Social Security Contributions and Benefits

[Gabe]

Help anybody,

Planning our move for this year, thought I had the following all straight in my head but recent articles have confused me;

We are relocating permanently this year, my wife and I, our three children (6, 4 and 2) having bought a house in the Gers last Spring. My questions all relate to Social Security issues: 

Neither my wife or I will be working for at least three years, whilst we renovate our house. During this time we will be living off of the proceeds from the sale of our house in England. I believe that as the interest from the money from this sale will be below the income tax threshold, we will not be liable for tax, as we will have no other source of income. However can we /should we choose to voluntarily pay social security contributions and if so, what are these likely to be. Is there a benefit to doing this ?

Also if we do (or do not) pay these contributions are will eligible to receive family allowance? Also if we make voluntary contributions do we then qualify for state health care support (eventually) at the corresponding rate. I am assuming that we will require full private health insurance (not top up) if we do not make social security payments.

Finally does the E106 provide you with full health care cover for the first two years (Jan - Dec) or do you still need top up/complimentary insurance during this period ?

Help !!! Gabe

[Will]

Neither my wife or I will be working for at least three years, whilst we renovate our house. During this time we will be living off of the proceeds from the sale of our house in England. I believe that as the interest from the money from this sale will be below the income tax threshold, we will not be liable for tax, as we will have no other source of income. However can we /should we choose to voluntarily pay social security contributions and if so, what are these likely to be. Is there a benefit to doing this ?

When you are on E106 you are not liable for French social security contributions, and there is, as far as I know, no way of paying voluntarily. I think you can probably pay voluntary contributions to the British system, but that merely helps preserve your UK pension rights if necessary, and has no bearing on health or other social security benefits. Do make a tax return for the period you live in France, even if you have no tax liability. This is a legal requirement and makes life a lot easier for yourself when you eventually fully join the system.

Also if we do (or do not) pay these contributions are will eligible to receive family allowance? Also if we make voluntary contributions do we then qualify for state health care support (eventually) at the corresponding rate. I am assuming that we will require full private health insurance (not top up) if we do not make social security payments.

Try searching the forum for 'child benefit' - it is payable in France but works rather differently from the British equivalent. Your E106 will provide the same benefits as a French taxpayer would enjoy, and when it expires you are required to join the French system. Your contribution depends on your income, if you are living off capital/interest it will probably not cost you anything. Under normal circumstances (there are exceptions for some workers with non-French employers), full private health insurance is not permitted in France.

Finally does the E106 provide you with full health care cover for the first two years (Jan - Dec) or do you still need top up/complimentary insurance during this period ?

Validity of E106 varies, you may not get two full calendar years. As you are covered for the same as a French resident/taxpayer you will get reimbursed at 70%/65%/35% or whatever standard percentage applies. So you may need top-up insurance, which although optional is a very good idea.

Note that there can be different interpretations of the rules by different officials and départements throughout France, so although this response describes what should happen, please do not regard it as being gospel truth. Others' experiences may not be the same.

[Gabe]

Thanks Will,

Your reply was very helpful indeed and I note the caveat regarding treating your reply as gospel.

We will be making a tax return anyway, even if it is a nil return (hopefully), as we will eventually be fully joining the system and appreciate that this will make things easier later on (again hopefully). Sorry to be a pain but can I just check that I now have this straight;

Short term : Initially we should be covered for up to a maximum of 2 years by  E106. During this time we should receive state health care to which we should add complimentary (top up) health insurance to cover any short falls. During this time we should receive family allowance but would not be liable for any social security contributions.

Longer term: After E106, we would be liable for social security contributions linked to income and would be entitled to state health provision and social benefits, regardless of whether we are employed or not. Obviously we would need to continue with complimentary health insurance.

Sorry to labour this, but I have read so many things on other sites, admittedly of dubious credibility, that you start to question yourself. Also don't worry I fully intend to get professional advice in France when we move just to check the local application of the "rules".

Once again, thanks for the advice.

Gabe

[Will]

I think you have got it just about right.

After E106, apart from health, and possibly child benefits, it can be very difficult to get other social benefits in France if you don't have a work record. However, if you are on very low income it seems to be possible to get free top-up cover. I think the general advice is that if you cannot support yourself in France then you could find things very difficult. We have seen far too many people coming here hoping to live off capital and interest and finding they cannot survive after a while. It sounds as if you have got things sorted though - but house rebuilds always seem to take far longer and cost much more than you originally estimate.

[Ron Avery]

"We will be making a tax return anyway, even if it is a nil return (hopefully)"

Gabe

If you are receiving interest on your capital you cannot make a nil return as such, you have to declare your income however small. You may not have enough income from your interest with your family size to pay income tax, but that is not a nil return.  Also be aware that even if you have a "low" income, you may well be liable to pay the social charges that are imposed on unearned income.  Do not assume that you will receive any unemployment benefits while you are doing up your house, not sure if you were going to try this or not, as with the UK you have to be available for work for unemployment benefit and you will lose benefits if you do not take any jobs that are offered to you without a very good reason 

[LesLauriers]

Gabe, You will have social charges of 11% to pay on all of your unearned interest, remember too that any "tax free" UK accounts are taxable here, even your kids accounts are subject to social charges and taxation as they have to be declared on your tax return. Making a tax return for the period from your date of arrival to 31st Dec will entitle you to certain benefits.

There are tax free savings schemes in France although they do pay less than you may be used to.

Read everything you can in the "Finance", "Legal" and "Health" forums, they are full of information.

[sommebay]

Neither my wife or I will be working for at least three years, whilst we renovate our house.

Its not that easy to find work in France. Do you have plans for when the house is renovated? Do either of you speak French?

 

[Gabe]

Will, Ron & Leslauriers,

Thanks for the info, very helpful. Just to fill in some gaps; the renovation that I refer to is more appropriately termed modernisation of our home. Which should not really take three years, but I do not intend to kill myself doing it. In response to Ron's point, we have no intention of claiming unemployment benefit at all. Seems a bit cheeky to claim family allowance, but we are entitled to it in England (or its equivalent) and as such I wanted this info so that I can  make financial forecasts for all income and expenditure.  Trust me that receipt, or non receipt, of family allowance benefits will not make or break our plans, but should be factored in.

Longer term I plan to either undertake limited working back in the UK to supplement income, or to use some of our capital to develop some of our outbuildings for income purposes. However I would much rather consider this option with proper, robust costings generated whilst living in France, than trying to do this as a desk top exercise from England. I have a reasonable level of building project experience to know how budgets can overrun.  Also this approach will give me time to get to know my neighbours and local community better, before "slapping" in a planning application that risks offence.

Finally, I take Leslaurier's point and have been "hoovering" up as much advice from various sources for the past three years. However this in itself can sometimes be contradictory, hence the question. Anyway at some point you have to stop planning and start doing !

Once again thanks for the advice.

Gabe