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Additional Voluntary Contribution (AVC) and French tax declaration


pomme
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Does anyone know how money taken out of an AVC should be declared? It is an ex-Equitable Life AVC and completely separate from my private pension fund.

The one search result here doesn't give any useful information for my case. However, it does mention an AVC is strictly an annuity (although whether the tax office would agree is another question) in which case I think it would be taxed as a rente viagère?

But I am only considering withdrawal of a part as a lump sum rather than a regular withdrawal so I'm not sure I could declare it as a rente viagère?

As I understand it, being over 70 I would get a significant abatement on rente viagère income compared to pension income?

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Thanks, pomme.  Don't know why but I always thought that the abatement was 40%!!!

There must be others with AVC who would know.  I see your difficulty; the French do not seem to have the same definitions as we do of all sorts of stuff to do with income tax.  

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Personally i declare as pension. Tho that decision was made when pensions did not suffer social charges but rentes onereaux did. I have not looked into it since, but it would anyway not be a good idea to try to change.
It is one of the grey areas that exist in tax due to the two differing systems. That allow you to choose legitimately the course best for you. But you could always ask the Fisc to define it for you. They will choose the definition most advanteageous to them.
JFB

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I took a very small pension pot as a lump sum 2 or 3 years ago.  I am sure it was Parsnips who posted that one should enter it on the French tax return in a box for "one-off" pensions. Which is what I did. Tax automatically taken in UK refunded on request and the amount taxed in France at a fixed (low) rate. I was very happy with this outcome!
If needed I could check the box number for you. It could change of course when this years' form is out.
Mrs H.

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[quote user="Hereford"]
I took a very small pension pot as a lump sum 2 or 3 years ago.  I am sure it was Parsnips who posted that one should enter it on the French tax return in a box for "one-off" pensions. Which is what I did. Tax automatically taken in UK refunded on request and the amount taxed in France at a fixed (low) rate. I was very happy with this outcome!
If needed I could check the box number for you. It could change of course when this years' form is out.
Mrs H.

[/quote]

I took a small lump sum in 2018.

I entered it as "REVENUS EXCEPTIONNELS OU DIFFÉRÉS", box DXX on 2042C.

Only 25% of the sum is taken into account for the RFR amount, to help chances of still qualifying for various allowances etc. dependant on this, but the actual total is used for most of the other tax calculations.

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My dad did exactly the same thing as the OP.

The first thing is the UK tax, it will be taxed at an emergency rate and there is something strange about how they do it as well.

They consider it a monthly payment so they multiply the amount by 12 then calculate the tax at whatever percentage is relevant, in his case it was 20% on the first part and 40% on the next.

You go and get the following form from HMRC website

https://www.gov.uk/government/publications/double-taxation-united-kingdomfrance-si-2009-number-226-form-france-individual

There are two forms and they are English and French. Complete the forms and go to your tax office, he didn't need an appointment. They signed and stamped both, kept the French one and he posted the English one back to the address given. Two weeks later he got his tax money back from HMRC.

The French took the amount from their copy of the form and put it automatically on his tax form. Because it was a pension he paid only 7% I believe in tax in France.
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Thank you all for the advice and comments.

It does seem I'll have to declare the withdrawal as a one-off pension rather than a rente viagère.

Using rente viagère does only seem correct if the whole sum was converted to a real annuity which was then paid in regular sums.
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I had an AVC pot in the UK which I took entirely as cash a couple of years ago. As others have said, I was taxed in the UK at source at an emergency rate on 75% of the drawdown. As I was taking the whole sum, as far as my French tax was concerned, I opted to pay a one-off 7.5% tax charge on the gross sum, which was effectively 6.75% after deducting the 10% rebate allowed. Social charges were payable in addition (no rebate on that).at around 7.4%, so the tax treatment here in France was quite generous.

The timing was quite important. I deliberately took the AVC drawdown in February 2017, so it fell at the end of the UK tax year, but at the beginning of the French tax year. I was then able to submit my UK tax return for 2016-17 in April 2017, receiving a rebate of all the UK tax paid on the drawdown within a matter of days. I didn't however need to declare it in France until May 2018, and didn't pay the French tax and social charges until September 2018. That was an ideal scenario as far as cash flow efficiency was concerned, so if the OP can act quickly, it would be worth trying to take the drawdown he is planning before 5th April....
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