Confused about Contribution Sociale Generalisee (CSG)

[frank]

Hi all.

My wife and I completed our tax forms a few weeks ago and went to our local Credit Impot office as we have done every year. We've always left it up to the particular member of staff to check everything we've entered on the form so that we can be sure we've not missed anything.

We had a call from them asking us to call in to see them which we did today and were told that we have to pay about 1,300 euros towards the Contribution Sociale Generalisee. This is the first time we've been asked to do this in 4 years.

The chap didn't speak English and our understanding of the reasons behind this charge was far from clear. My wife has a teacher's pension from the UK and pays her tax to the UK government. I have a UK private pension and pay my tax in France. There are no other factors to take into account such as rental income, dependents, wealth tax etc. Our situation is very simple and at the moment our income is at the level where we do not (happily) have to pay any tax to the French government. This will change soon when we both start to receive our UK State Pensions.

So, on the level of income that we have at the moment, 1,300 euros seems a big percentage. We were told that it's not calculated on income and that everyone pays this tax regardless of their situation - French residents and foreigners alike.

The chap also told us that we should have paid it in the past but it was the fault of his colleagues, who didn't advise us correctly in previous years, that we managed to get away without paying it.

Is this all correct? Are there any reasons why he may have made a mistake as his colleagues in the past have done? Are there any exonerations that he may not have taken into account? We have never felt confident taking our forms in each year as it always seems that, whoever we talk to, is unsure about what to do. We had three people discuss our forms with us last year and none of them agreed on the correct way to do so. Each year we worry about whether the forms are correct or not by the time we left their offices. Considering our situation is about as uncomplicated as it could be, you have to wonder!

Any advice would be much appreciated.

Thanks

Frank

[NormanH]

A key factor is how your health care is paid for.

If you are not yet in receipt of an OAP I presume you do not have an S1 form by which the UK pays.

If you are 'à la charge de la France' some of your income (not your wife's pension but possibly yours) might be subject to CSG

[frank]

Thanks NormanH

Our healthcare has been covered in the usual way, CPAM then URSSAF and with top-ups. My wife will get her UK state pension before I do shortly so we'll both be covered by the S1 form. Will this make any difference to the CSG payments once we're in receipt of the S1 form?

[NormanH]

Once you have an S1 and are paid for by the UK you are exempt from CSG

[NormanH]

By the way CSG is not the same for everyone, and it is a percentage of eligible income...

http://www.impots.gouv.fr/portal/dgi/public/particuliers.impot?pageId=part_ctrb_soc&typePage=cpr02&sfid=501&espId=1&communaute=1&impot=CS

Please ask if you need any help with that site.

[suein56]

[quote user="frank"]

Our healthcare has been covered in the usual way, CPAM then URSSAF and with top-ups.[/quote]

OH and I were in the same situation as you as regards pension, but no OAP state pension, so we have paid the CSG due on our income for years and years. So, in view of that, you have probably built up a CSG bill which has been quietly accumulating over the past few years.

Do double check but, IMO, it does seem very likely that a CSG bill might be due.

As Norman says, once your S1 is in place then your CSG worries will disappear - starting from the next French tax year.

Sue

[parsnips]

[quote user="frank"]Thanks NormanH

Our healthcare has been covered in the usual way, CPAM then URSSAF and with top-ups. My wife will get her UK state pension before I do shortly so we'll both be covered by the S1 form. Will this make any difference to the CSG payments once we're in receipt of the S1 form?[/quote]

Hi,

      Until you get your form S1, you are liable to the CSG on your private pension and any investment income , but your wife's teachers pension is exempt under article 19 of the tax treaty.  On the figures you quote I calculate that the CSG taken equates to your private pension being about 8400€ - if it is a lot less , and you have no investment income making it up to that level , then the CSG may have been incorrectly assessed on the exempt teachers pension.

[frank]

Thanks Sue.

We were told that this bill of 1,300 euros is for this year only and that previous years have been ignored because it was the fault of other members of the tax department who had advised us wrongly. So, we know how much the bill will be.

Having said that, as Parsnips has said, based on my income alone (which is a small private pension) 1,300 euros seems way over the top for one year's contributions. It looks as if they may have calculated the tax based on both our incomes which, as has been said, should not be so as my wife has a goverment teacher's pension.

If I was very synical I'd suspect them of trying to claw back some of the tax they missed in the past few years but it's probably best to assume they've miscalculated until we see exactly how they've done the calculations. We'll have to go in again and ask them to double check.

Thanks for your comments NormanH, Sue and Parsnips

[frank]

A question for NormanH (or anyone)

I've taken a look at the link you provided but would like to find some written proof that UK teacher's pensions are exempt from CSG if you know where I can find it. I've searched for Article 19 of the Double Taxation Treaty on the net but not had much luck. I'd like to have something that I can show to the tax office that will prove that tax is not due in this case, either in French or English or both.

Thanks if you can help

Frank

[andyh4]

Page 22.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/411884/france.pdf

Unless your wife is a French national, in which case charges are due in France.

[parsnips]

[quote user="frank"]A question for NormanH (or anyone)

I've taken a look at the link you provided but would like to find some written proof that UK teacher's pensions are exempt from CSG if you know where I can find it. I've searched for Article 19 of the Double Taxation Treaty on the net but not had much luck. I'd like to have something that I can show to the tax office that will prove that tax is not due in this case, either in French or English or both.

Thanks if you can help

Frank[/quote]

HI,

 In english;

http://www.ambafrance-uk.org/IMG/pdf_france_uk_2008.pdf

and in french;

 http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_5835/fichedescriptive_5835.pdf

[frank]

Hi all and an update.

So, over the course of the past week we've had quite an interesting time over the CSG payments on my wife's UK teacher's pension.

Taking the copies of Article 19 of the Double Taxation Treaty, in both French and English, we went back to the tax office to ask them again if they would check that their interrpretation of the rules was correct. This time we met with a different advisor who also said that we had to pay the tax. We left again, still not convinced because so many of you said we were not supposed to pay this charge.

I managed to find the number of an English accountant who works in France (Brittany) and asked him if there was anything he could do. This chap was brilliant! Although he was off work on some sort of course, he replied immediately and e-mailed a letter, in French, to give to the tax office, explaining why they were wrong. The accountant said he had a raft of such letters ready to give to various French officials for similar situations such as this.

The next morning we went back to the tax office and met both the advisors we met earlier and gave them the letter. Again, they kept saying we had to pay CSG on my wife's pension. They weren't heavy with it, but they couldn't understand how the law would otherwise work, how my wife's healthcare contributions would otherwise be covered. We did tell them, to their surprise, that in the UK we pay National Insurance contributions that go towards health care AT SOURCE and that maybe that was the reason the law stands as it is. I've no idea if that's the case (it probably isn't) but, it seemed to floor them a bit. We could see they were stumped. Anyway, we left on good terms with them asking if the accountant who gave us the letter would give them a call.

That afternoon, we got a phone call from one of the advisors who told us that they were NOT going to charge CSG on my wife's pension and that the charge on my pension would be reduced to the mandatory 3.8% instead of the 6.6% they were going to charge us on both incomes. Brilliant news! I asked why, assuming that maybe the accountant had spoken to them. He hadn't. It just seems that they were not sure enough in the end to apply the charge. We can't blame them, they're not used to the rules and the whole thing does seem confusing if that's the case. But we're really glad we posted on this forum and had the help of the accountant. As a result, we've saved ourselves about 1,150 euros that we were not supposed to pay in the first place.

I'm not sure if I can post the name of the accountant who helped us on the forum, but he deserves a mention (if I can pass on his contact details, I'll happily do so). If the tax office had continued to insist on applying the charge, he was ready to dispute it, telling me of the different ways that could be done, some of which would cost us nothing. He is obviously clued up and used to having similar "battles" with the French authorities. Also, happy with him because he refused to accept any sort of payment for his help.

So, thanks for your help. It's not often we feel we've come out on top when dealing with French officialdom, but this was a good result.

Frank

[mint]

BRAVO, Frank, and congratulations!

I am waiting for les impots to give me a favourable reply to disputing the payment of contributions sociales on my husband's annuities and our bank interest but many on here are also awaiting those.

Parsnips will, I am certain, give us the nod when it's time to contest them again.  Otherwise, we shall all be PMing you for the details of that very enlightened account[:D]

[idun]

If you are paying NI on this  public pension in the UK, then surely you are entitled to an E106 now S1 as you live in France???

Or are you not actually doing that and just topping up the national insurance contributions, which has nothing to do with health care, but only contributing towards the state pension?

  You said: reduced to the mandatory 3.8% instead of the 6.6% they were going to charge us on both incomes.

But surely they should not be charging your wife at all, and maybe only you, on your pension and even if it was 6.6 on your pension, then surely 1x6.6 is better than a double income having a 3.8% deduction.

I do not understand why you are so happy and I do not understand why this is all messed up either. I think I would be contacting the Impots head office and getting it sorted out.

[frank]

Hi Idun.

I think you've possibly mis-understood our situation and my post.

I didn't mean to infer we are paying NI on my wife's teacher's pension now, just that we were many years back when we lived in the UK and that I was guessing, rightly or wrongly, that may have something to do with the laws surrounding the Double Taxation Treaty. Probably has nothing to do with it at all but it seemed to confuse the advisors at our tax office!

We've been here for 7 years and will be entitled to cover on the S1 form in a few weeks under my wife's name as she receives her UK state pension before I do. Up until now we've been covered in France by CPAM and URSSAF and top-ups (all in the usual manner).

Why am I happy? Because this year, for the first time, the tax office they WERE about to charge us 6.6% on BOTH our pensions whereas now, only I will be paying 3.8% on my pension. My wife will now not be paying anything on her pension. This is precisely because we took advice from people on the forum and an English accountant during the past week or so. It WAS messed up and we have now sorted it out . . . saving over 1,000 euros. It will be probably be clearer to you if take a quick look at the whole post.

Thanks

Frank

[NormanH]

I don't think you needed the accountant. parsnips is the tops when it comes to tax....

[Rabbie]

[quote user="NormanH"]I don't think you needed the accountant. parsnips is the tops when it comes to tax....
[/quote]Excellent as I know Parsnip is on these matters, I suspect a French accountant carries more weight with French civil servants.

Anyway I am glad you got the result you were hoping for.[:)]

[idun]

So have I got this right, they have given your wife a reprieve and decided to charge you the lower rate.

 Is that the right rate for you?

No idea why you said that they were surprised that social security payments were taken at source in the UK, they always have been in France for employees, so why on earth that would cause amazement is rather beyond me. And remember in general french pensioners have stoppages 'at source' from their pensions, we most certainly pay securité sociale payments 'at source'

[frank]

They now seem to have come to the conclusion that it would have been wrong to have charged my wife CSG on her UK teacher's pension according to Article 19 of the Double Taxation Treaty. Simple as that.

They will be charging me CSG on my small private pension at the rate of 3.8% which, I believe, is correct. Why do you ask if this is the right rate?

I'm not sure why you seem so concerned about whether or not they were surprised about NI contributions being taken at source in the UK. You'd have to ask them why they were surprised. If you were to ask me, I'd say it's probably because they are not familiar with how these things work in other countries and exactly how they should process the paperwork when a foreigner sits down in front of them with their yearly tax declaration. They don't handle many cases with foreigners (their words, not mine) in this area. That could well be true as there are very few Brits here in comparison to other areas of France, and I'm sure they go through similar issues when other foreign nationals walk through their doors too. Can't blame them for not being up-to-date with, or mis-interpreting, the rules on double taxation treaties and the other treaties and laws if they only have to deal with them very rarely (i.e. once a year with probably 0.1% of the people they see). It's not good, of course, but they do seem to panic and go for the quick-fix (for them), hoping no questions will be asked. Did someone say "That's France for you"?

They've also always assumed in the past few years that, once we had both passed the age of 60, we were both in receipt of the UK state pension and we've had to convince them we're not. Why? We've always assumed that's because the French get their state pensions at 60 (don't knock me if that's wrong) and they were possibly thinking it was the same for both countries. CPAM assumed exactly the same thing. Why? Again, you'd have to ask them. I just think it's down to nothing more than indivual tax officers not being used to dealing with foreigners on a daily basis. How many of the thousands of foreign nationals living in any of the EU states have similar problems? We're not the first and I'm not complaining (this time). I'm just glad we managed to get things done in the way they should have been done without things getting nasty, and that we can keep our 1,150 euros.

[Daft Doctor]

Hi, we had this same problem a couple of years ago when we were initially charged CSG/CDRS on UK property income, which like your wife's teacher's pension is wholly taxed in the UK. The problem was rectified after our accountant intervened, and we haven't been charged it since. The dual tax treaty means that although such income is always declared in France, a credit must be given equivalent to the French taxes charged on the income. The key thing is that for the purposes of the treaty, 'french taxes' includes both tax and social charges, so CSG/CDRS should not be levied in the first place. That's the theory anyway..........

[NormanH]

[quote user="Rabbie"]

[quote user="NormanH"]I don't think you needed the accountant. parsnips is the tops when it comes to tax....

[/quote]Excellent as I know Parsnip is on these matters, I suspect a French accountant carries more weight with French civil servants.

Anyway I am glad you got the result you were hoping for.[:)]

[/quote]

Yes and no.

As the French system is so codified and the 'texte' is available to all it suffices to quote the correct bit. Of course you need to know it which is where parsnips is so good.

I have reclaimed things successfully  in the past just by quoting and providing the correct supporting evidence, all done by email. No need of accountants..

[woolybanana]

Didn't you get you sentence suspended that way?