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French tax on NHS pension lump sum?


Daft Doctor
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[quote user="suein56"][quote user="HoneySuckleDreams"]Don't you have to declare anything you receive as part of your world-wide "income" so that you pay cotisisations on the amount? Like premium bond winnings [/quote]
Yes but a lump sum is not 'income' in the sense it is not part of an income stream. Premium bond wins - which I declare - are classed as interest - which is part of an income stream and therefore taxable income.

Sue
[/quote]

I realise it's not part of an income stream, which is why a quoted it, i wasn't sure how else to describe it. The point I was trying to make was that you pay a % for cotisisations

I didn't realise bond wins are classified as interest. I was told to declare it (if any) in the box marked - "anything else". i.e. have you received any money from any other source that you can't already put in a box. Interest doesn't really fit very well. Maybe it's down to each tax office how they define it

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[quote user="HoneySuckleDreams"]I didn't realise bond wins are classified as interest. Interest doesn't really fit very well. Maybe it's down to each tax office how they define it[/quote]

Could be.

It was explained to me by the contrôleur principale of our Vannes office when he said he had read the Premium Bond site in detail to be able to answer UK immigrants' queries as to why they had to declare bond wins as income, when they are regarded as (untaxable) winnings in the UK. As, unlike the lottery your stake is not lost, so the 'win' is not a win in the strict sense but interest on capital.

I was not going to argue with him.

Sue [;-)]

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There is a parallel discussion going on in another place and Parsnips is contributing there also.

I recently posted this:

In that case it seems the sole point of contention is whether or not a PCLS actually forms part of a pension or not and if the PCLS from a public service pension is deemed to while that from a private pension is not then that is monstorously inequitable.

The Oxford English dictionary defines pension thus:

a regular payment made during a person’s retirement from an investment fund to which that person or their employer has contributed during their working life.

a regular payment made by the government to people of or above the official retirement age and to some widows and disabled people.

Little room for ambiguity and discrimination there then.

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Hi

,The problem seems to arise because the french

have not had the equivalent of the occupational pension lump sum , and

so in the past they left those on UK non-government pensions alone.

Their recent new rules seem to have been conceived to "catch" the huge

golden handshakes of CEOs etc of major companies , and , typically have

been extended to catch all the pensions which the french are authorised

to tax under the treaty (with some allowance for the smaller sums).

The reason that (I believe -despite what Siddalls say) lump sums

on UK government pensions are not taxable in France , is because , under

the treaty, govt. pensions are taxable ONLY in the country that pays

them; the UK government chooses not to tax the lump sum part (although

recently they have imposed a ceiling on the tax free amount). You can

be sure the french would tax them if they could--and , no doubt, in many

cases will -in error.
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[quote user="AnOther"]

There is a parallel discussion going on in another place and Parsnips is contributing there also.

I recently posted this:

In that case it seems the sole point of contention is whether or not a PCLS actually forms part of a pension or not and if the PCLS from a public service pension is deemed to while that from a private pension is not then that is monstorously inequitable.

The Oxford English dictionary defines pension thus:

a regular payment made during a person’s retirement from an investment fund to which that person or their employer has contributed during their working life.

a regular payment made by the government to people of or above the official retirement age and to some widows and disabled people.

Little room for ambiguity and discrimination there then.

[/quote]

I believe we are discussing what is taxable in France, in which case the definitions of the
Oxford English dictionary are purely academic. What counts is the definition of the French tax authorities.

In terms of what is inequitable one might also consider the fact that
public service pensions are obliged to be taxed at source in the UK, while private pensions are not.  The difference between a modest  sum taxed in France and the same sum taxed in the UK is  considerable.

I calculate that 16000 € taxed in France would attract around 677 € of tax, while £16000 taxed at source in the UK attracts around £150 a MONTH...

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[quote user="NormanH"]I believe we are discussing what is taxable in France, in which case the definitions of the Oxford English dictionary are purely academic[/quote]I disagree Norman, as a minimum requirement for dual tax treaty it would seem to me absolutely germain that both parties understand and agree on what the word 'pension' actually means and not leave it open to freestyle interperetation !

Regarding paying less tax in France, even on my offshore salary I would be better off it were taxed in France but since that is not an option for me I don't lose any sleep over it.

Finally a whiff of hypocrisy, on the one hand you want the lump sum to be tax free in France but on the other you want to benefit from paying less tax in France on the residual pension, you can't have it both ways now can you [;-)]

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That's an extension to Normans argument that the Oxford definition is academic Coops.

I would say that tax breaks for other member state pension payments will be determined by their own DTT with France, if a DTT were a standard formula we wouldn't need one for every pair of countries would we ?

PS: Larousse is probably my favourite and most used app on my iPhone [:)]

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[quote user="AnOther"]

That's an extension to Normans argument that the Oxford definition is academic Coops. Oh, because I thought he was saying that it was irrelevant because it was the English definition of pension not the French one.  Sorry Norman, I misunderstood you.

I would say that tax breaks for other member state pension payments will be determined by their own DTT with France, if a DTT were a standard formula we wouldn't need one for every pair of countries would we ? I was merely wondering if any other country a) offered lump sum alternatives at all and b) if they were tax free anywhere but in Britain.  I wasn't suggesting that all countries would be treated in the same way - just asking the question.

PS: Larousse is probably my favourite and most used app on my iPhone [:)]

[/quote]
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[quote user="cooperlola"]PS: Larousse is probably my favourite and most used app on my iPhone [:)][/quote]

Oh my goodness ... get you !

Speaking as someone who has just updated to a semi-smart phone after the battery on my old phone died - phone bought circa 2001 and the cost of a replacement battery had become prohibitive. I am being dragged kicking and screaming int the 21st century ... but, on reflexion, it is not so bad. The battery on my new phone lasts about 20 days instead of the 3 or 4 previously; so just think about how much I am saving on not having to recharge it so often ! [:-))]

Sue [;-)]

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[quote user="suein56"][quote user="cooperlola"]PS: Larousse is probably my favourite and most used app on my iPhone [:)][/quote]

Sue [;-)]
[/quote]That's come out as if I said it and thus own an overpriced Apple product!  Heaven forfend![:D]  (I did have an I-pod for about a month, I admit, but sold it.)

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Absolutely no 'oneupmanship' inferred or intended.

My iPhone is a battered old 1st generation model that I was given because it was broken and managed to repair, and it's on PAYG, I never would have paid good money for one and have never had a contract in my life.

I have Larousse on my PC also which I guess is what Cops has.

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[quote user="AnOther"]

That's an extension to Normans argument that the Oxford definition is academic Coops.

I would say that tax breaks for other member state pension payments will be determined by their own DTT with France, if a DTT were a standard formula we wouldn't need one for every pair of countries would we ?

PS: Larousse is probably my favourite and most used app on my iPhone [:)]

[/quote]

Hi,

     France does have a standard DTT , and the latest changes have brought the UK version into line with that standard version (which is varied to accomodate the other contracting state's requirements)

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[quote user="AnOther"]

Finally a whiff of hypocrisy, on the one hand you want the lump sum to be tax free in France but on the other you want to benefit from paying less tax in France on the residual pension, you can't have it both ways now can you [;-)]

[/quote]

I know you weren't being overtly serious AnOther, but I don't think hypocrasy comes into it.  I don't know anyone who doesn't want to pay the very least income tax they can legally get away with, and I for one am no different.  Where there was a degree of choice and timing in the matter, isn't that considered good financial and tax planning?  Would it be hypocrasy of the two governments to tax the pension in the UK (relatively punitively) and also tax the lump sum in France?  I doubt if they would think so, they'd say 'those are the rules' but that wouldn't be so good for me. [8-)]

It seems to me that if in the case of 'Government' pensions the UK government are effectively saying to the French, 'hands off this guy's NHS pension, the tax on it is ours and it can only be taxed in the UK', then the tax treatment of the PCLS, which is an intrinsic part of that pension entitlement, should surely be the same, should it not?     

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Hi, earlier in this thread I mentioned this: 

[quote user="Daft Doctor"] As an extra bit in the mix, we have tax losses to carry forward in France on our leaseback of 5.6k euros and 13.7k euros for 'industriels et commerciaux non-professionnelles' and 'locations meublees non-professionnelles' respectively. Am I right that these losses can be offset against any French-taxable income once we are resident? [/quote]

I have now had a very cordial phone call from a gentleman at HMRC who has told me that my version of the NHS pension is non-Government for the purposes of dual taxation.  It will indeed be taxed in France, which overall is good news (leaving the lump sum issue out of it for now!).  The question I posed originally about our previous losses will therefore become relevant, so I thought parsnips or SD might be able to help.  Can these losses only be offset against future property profits or could they be offset against my NHS pension income in year 1?  Thanks for any insight, promise it won't be relied on as gospel!  

 

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[quote user="Daft Doctor"]

Hi, earlier in this thread I mentioned this: 

[quote user="Daft Doctor"] As an extra bit in the mix, we have tax losses to carry forward in France on our leaseback of 5.6k euros and 13.7k euros for 'industriels et commerciaux non-professionnelles' and 'locations meublees non-professionnelles' respectively. Am I right that these losses can be offset against any French-taxable income once we are resident? [/quote]

I have now had a very cordial phone call from a gentleman at HMRC who has told me that my version of the NHS pension is non-Government for the purposes of dual taxation.  It will indeed be taxed in France, which overall is good news (leaving the lump sum issue out of it for now!).  The question I posed originally about our previous losses will therefore become relevant, so I thought parsnips or SD might be able to help.  Can these losses only be offset against future property profits or could they be offset against my NHS pension income in year 1?  Thanks for any insight, promise it won't be relied on as gospel!  

 

[/quote]

Hi,

      This is not a subject I know from personal experience , but according to sites on the internet , it seems losses on non-professional lets can only be set off against gains from similar sources .  They can be used in the year of the loss or carried forward 6 years.  If you search the net you will find more info.

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Daft Doctor, as I have previously mentioned you should really by now have obtained professional tax advice and it puzzles me that you appear not to have done so. After all as a Doctor if you knew an individual with troublesome symptoms was seeking medical advice from lay people, I am sure you would be telling them to consult a Doctor!

It seems that you are a reasonably wealthy man and will be retiring with a pension pot that most Brit retirees in France can only dream of, and therefore especially need French tax advice that encompasses such issues as the recent changes to French wealth tax, inheritance tax and the newly resurrected exit tax.

The latter could be especially problematic if you decide after six years to leave France to move elsewhere, as having to pay income tax on any unrealised gains just because you are leaving the country could be painful.
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I realise your point Sprogster, but I'm perhaps not quite as wealthy as you seem to imagine.  I do like to find out as much as I can myself before I decide how much advice I need, that approach has served me very well in the past.  As I have already said in a previous post I have both UK and French accountants to seek definitive help and advice from when the time comes, but thanks anyway for the concern. 
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Several responses seem to regard the lump sum as just another pension payment. Surely it is tax-free in UK because it is a return of contributions, rather than a regular pension payment - it was your money in the first place. It's complicated by tax relief given to you (and your employer) to encourage your saving, but the principle still applies.

I wouldn't want to argue it with the French tax man, however, which is why I took mine a few years ago, having read on this forum that it was about to become taxable. Taking it before arriving in France, if possible, must be the best option.

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Hi Sue,

Have just moved to Vannes, and I notice you have had some dealings with the local Vannes tax office.

I have made a couple of visits there, but found them very unhelpful, and they were reluctant to let me speak to someone who speaks English.

Do you have a particular person at this tax office who you might recommend that I deal with, and do you know of any tax expert in Vannes who speaks English.. My first declaration will be in May 2012, and will involve a government pension, two small private pensions, incapacity benefit, interest on UK Bank Accounts and premium bond winnings..

Thanks

Lyndros

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[quote user="Daft Doctor"]

Hi, earlier in this thread I mentioned this: 

[quote user="Daft Doctor"] As an extra bit in the mix, we have tax losses to carry forward in France on our leaseback of 5.6k euros and 13.7k euros for 'industriels et commerciaux non-professionnelles' and 'locations meublees non-professionnelles' respectively. Am I right that these losses can be offset against any French-taxable income once we are resident? [/quote]

I have now had a very cordial phone call from a gentleman at HMRC who has told me that my version of the NHS pension is non-Government for the purposes of dual taxation.  It will indeed be taxed in France, which overall is good news (leaving the lump sum issue out of it for now!).  The question I posed originally about our previous losses will therefore become relevant, so I thought parsnips or SD might be able to help.  Can these losses only be offset against future property profits or could they be offset against my NHS pension income in year 1?  Thanks for any insight, promise it won't be relied on as gospel!  

 

[/quote]

Daft Doctor ALL NHS pensions ore non-government pensions. The reason being that we are not employed centrally by the government but by our respective trusts, SHAs etc and are therefore not classed as goverment pensions and therefore not taxed at source.

This is good news as there will normally be less tax to pay under the French system than under the UK system.

As far as I was aware if you have become tax resident in France before the payout then the French will tax it. If however, you are still in the UK tax system when it is paid out then it will not be taxed.

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[quote user="Sprogster"]Daft Doctor, as I have previously mentioned you should really by now have obtained professional tax advice and it puzzles me that you appear not to have done so. After all as a Doctor if you knew an individual with troublesome symptoms was seeking medical advice from lay people, I am sure you would be telling them to consult a Doctor!

It seems that you are a reasonably wealthy man and will be retiring with a pension pot that most Brit retirees in France can only dream of, and therefore especially need French tax advice that encompasses such issues as the recent changes to French wealth tax, inheritance tax and the newly resurrected exit tax.

The latter could be especially problematic if you decide after six years to leave France to move elsewhere, as having to pay income tax on any unrealised gains just because you are leaving the country could be painful.[/quote]

Hi,

        While I agree with Sprogster that good professional advice is invaluable , I have become aware through these forums that there is a lot of bad "professional" advice out there , in the form of self-styled "consultants", "advisers", "tax return services" " business set-up services" etc.  Even now there is a self-appointed "expert" on a regional publication who is still advising the readers that social charges are legitimately being taken from their UK rents and govt. pensions.

         The only absolutely reliable advice is likely to be very expensive , and may well end up costing more than the tax saved.

         A doctor can be assumed to be an intelligent person and there is plenty of good info to be found on the web ( try "Le Particulier" magazine site).

         By the way, the exit tax is aimed at rich french nationals who move out of France specifically to avoid tax on the sale of their company shares (normally in their own companies) it only applies to holdings of more than 1.3 million € and more than 1% of any company. I'm sure that Doc will be able to spread his  investments in such a way as to not be caught by this one .

        

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Parsnips, you are echoing my very thoughts.  In my career I have been pestered to death by IFA's and other so-called experts trying to get some commission out of me, and I have been singularly unimpressed by most of them. Ask them a curve-ball question that isn't on their script and they run a mile!  Yes, I am reasonably intelligent, I happen to have an MBA as well as my medical degree and have written articles on GP finance in the past, but then again most people could understand a lot more about tax and finance if they gave themselves the credit they deserve.  I am actually interested in tax and finance as subjects and my tax affairs are not in fact all that complicated.  A little planning with the help of some cost-effective advice will be necessary, but I have no intention of lining anyone's pockets in the process.  
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