Social Charges on UK Investment & Savings Update (if your interested)

[parsnips]

[quote user="Francophile"]The clue is probably in the title of this thread, but can somebody please confirm, on good authority, that it is only Investment Income that is exempt from Social Charges for holders of an S1?

Or, preferably, can somebody please confirm, on good authority, that income taxed under the Microbic regime (such as rental income from running a gîte) is similarly exempt?[/quote]

Hi,

   Here are the words used by the Conseil d'Etat in it's ruling of 17/04/2015;

" que la circonstance qu'un prélèvement soit qualifié d'impôt par une

législation nationale n'exclut pas que ce même prélèvement puisse être

regardé comme relevant du champ d'application du règlement n° 1408/71 ;

que ne peuvent être assujetties à des contributions relevant du champ

d'application du règlement n° 1408/71 les personnes qui résident en

France mais qui ne relèvent pas du régime français de sécurité sociale ;"

  roughly translated " the fact that a national legislation (france) regards an imposition as a tax , does not exclude that same imposition being regarded as falling under EU reg.1408/71 ( which states that a citizen can only be subject to one social security regime at any one time); (therefore) that persons residing in France but who are not affiliated to the french social security regime (S1 holders)  cannot be subjected to contributions falling under the scope of  EU reg .1408/71."

I regard that as a pretty good authority that S1 holders are exempt from all and any social charges on all their income from any source - however , don't be surprised if , in the first instance , your local tax numpties do not understand or accept the implications of this ruling. 

 

[woolybanana]

My tax inspector neighbour reckons it may not apply to anything earned in France, but is not yet sure.

[parsnips]

[quote user="woolybanana"]My tax inspector neighbour reckons it may not apply to anything earned in France, but is not yet sure.[/quote]

Hi,

 I refer you to the last paragraph of my post.

[Francophile]

[quote user="parsnips"][quote user="Francophile"]The clue is probably in the title of this thread, but can somebody please confirm, on good authority, that it is only Investment Income that is exempt from Social Charges for holders of an S1? Or, preferably, can somebody please confirm, on good authority, that income taxed under the Microbic regime (such as rental income from running a gîte) is similarly exempt?[/quote]

Hi,
   Here are the words used by the Conseil d'Etat in it's ruling of 17/04/2015;
" que la circonstance qu'un prélèvement soit qualifié d'impôt par une législation nationale n'exclut pas que ce même prélèvement puisse être regardé comme relevant du champ d'application du règlement n° 1408/71 ; que ne peuvent être assujetties à des contributions relevant du champ d'application du règlement n° 1408/71 les personnes qui résident en France mais qui ne relèvent pas du régime français de sécurité sociale ;"

  roughly translated " the fact that a national legislation (france) regards an imposition as a tax , does not exclude that same imposition being regarded as falling under EU reg.1408/71 ( which states that a citizen can only be subject to one social security regime at any one time); (therefore) that persons residing in France but who are not affiliated to the french social security regime (S1 holders)  cannot be subjected to contributions falling under the scope of  EU reg .1408/71."

I regard that as a pretty good authority that S1 holders are exempt from all and any social charges on all their income from any source - however , don't be surprised if , in the first instance , your local tax numpties do not understand or accept the implications of this ruling. 

 
[/quote] Thanks Parsnips. Very helpful.

[woolybanana]

[quote user="parsnips"][quote user="woolybanana"]My tax inspector neighbour reckons it may not apply to anything earned in France, but is not yet sure.[/quote]

Hi,
 I refer you to the last paragraph of my post.
[/quote] Parsnips, you may well be right, of course. To be fair, my neighbour is not dealing with this but just has his ear to the ground. Confusion is about right I reckon. By the way, thank you for the pro forma letter wat I will be adapting and sending off in the next few days. Was just waiting for the copy of the S1 to arrive. Plus house hunting!

[Quillan]

Can I please verify that I understand correctly.

 

If you have an S1 then you should not be paying any CSG, CRDS and Prel Soc Cont add Prel Sol (whatever that is) regardless of if your income is from the UK or France and specifically if you are tax registered as a Microbic regime (in my case running as a B&B)? If this is correct and you have paid for a whole year but your S1 was registered in France from June 2014 can you claim a rebate on a pro-rata basis? If the latter is correct how do you go about claiming?

[Chancer]

You might be right but rather you then me on that one Quillan, I choose my battles carefully.

 

Its one thing not paying the social charges on UK income if you have already been taxed on it and maybe the legislation had not considered the S1 loophole but to not pay social charges on French income when it has already had an abattement of 71%...................

 

Quand même! Il ne faut pas deconner [:P]

[Hereford]

We sent in the letter of "appeal" a couple of weeks ago and today have had three letters (one for each year) saying that our letter has been passed up the chain to the department that deals with contentious appeals - in fact to the department capital!

Will post again once we have a reply.

[Quillan]

[quote user="Chancer"]

You might be right but rather you then me on that one Quillan, I choose my battles carefully.

 

Its one thing not paying the social charges on UK income if you have already been taxed on it and maybe the legislation had not considered the S1 loophole but to not pay social charges on French income when it has already had an abattement of 71%...................

 

Quand même! Il ne faut pas deconner [:P]

[/quote]

 

Sorry I am not with you. I don't have a UK income although Mrs Q does and that is on our French tax form. She got her S1 last hear as did I on the back of hers. I am not the only one asking this question if you look back through the posts (Francophile). Seems to me that all you can do is ask the question and the answer will either be a yes or a no. If you think it could be opening a 'can of worms' then could you explain for me please what can exactly it could be opening.

[Chancer]

The answer should be a yes or no but it will probably come across as "it was never intended that (percieved) "rich" foreigners should come here and make loads of money taking jobs from the French blah di blah di blah and not pay social charges like the rest of us especially after they already benefit from a 71% abattement.

 

The can of worms dépends on how "clean" you are in the French sense of the word, you have intimated before that you have fdutifully illed out the tax forms as they told you (good strategy)  and that you ended up paying little or no tax and IIRC even got refunds, my situation is very similar , I could also ask the question but for the little I pay I'm happy to pay it even if I dont really need to, better to pay whats asked of me than open my own can of worms.

[parsnips]

[quote user="Chancer"]

You might be right but rather you then me on that one Quillan, I choose my battles carefully.

 

Its one thing not paying the social charges on UK income if you have already been taxed on it and maybe the legislation had not considered the S1 loophole but to not pay social charges on French income when it has already had an abattement of 71%...................

 

Quand même! Il ne faut pas deconner [:P]

[/quote]

Hi,

     There is no place in these matters for reasonableness or common sense; it is a matter of law.  S1 holders are no charge on the french state.

  The "social charges" were created as a sleight of hand  in the late 90s, to attempt to reduce the deficit in order to qualify for entry to the € .  At the time , as usual ,the french people were groaning under what they saw as excessive taxation.  To justify further increases in the  pillaging of peoples incomes , the new tax was dressed up as a "contribution" to a collection of "good causes" like health, education and family allowances , which no good "republican" could quibble about. 

 In 2001 the European Court ruled that pensioners with E121 (nowS1) should not be charged the new "contribution" , which at Court the french claimed was actually a general tax (not what they told their tax-payers); the Court saw it differently and ruled that under reg 1408/71 it could not be charged on the earnings of  french frontier workers nor their pensions - by extension this also applied to UK  state  pensioners.

  At the time some (including me) petitioned Brussels that this principle should also apply to all other income.  Brussels stated that they had only been asked to take court action on frontier workers .    At the time no-one was prepared to commence court action on other income.   Now , thanks to Mr  De Ruyter , the french government's duplicity has come back to bite them in the derriere.

  I advise people to claim back as much as they can for the eligible years 2012/2013/2014 , and this year, for I don't doubt that the finance ministry's experts  are scheming hard to find a way round the problem. 

  As an ex-tax officer myself (before I got a proper job), I fear that the solution would be quite simple ; however I won't mention it here , just in case they read this forum.

         

[Quillan]

Parsnips - Please can you send me a copy of the stock letter, it's worth a try. If I get nothing back and still have to pay in the future then so be it but if you don't ask you don't get.

[parsnips]

[quote user="Quillan"]Parsnips - Please can you send me a copy of the stock letter, it's worth a try. If I get nothing back and still have to pay in the future then so be it but if you don't ask you don't get.[/quote]

Hi,

 See my post dated 18/08/2015 page 2 this thread.

[Quillan]

Thank you.

[Daft Doctor]

I've read all this stuff with interest as I am sure I may have right to a refund also, but just wanted to clarify a couple of points before I plunge headlong into a letter using Parsnip's very useful template.

Firstly, is it only UK investment income and savings which are exempt from SC's for S1 holders, or is it all income, including French savings interest for example? Secondly, I had an early-retiree's S1 from arriving in France in May 2012 until January 2014, but my wife was an autoentrepreneur throughout and was therefore 'à la charge' of the French system, paying her quarterly cotisations. My health care was therefore through CPAM, hers was through RSI. How would this affect the right for me to reclaim? Would I still be able to reclaim all social charges on accounts held in my sole name and 50% of social charges levied on joint accounts? Any advice on these questions (thinking of Parsnips particularly, but others may know) would be gratefully received.

[parsnips]

[quote user="Daft Doctor"]I've read all this stuff with interest as I am sure I may have right to a refund also, but just wanted to clarify a couple of points before I plunge headlong into a letter using Parsnip's very useful template.

Firstly, is it only UK investment income and savings which are exempt from SC's for S1 holders, or is it all income, including French savings interest for example? Secondly, I had an early-retiree's S1 from arriving in France in May 2012 until January 2014, but my wife was an autoentrepreneur throughout and was therefore 'à la charge' of the French system, paying her quarterly cotisations. My health care was therefore through CPAM, hers was through RSI. How would this affect the right for me to reclaim? Would I still be able to reclaim all social charges on accounts held in my sole name and 50% of social charges levied on joint accounts? Any advice on these questions (thinking of Parsnips particularly, but others may know) would be gratefully received.[/quote]

Hi,

  First it must be said that,  as usual , many tax offices and financial advisers will get it wrong.

In my opinion the following words in the ruling from the Conseil d'Etat are quite clear and mean that SI holders cannot be subjected to social charges on any of their investment income wherever it arises;

" ....que la circonstance qu'un prélèvement soit qualifié d'impôt par une

législation nationale n'exclut pas que ce même prélèvement puisse être

regardé comme relevant du champ d'application du règlement n° 1408/71 ;

que ne peuvent être assujetties à des contributions relevant du champ

d'application du règlement n° 1408/71 les personnes qui résident en

France mais qui ne relèvent pas du régime français de sécurité sociale ;"

  roughly translated..... " the fact that a national legislation (france) regards an imposition as a tax , does not exclude that same imposition being regarded as falling under EU reg.1408/71 ( which states that a citizen can only be subject to one social security regime at any one time); (therefore) that persons residing in France but who are not affiliated to the french social security regime (S1 holders)  cannot be subjected to contributions falling under the scope of  EU reg .1408/71."

No mention there of country of origin , and as it is obviously the "personne physique" and not the income itself or the account holder who can be subject to a social contribution then all investments including  french life assurance and bank accounts must be included.

In your particular case , I can only suggest setting out fully the circumstances in your claim , and expecting a long and  tedious exchange with the tax people.  From what some have posted , it seems that a lot of claims are going in (some banks are charging for a claims service) and at least some offices are passing claims up the chain of command.

[Daft Doctor]

Thanks Parsnips, useful advice as always. We paid quite a lot in social charges on bank interest during 2012 & 2013 as we had sold up and had quite a lot on deposit in the UK while waiting to buy land in France, build a house, etc. Even if I can only try to reclaim all the SC's paid on my own accounts and half those paid on the joint accounts with Mrs DD during those periods, it would still be very worthwhile.

[woolybanana]

Well, letter and paperwork sent off to get dosh back. Just out of interest, has anyone had a favourable outcome as yet?

[parsnips]

[quote user="woolybanana"]Well, letter and paperwork sent off to get dosh back. Just out of interest, has anyone had a favourable outcome as yet?[/quote]

Hi,

   I have seen a post on a similar thread on another well-known forum saying so.

[woolybanana]

Ah, Parsnips, there is hope then.

By the way, I may wanna pick your brains about Assurances Vie, but will pm when I have finished breaking up my home and can think straight, if that is OK?

[pomme]

I took my letter in to the local tax office (NE France where I know of only one other UK family). The office had two senior staff on duty answering current tax payment problems. The one I spoke to had a trainee with him and as soon as he saw the letter he started explaining to the trainee about the S1 form meaning health care was paid by a foreign country rather than by France so the CSG etc weren't applicable. He said he assumed I didn't have a Carte Vitale (!) but when I said I did he took it and was able to check my status through his computer.

So it seems there must be some documentation being circulated to at least some tax offices.

[mint]

Pomme, thank you for giving me some hope[:D]

Our possible refund is not huge by some rich people's standard but it's quite a bit to us as OH has 2 annuities on which we have paid all the charges for all the 8 years we have been here.

As Tesco keeps reminding us, Every Little Helps?

[parsnips]

[quote user="woolybanana"]Ah, Parsnips, there is hope then.

[/quote]

Hi

As I feared the thieving s*ds are trying to wriggle out of the judgement!

 

See this in today’s les Echos:

 

http://www.lesechos.fr/economie-france/budget-fiscalite/021337554822-csg-la-parade-de-bercy-pour-taxer-les-non-residents-1156949.php#

and in Figaro (which seems to suggest that S1 holders may escape from this)

http://www.lefigaro.fr/impots/2015/09/18/05003-20150918ARTFIG00148-le-tour-de-passe-passe-de-bercy-pour-taxer-les-non-residents.php

 

It is not clear from the article  exactly who is concerned by their

manoeuvring* , or , indeed whether they will succeed .   It appears that

the years 2013,2014 , and 2015 are safe , but it would be well to take

capital gains on investments sooner rather than later.

• It only specifically mentions french nationals resident outside
  France who receive income from french real estate , but all these issues
  are connected.

[CeeJay]

Received from my local tax office (Montpellier) today 2 Avis Rectificatif for years 2013/2014 showing that no social charges have been levied. This after having emailed the tax office about the 10th of this month explainig that I have an S1 and had been charged a small amount of social charges on UK investment interest and would they explain why. Albeit the charges were under 61 Euros so not actually levied.

[pomme]

If the tax offices are sending Avis Rectificatif, it sounds as though they are going back and redoing the calculations completely. So the part of the CSG which is deductible from the following year’s taxable income will also be removed. That could result in a higher income tax bill and the total refund not being as high as the CSG refund claim made.