer usage etc...

That said, the letter I received was empathetic and realised that my situation had not changed since I was first issued an E106 three years ago - it's the legislation that's different (and it was the HMRC that issued it).  The basic EU premise seems to be you pay cotisations in the country where you 'live' AND conduct 'part or all of your activity'.  Grey area around 'live' then...

[/quote]

I did also receive the very 'helpful' advice telling me how I can ask my employer to setup a subsidiary in France, just for me!!  I do happen to work for a multinational who have an operation in this and ever other country so I will approach them about it - but the red tape involved internally to work for one division and get paid by another is no small mountain to climb!

I think for now I will go back to the HMRC and pick up on a technicality - I never said I worked from France, only home/remote (which I also do in the UK). I'd take Will's suggestion about not actually doing any work when in France - all I'd be guilty of is owning a laptop/BlackBerry.

Clearly this problem is not going to go away so will need to find best solution for my own situation - will post back when I get more advice...

 

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It's situations like this which can force even the most law abiding people into bending the rules.

If you weren't still compelled to pay UK tax & NI then it might be more acceptable but the grasping UK government wants (needs) every single penny it can wrest from any individual no matter how unfair or unjust the means.

I can appreciate the potential complications of transferring to your company's French division but even so if you do intend to stay in France and continue working for a few years there could be some significant advantages attatched to it, especially so now that you are in the spot you are in, so definately one to follow up I would say.

Good luck with arguing technicalities with HMRC. Remember though that even if they do concede to review your case then it's almost certain that will be asking your employer exactly what work you do or do not perform for them in France (it will matter not whether it's at home at the computer or on the Blackberry or actual physical toil - work is work) and I'd be surprised if your employer would be willing to 'mis-speak' on your behalf.

Thankfully my situation is different. I work offshore UK for 2 weeks then am on leave for 3 performing no work whatsoever in France. No comments please [6]

One final thing though, and I don't know why this didn't occur to me before, ignoring everything else if you have been in France on an E106 for 3 years (wholly legitimately that is - i.e. annual tax returns etc. etc. !) and your E106 cover has now come to an end then, under the current recently revised rules, you should be entitled to afilliate to CPAM in which case you don't need it anymore anyway.

This of course is on the understanding that the French do not know and are not made aware that you do actually perform work in France but I can't see how they would unless you personally tell them and if they already did know then they would likely be asking why you weren't working through a French entity.

Depending on what your letter of refusal from HMRC actually says then you might be able to take it to CPAM and use it to join up and of course, after 5 (legitimate) years of residence, you can automatically join anyway.

Just watch that 'work' word very carefully !

Good luck.

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[quote user="Will"]

The simplest thing would be to do all of your work (or at least tell everybody that you do) while in Britain, and to arrange it so that you spend more time in Britain so that you pay NI there and can use the EHIC when in France (183 days is not necessarily relevant to fiscal residence but for social security residence it is). Dependants living in France should be covered under E109. There's nothing to stop you answering the phone or sending e-mails when in France, just don't do any actual work.

[/quote]

Will,

I've just been trying to sort out the 106 / 109 situation in my own mind. If I work full time in UK, I understand that my wife, in France, would be covered by a 109,.........but.....does the 109 continue as long as I work or does it expire, someone mentioned a validity period of only one year.

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Steve,

I too have seen references to the E109 only lasting 12 months but cannot see any logical reason why it should not be renewable annually just as the 'workers E106' needs to be. There is a reference to the E109 HERE which according to my interpretation does suggest that this is the case.

Also I'm sure you know that just working full time in UK isn't the whole story.

Entitlement to an E106 or 109 is dependant on your NI record and you require 2 years of full contributions over the previous 3 full tax years; so for instance if you have not been paying NI for a few years and were to quit the Middle East today to start work in the UK then you would not be entitled to a E form until April 2011.

 

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I agree with Ernie.

E109 has never been an option for us because Mrs Will is employed in France, but my understanding is that entitlement continues as long as you pay NI. Obviously an 'open ended' E109 could easily be abused, so it makes sense that it should be renewable on a yearly basis.

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