RMI and other benefits under review

[Chancer]

I have just watched a report on France2 where they were showing the work of the anti-fraud investigators, they highlighted the case of a Brit who was claiming RMI yet had a regular income of  1500 euros, I think from renting a gite(s) as they showed a view of the swimming pool, it may possibly have been UK rental income; I was on the computer at the time with one ear (in french!) listening to the news.

I went into the living room to see the rest of the report, I think that the guy is or was in prison, they highlighted British and Dutch as being amongst those that they are looking closely at.

They stated that if the amount of hidden revenue was twice that of what was declared (or perhaps claimed as RMI) it would be treated as and prosecuted as fraud, not something to be taken lightly in France.

My neighbouring brasserie has recently undergone a "controle des impots", the lady was there one or two afternoons each week during October, November and December, he finally got a demand for 40,000 euros on December 20th. This is for a business that is on its knees and I doubt is covering its costs at the moment but I am sure that they have got their sums right and are claiming back several years of undeclared revenue.

[Clair]

More specific details about what will be looked at

http://www.lefigaro.fr/economie/2008/01/10/04001-20080110ARTFIG00337-rmi-cmu-la-chasseaux-fraudeurs-s-intensifie-.php

Seront ainsi pris en compte, pour le RMI, la valeur locative des

propriétés occupées, 80% du montant des travaux d'entretien, 80% des

dépenses de personnel, 6,25% de la valeur des voitures, motos et

bateaux de plus de 10 000 euros, 80% des achats d'informatique,

électroménager, hi-fi de plus de 1 000 euros, 80% des dépenses de

voyage, frais de restaurants, inscriptions à un club de sport, et 2,5%

des capitaux détenus. Le tout devra être inférieur à la moitié du

montant annuel du RMI.

Google translation:

Will be taken

into account as well, for the RMI, the rental value of properties

occupied, 80% of the amount of maintenance work, 80% of staff costs,

6.25% of the value of cars, motorcycles and boats over 10000 euros, 80%

of the purchases of computers, appliances, hi-fi over 1000 euros, 80%

of travel expenses, costs of restaurants and registration from a sports

club, and 2.5% of assets held . Le tout devra être inférieur à la moitié du montant annuel du RMI. Everything must be less than half the annual amount of RMI.

[Chancer]

I followed that on the news article Claire but didnt really understand what they were saying, sadly with your text and even the English translation I still dont get it[:)]

Could you explain it for me, I must be missing something simple (I am a man after all).

Editted

I just read the linked French article and understand it now.

They say that up to now someone could legitamately "touche" the RMI despite living in a big house but paying little or no rent to the parents who own it, having use of a big car again borrowed and taking expensive holidays paid by someone else. All this they will treat as income.

Not sure about the 80% of the maintenance on the house, does that mean if someone asset rich and on the RMI will not be allowed to spend their capital on essential repairs say a new roof?

[Clair]

The authorities will look at the lifestyle of RMI beneficiaries and assess if they are really in need of it.

Any discrepancy in the income declared and the lifestyle enjoyed will be enough to justify a loss of the benefit.

To reach their conclusions, they will take into account

• the rentable value of the accommodation,
• 80% of the value of any maintenance undertaken on said accommodation,
• 80% of costs of any employee (house help?),
• 6.25% of the value of car, motorbike or boat valued at over €10 K,
• 80% of electrical purchases over €1000 (computer, hifi, washing machine...)
• 80% of amount spend on travel
• 2.5% of assets
• how much is spent at restaurants, at sports clubs, travelling...

When all these are added, they should amount to less than 50% of the annual RMI received.

[Chancer]

Some seem reasonable enough like employees (as if!), spending in restaurants and sports clubs and travelling, I can understand the 2.5% of assets as it is no different to say UK income support which is not granted if you have more than a certain amount of savings.

But it would appear that people are penalised if they have already paid for their house which has a high rentable value, I suppose that they could sell and downsize but the RMI figures quoted earlier would not cover the rental on most properties.

It looks like people will be frightened to pay for or even DIY essential repairs and will have to sell their cars if they are worth more than 10K euros.

Some of the people mentioned earlier in this thread are going to get a rude awakening!

[Clair]

An employee could be someone who does a couple of hours of cleaning/clothes washing a week, that an old boy would pay by CESU...

[Will]

The checks do not seem at all unreasonable. France cannot afford freeloaders any more than any other country can.

I wonder how some users of this forum would feel about immigrants going to Britain with no intention of working legally, installing themselves in a £500,000 house and surrounding themselves with the trappings of luxury, taking frequent holidays, and expecting social security handouts to help fund their day-to-day life?

The only one that looks a bit contentious is the cost of maintaining your house. Dare I suggest that may be specificaly targeted at the type of person who comes to France with a pile of cash, that gets ploughed into rebuilding a house? So that the balance sheet might show a house bought for 75,000€, but once finished the owner would expect to be able to sell it for four or five times that amount? They might claim, as they often do, that they are enhancing the neighbourhood, or even creating local employment, but it is they who expect to profit from the investment.

[breizh]

I am glad the Government are looking at RMI and benefits in kind.

But I will hazard to guess they won't look too closely at SNCF employees with their free rail travel, and also for their families, including both sets of parents. Or what about EdF. Ever noticed the 1% surcharge on your bill for the employees social fund to pay for their holidays, not only do EdF employees not pay this, they also get their electricity for free. Cheap loans/mortgages if you work for CL. Should not this be considered as income? My french family think it's brilliant that Britain sorted out these issues years ago, but don't beleive Sarkozy will ever be able to rein in the freeloading here.

Regarding overseas income. Within the EU you can choose to pay tax either in the country where the income is earned, or the country of residency. For example if you receive revenue from a rental property in the UK, but are resident in France you can pay the tax on that in the UK if you wish.

My wife has a number of properties rented out to locals in Bretagne. When we were resident in the UK, we elected to pay tax in France on that revenue, as we would pay no tax as we were below the minimum. Similarly when we were resident in Barcelona we elected to pay tax on rental revenue in the UK in the UK, as it would be minimal, and still paying no tax in France on French property, and tax in Spain on earnings there. It gets very complicated, but if you try hard it is possible to have a good income but pay virtually no tax, and all absolutely legal. Now we are resident in France and have no overseas income we decided to transfer ownership to the French properties to my wife's french nephews and neices. Mainly on the advice of her mum (who is Maire) in order to avoid CGT.

In conclusion, the French should look under their own beds for benefit and tax cheats before they look elsewhere. You see a few Brits, I see 60 million Frenchmen making it an artform.

[cooperlola]

Breizh.  As a retired railway employee from the UK, I can tell you that - following a ruling by the law lords about 15 years ago -  rail travel benefits for employees and their families are not taxable in the UK either.  The ruling stated that any benefits in kind which were provided at no cost to the employer, were not taxable.  So, in this one case at least, the UK is the same as France. 

[breizh]

Thanks for putting me straight Cooperla. Didn't know that.

[cooperlola]

[quote user="breizh"]

Thanks for putting me straight Cooperla. Didn't know that.

[/quote]I remember it well, because I got a nice little tax rebate at the time![:D]

[breizh]

SNCF would also give free travel to your parents and your wife's family also, is it the same in the UK? and you and they also get to use the SNCF social facilities such as the les colonies de vacance. It may be an urban myth, but apparently SNCF passenger revenue is not sufficient to cover even the former employee pensions, and the subsidy paid annually is more than the Secondary and Tertiary education budgets put together.  

If you what to hear someone have a real good rant I'll get the MIL, I've never come across anyone with such a low opinion of the French and their freeloading as her. One problem though this is an English forum and she doesn't understand a word of English. That said, she's quite happy to spend 2 weeks at a health spa paid for by CMU!!!

 

[cooperlola]

No, o/h's and dependent children only.  And the level of travel depends upon your grade - for instance you got a reduction when you started, then free 2nd class travel in one region, then all regions, then 1st class if you reach really dizzy heights!  Mind you, things have probably changed since privatisation has taken hold but I still get mine as a retired bod who worked on the railway pre-Maggie.  Not that I use it much now, of course, although I do get 50% off in Europe.[:)]

[breizh]

Sorry, just realised I'd hijacked the thread.

[cooperlola]

[quote user="breizh"]Sorry, just realised I'd hijacked the thread.[/quote]With some assistance![:$]

[Pickles]

[quote user="breizh"]Regarding overseas income. Within the EU you can choose to pay tax either in the country where the income is earned, or the country of residency. For example if you receive revenue from a rental property in the UK, but are resident in France you can pay the tax on that in the UK if you wish.[/quote]

I'm interested in your comments as they do not reflect how I understand the system to work. IIRC if you have rental income in the UK, wherever you live or are domiciled, that automatically gives rise to a potential UK tax liability, and the income has to be declared to the UK tax authorities and any resultant tax paid to them.  If you are French resident, then the general case is that you have a potential liability to pay tax in France on your worldwide income. However, double taxation agreements mean that in general the tax paid in the UK is offset against your liability in France, but the income still has to be declared in France. AFAIK, you don't get to choose.

[quote user="breizh"]My wife has a number of properties rented out to locals in Bretagne. When we were resident in the UK, we elected to pay tax in France on that revenue, as we would pay no tax as we were below the minimum.[/quote]

Again, that would not be how I understand the system to work. If you have

rental income in France, wherever you live or are domiciled, that

automatically gives rise to a potential French tax liability, and the

income has to be declared to the French tax authorities and any resultant tax paid to them. The French tax authorities do not give non-resident taxpayers the same treatment as resident taxpayers, however - basically you are taxed at a flat 20% of the taxable revenue (until you hit the normal higher tax bands) with no equivalent of personal allowances (OK, if the tax is below say 100€, I think that they don't bother, but I think that's the limit). The only circumstances in which the 20% flat tax is not levied is if you can show that if all your worldwide income were taken into account under the French system, the band into which you would fall would pay less than 20% tax. Under these specific circumstances they would then apply the appropriate bareme.Naturally, you don't pay cotisations. If you are UK

resident and domiciled, then IIRC, the general case is that you have a potential

liability to pay tax in the UK on your worldwide income. However,

double taxation agreements mean that in general the tax paid in France

is offset against your liability in the UK, but the income still has to

be declared in the UK. Of course the UK has the non-dom quirk, where if you are UK resident but not domiciled, then you can elect to be taxed on overseas income on the remittance basis, and hence if you don't remit it to the UK then you don't have the UK tax liability in this respect. However, for the general case of UK resident and domiciled taxpayers, again, you don't get to choose.

Or have you got a better accountant?

Sorry, going even further off topic ....

Regards

Pickles

[artsole]

[quote user="Clair"]The authorities will look at the lifestyle of RMI beneficiaries and assess if they are really in need of it.
Any discrepancy in the income declared and the lifestyle enjoyed will be enough to justify a loss of the benefit.

To reach their conclusions, they will take into account

• the rentable value of the accommodation,

• 80% of the value of any maintenance undertaken on said accommodation,

• 80% of costs of any employee (house help?),

• 6.25% of the value of car, motorbike or boat valued at over €10 K,

• 80% of electrical purchases over €1000 (computer, hifi, washing machine...)

• 80% of amount spend on travel

• 2.5% of assets

• how much is spent at restaurants, at sports clubs, travelling...

When all these are added, they should amount to less than 50% of the annual RMI received.[/quote]

Will they include my CD collection as well[:-))]

[Will]

Only 80% of those that cost over 1000€ so you should be OK there
(by the way, we got all bar one of your 60s compilation on the way home - the last, Brenton Wood, took a bit more time [:P]).

I agree that the French are probably world champions at financial fiddles, but that doesn't mean we should all do it, even if we are expected to at times... And also that you cannot choose in Europe where you pay tax - apart perhaps from piddling amounts. Where you pay is determined by the residence laws of the individual countries and whatever double taxation agreements exist between them. What you can do is arrange where you spend time etc. so that the tax rules work to your advantage, but we can't all manage (or don't all need) to do that. In France the social security payments are far more significant than taxes, anyway, and are quite separate from taxes, unlike in Britain where they are mostly collected with income tax.

 

[Sprogster]

Pickles, you are absolutely correct.

Income is taxed in the country it arises and if there is an appropriate tax treaty in place, you get the foreign tax paid offset as a credit against the tax due in the country you are tax resident.

The non dom quirck will be only available to those who qualify from the 6th April if they are prepared to pay £30,000.00 fee to HMRC and accept they will lose all their UK tax allowances! 

[artsole]

[quote user="Clair"]The authorities will look at the lifestyle of RMI beneficiaries and assess if they are really in need of it.
Any discrepancy in the income declared and the lifestyle enjoyed will be enough to justify a loss of the benefit.

To reach their conclusions, they will take into account

• the rentable value of the accommodation,

• 80% of the value of any maintenance undertaken on said accommodation,

• 80% of costs of any employee (house help?),

• 6.25% of the value of car, motorbike or boat valued at over €10 K,

• 80% of electrical purchases over €1000 (computer, hifi, washing machine...)

• 80% of amount spend on travel

• 2.5% of assets

• how much is spent at restaurants, at sports clubs, travelling...

When all these are added, they should amount to less than 50% of the annual RMI received.[/quote]

After I replied to this post yesterday, I started to think about this new 'lifestyle investigation' more thoughtfully..................and I came to several conclusions. Firstly, how are they going to 'police' it.....................how many people would need to be employed to do the 'checks' And who defines 'lifestyle'. It's a fact that many people on low incomes/benefit have to rely on credit for the 'luxuries' in  life ie: TV/car etc. do you begrudge them that? How do they discover 'how much is spent on restaurants, sports clubs etc.'

It seems to me that this system is riddled with problems................if they need to employ thousands of people to do the investigations...........it's like 'robbing peter to pay paul'!

If they think they may rely on the 'informer' culture, then that is a very dangerous road to go down.................as has happened in the UK, people will inform on others for all sorts of reasons................jealousy, vengeance, or just down right vindictiveness. Just look at some of the comments made on here........about others having a better lifestyle..........AND THEY CLAIM BENEFITS TOO!  Far too dangerous a route to take.............[:(]

[Will]

Artsole, I would like to know the answer to that, too.

I remember saying when the Sarkozy reforms came in that there would be a danger of an extra tier of bureaucrats that would cost more than any savings. The reality of that has been proved in the NHS in Britain where there is such an emphasis on performance monitoring and collecting data for the various league tables and the like, that hospitals have been forced to employ extra administrators at the expense of health care staff. So patient care has suffered greatly as a result (but it doesn't matter because waiting lists are below three months for 90% of operations, 70% of drugs prescribed are generic rather than branded, or whatever other statistic you would like to quote).

The consensus was that sort of thing would not happen in France. I'm still not sure.

 

[artsole]

I'm in total agreement with you Will................with Sarkozy, I feel a 'Thatcher' type period arriving in France.............[Www]

[cooperlola]

[quote user="artsole"]I'm in total agreement with you Will................with Sarkozy, I feel a 'Thatcher' type period arriving in France.............[Www][/quote]Do you MIND![:-))] The bloomin' exchange rates are getting me down enough as it is.

[Danny]

[quote user="artsole"]After I replied to this post yesterday, I started to think about this new 'lifestyle investigation' more thoughtfully..................and I came to several conclusions. Firstly, how are they going to 'police' it.....................how many people would need to be employed to do the 'checks' And who defines 'lifestyle'. It's a fact that many people on low incomes/benefit have to rely on credit for the 'luxuries' in  life ie: TV/car etc. do you begrudge them that? How do they discover 'how much is spent on restaurants, sports clubs etc.'

It seems to me that this system is riddled with problems................if they need to employ thousands of people to do the investigations...........it's like 'robbing peter to pay paul'!

If they think they may rely on the 'informer' culture, then that is a very dangerous road to go down.................as has happened in the UK, people will inform on others for all sorts of reasons................jealousy, vengeance, or just down right vindictiveness. Just look at some of the comments made on here........about others having a better lifestyle..........AND THEY CLAIM BENEFITS TOO!  Far too dangerous a route to take.............[:(]

[/quote]

Artsole,

What do you think of those who make false declarations to receive RMI? If I knew someone was on the fiddle, I think I would not have a problem being the 'informer' as you put it. It is just fraud and taking the proverbial. I don't have any issue with claiming benefits that one is entitled to but anyone making false declarations deserves to be investigated. The only way that someone is likely to get caught is if someone else tells the appropiate people. Otherwise no one will know and people will just carry on thinking that they can get away with it at everyone else's expense.

I find something strange implicit in your comments about people informing for all sorts of reasons. As if people are entitled to be fraudulent and shouldn't be inconvenienced. The simplest reason is just because it is wrong.

Danny

[Ron Avery]

[quote user="Will"]

Artsole, I would like to know the answer to that, too.

I remember saying when the Sarkozy reforms came in that there would be a danger of an extra tier of bureaucrats that would cost more than any savings. The reality of that has been proved in the NHS in Britain where there is such an emphasis on performance monitoring and collecting data for the various league tables and the like, that hospitals have been forced to employ extra administrators at the expense of health care staff. So patient care has suffered greatly as a result (but it doesn't matter because waiting lists are below three months for 90% of operations, 70% of drugs prescribed are generic rather than branded, or whatever other statistic you would like to quote).

The consensus was that sort of thing would not happen in France. I'm still not sure.

[/quote]

Not sure I see the link between the cost of administrators policing income in France to those compiling NHS league tables in the UK, one has a cost benefit the other may not although that is open to discussion, but not here perhaps.........

With any fraud investigation systems you don't have to increase the number of  people carrying out checks to get results.  All you do is to tell people its being done and what is being covered.  Then you just do a couple of people with a lot of publicity.  With these type of investigations, its not the value of the actual detected fraud that counts, its the perceived deterrent value of stopping others who may also be on the fiddle or thinking about doing it.  If in a village a couple of builders got done for working on the black, or a couple were done for tax evasion and this was publicised as were the RMI checks in the Dordogne some time ago, how many others who were doing the same thing would think twice before continuing?

When I did this sort of thing on the trains, if you made checks visible and people saw a man checking tickets on the barrier, they would buy a ticket, if he was not there you might just take a chance and not buy a ticket, so the deterrent value of the visible checks is not the detected fruad, its the value of tickets bought that might not have been if nobody was checking.

In these days of joined up systems, for which France is lagging behind a little to other countries but catching up fast. It really is not hard to cross-check a lot of things from a desk.  An investigator could check your income from your bank account, tax returns and CPAM declarations,  the value of your house from the purchase, tax d'hab and fonciere and car value from the registration.  They could then extend it to potential undeclared income from Gites owned and advertised on web sites etc etc.  With many computer systems its so easy to run reports that give say a listing people claiming benefits or declaring income below the SMIC against those who have bought a new car or advertising gites for rent.  It really is not hard or labour intensive.