Merger of CSG and Income tax?

[Pickles]

Did I just hear Ayrault saying that he wanted to "rethink" taxation, and as part of this he resurrected Hollande's pledge to merge CSG and Income tax? One of the many pledges that had previously vanished without trace? For those UK residents with French income, it might allow them to get a UK tax credit for the CSG part of the social charges.

[5-element]

But income tax and social charges are already merged, as from this year - I've already paid ours...both French residents,  (as I have a minuscule French pension, it means means that we are liable). Admittedly, the opposite situation to the one you mention, Pickles, but I thought it means that everyone who is liable for CSG etc had the amount merged with their income tax for 2012. Apologies if I am just muddying the waters further...

[Pickles]

Yes, IR and CSG/CRDS/etc have been collected together this year, but they are still considered as separate items. For UK residents, this is important as IR payments give rise to credits against the same income in the UK system, whereas social charges apparently do not.

[5-element]

Thanks for clarifying, Pickles. It's become such an impossible task to try and keep up with new measures, half-measures, and proposals of measures [:)]

[NormanH]

I too must have misunderstood.

I thought that this would mean that UK nationals who live in  France would now have to pay the CSG on their incomes that they escaped previously by having an S1..

[Pickles]

Actually, NH, I hadn't thought of that. If you are currently subject to IR in France but not CSG, then if they follow through with Ayrault's (Hollande's) proposal and merge them, then you will see your tax increase.

[NormanH]

And by about 7.5% of global revenue...

[parsnips]

[quote user="Pickles"]Actually, NH, I hadn't thought of that. If you are currently subject to IR in France but not CSG, then if they follow through with Ayrault's (Hollande's) proposal and merge them, then you will see your tax increase.[/quote]

Hi,

       The only income subject to french IR but not CSG, is, I think, the UK state retirement pension, which is exempted by a specific EU ruling.    The ruling was based on the CSG being a "cotisation" not a tax.   I assume that if the CSG is totally merged into IR , the exemption would become inapplicable , so CSG would be charged on the UK state pension.   However , the fact that they are "talking about it " does not mean that they are capable of carrying through such a complex reform.

[idun]

Parsnips said:  The only income subject to french IR but not CSG, is, I think, the UK

state retirement pension, which is exempted by a specific EU ruling.

Not just UK state pensions,  pensions (private and state) are a separate issue. No idea about government pensions though.

[5-element]

[quote user="parsnips"]

Hi,

       The only income subject to french IR but not CSG, is, I think, the UK state retirement pension, which is exempted by a specific EU ruling.    The ruling was based on the CSG being a "cotisation" not a tax.

[/quote]

UK state retirement pension is exempted by a specific EU ruling, but only if you do not have any French pension too (mine is 100 euros per month). But because of that tiny French pension on top of part of a UK state pension, I no longer have an S1 and am "à la charge" of the French social security for healthcare.

Mr. 5E, on the other hand, has an S1 - and therefore should be exempt from CSG.

Not so. Because we are taxed jointly, the CSG amount we owe is calculated on half our joint income.

What is even more interesting than OH being in effect, charged CSG, is that should I be taxed alone, my income is below the ceiling of taxable income and should also be exonerated from CSG charges. So, while OH is exempt (0 CSG to pay), and I am exonerated (0 CSG to pay), together, we are charged CSG! Which must mean that 0 + 0 = 2 sometimes.

I had animated discussions with the accountant about this, she swore blind that she had checked and that the charged CSG was right.

I am now bracing myself to go and enquire at the local hotel des Impots,and maybe even build a dossier to contest what I see as a rather odd way of calculating social charges.

[Judith]

However , the fact that they are "talking about it " does not mean that they are capable of carrying through such a complex reform.

Indeed.  Nor any other reform of tax, legals or anything that might just help make life easier for everyone in France!

[parsnips]

[quote user="5-element"][quote user="parsnips"]

Hi,

       The only income subject to french IR but not CSG, is, I think, the UK state retirement pension, which is exempted by a specific EU ruling.    The ruling was based on the CSG being a "cotisation" not a tax.

[/quote]

UK state retirement pension is exempted by a specific EU ruling, but only if you do not have any French pension too (mine is 100 euros per month). But because of that tiny French pension on top of part of a UK state pension, I no longer have an S1 and am "à la charge" of the French social security for healthcare.

Mr. 5E, on the other hand, has an S1 - and therefore should be exempt from CSG.

Not so. Because we are taxed jointly, the CSG amount we owe is calculated on half our joint income.

What is even more interesting than OH being in effect, charged CSG, is that should I be taxed alone, my income is below the ceiling of taxable income and should also be exonerated from CSG charges. So, while OH is exempt (0 CSG to pay), and I am exonerated (0 CSG to pay), together, we are charged CSG! Which must mean that 0 + 0 = 2 sometimes.

I had animated discussions with the accountant about this, she swore blind that she had checked and that the charged CSG was right.

I am now bracing myself to go and enquire at the local hotel des Impots,and maybe even build a dossier to contest what I see as a rather odd way of calculating social charges.

[/quote]

Hi,

      I think you are being incorrectly subjected to CSG.     In my opinion , only your french pension should be subject to CSG.    You should certainly appeal to both the conciliateur fiscal and the tribunal administratif.    Both procedures will be free from 01/01/2014, so you have nothing to lose.

[parsnips]

[quote user="idun"]Parsnips said:  The only income subject to french IR but not CSG, is, I think, the UK

state retirement pension, which is exempted by a specific EU ruling.

Not just UK state pensions,  pensions (private and state) are a separate issue. No idea about government pensions though.

[/quote]

Hi,

      If the foyer fiscal is covered by an S1 issued with a UK state pension, then all pensions are exempt from CSG.    If there are only occupational and private pensions they are subject to CSG under instruction 2041GG.

        UK Government pensions are exempted from all french taxes including CSG under article 19 of the treaty.  

[EuroTrash]

"my income is below the ceiling of taxable income and should also be exonerated from CSG charges. "

Is the CSG threshhold the same as the income tax threshold? I earned a small amount (from memory around £1000) in the UK last year, taxed PAYE, and my tax return showed a tiny amount of CSG payable, so tiny in fact that they didn't impose it and my bill was 0. All my other earnings were AE with income tax deducted quarterly so the CSG could only have resulted from the very small UK earnings, which would not have exceed any threshold.

Also, would this not be a good thing for people who live in France and have earned income from the UK? Income tax in the UK is usually more than impots sur revenu in France so it negates French liability with some to spare. If CSG is classed as impots sur revenu, the spare income tax paid in the UK would actually go towards reducing it, no?.

[NormanH]

Presumably as an AE your health care is paid for by France, so you are liable for CSG on all your income?

[EuroTrash]

Well that's what I assumed (all foreign income at least) but 5_elements seemed to be saying that she is in the French health system but she shouldn't be liable to CSG because her income is below the tax threshold?

[5-element]

[quote user="EuroTrash"]Well that's what I assumed (all foreign income at least) but 5_elements seemed to be saying that she is in the French health system but she shouldn't be liable to CSG because her income is below the tax threshold?[/quote]

I think you might have misunderstood me, Eurotrash. I am in the French health system (although I get most of my income from the UK). My own income is both below taxable threshold, and also below the CSG threshold (2 different figures I think).

My husband is NOT in the French health system, and therefore is not liable for any CSG.

But because we are one "foyer fiscal", if you add both our incomes, we are liable for some income tax - fair enough!

However, our incomes should NOT be treated together for CSG payment, since HE is exempted - so, if there was CSG to be paid, it should be on my income only. My income is too low to be CSG liable. Yet, we are being liable, as if we were a standard French foyer fiscal. In other words, his CSG exemption is being ignored (through the mere fact that he is married to me?).

Parsnips, many thanks, I will proceed with contesting (I have paid - of course one pays first, and then contests.[:D])

[EuroTrash]

We're still misunderstanding each other I think.

I earned around £1000 and CSG was apparently charged on that, yet you say "My income is too low to be CSG liable."

My question is very simply, at what stage does income become CSG liable?

I realise this is a bit tangential to your issue, but since it did crop up I just would have liked to clarify it, because I actually thought CSG started, theoretically, at the first euro.

[5-element]

We misunderstand each other probably because our situations are completely different - I have no idea how to clarify yours, as it is so much outside my experience!

I can only direct you to the official text: http://vosdroits.service-public.fr/particuliers/F17585.xhtml which may, or may not be relevant to you since yours seems to be neither pension de retraite nor pension d'invalidite???

I hope you find the answer to your question, although, not necessarily in the link above?

[suein56]

[quote user="EuroTrash"]

My question is very simply, at what stage does income become CSG liable?... because I actually thought CSG started, theoretically, at the first euro.[/quote]

IMHO it does start at the first euro as all our income that is liable for CSG is taken into account.

Sue

[NormanH]

This is the page for reference:

https://www.lassuranceretraite.fr/cs/Satellite/PUBPrincipale/Retraites/Paiement-Votre-Retraite/Prelevements-Sociaux

If you pay CSG it is from the first €...but there is a limit beneath which you don't pay at all

Vous n'êtes pas concerné par la CSG si :

votre revenu fiscal de référence ne dépasse pas le seuil de revenus ;

To complicate things further there are 2 different rates according to your income

[EuroTrash]

Thanks, Sue and Norman.

I still don't entirely understand the 1€ liability but it looks far too complicated to grapple with for the sake of understanding a euro, and probably by next year it will have all changed in any case.

[NormanH]

Put another way: if your revenu fiscale de référence is less than 10,224 € for a single person or 15684 € for a couple you aren't liable for CSG. Above that and you are liable on all your income from 0€

If you are don't pay tax, your CSG would be at the lower rate of 3.8%

[parsnips]

[quote user="EuroTrash"]"my income is below the ceiling of taxable income and should also be exonerated from CSG charges. "

Is the CSG threshhold the same as the income tax threshold? I earned a small amount (from memory around £1000) in the UK last year, taxed PAYE, and my tax return showed a tiny amount of CSG payable, so tiny in fact that they didn't impose it and my bill was 0. All my other earnings were AE with income tax deducted quarterly so the CSG could only have resulted from the very small UK earnings, which would not have exceed any threshold.

Also, would this not be a good thing for people who live in France and have earned income from the UK? Income tax in the UK is usually more than impots sur revenu in France so it negates French liability with some to spare. If CSG is classed as impots sur revenu, the spare income tax paid in the UK would actually go towards reducing it, no?.[/quote]

Hi,

      Some pension income is exempt from CSG (dependent on total income) see here;

service.cipav-retraite.fr/cipav/article-81-exoneration-de-csg-et-crds-115.htm

CSG of less than 61 € is not collected.

[suein56]

[quote user="NormanH"]If you are don't pay tax, your CSG would be at the lower rate of 3.8% [/quote]

That must be regarding pensions as it doesn't apply if you have investment income. In my experience unearned income always attracts CSG at the full rate, even if your RFR is below the limits you gave above.

Sue