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Retirement income


powerdesal
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As I will be retiring soon (for good this time) I have been giving some thought to the income tax situation in France.

As my (our) income will be a combination of UK state pension and investment income it is the treatment of investment income which is of most concern.

I am reasonably sure that there will be others on the forum who have a similar income stream and, whilst I have researched (as far as possible) the liability for tax and social contributions applied to investment income all the info I have found tends to refer to things like private pensions.

I will obviously be taking advice from an accountant but I am a little confusedby the info so far.

Q1. If income is taken by selling shares / cashing bonds etc is the total amount taxed (contributions +income tax) or is it just the gain. If the gain, how to prove it?.

Is the income tax annual allowance applied to that income or is it a fixed tax rate irrespective of how much allowance is unused.

Does being over 65 alter the situation?

Any words of wisdom from forum members will be greatfully received.
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Hi,

       Capital Gains on sale of shares , parts of mutual funds, SICAVs etc are now taxed at 19% (fixed rate) and also 12.3% social contributions. They do not enter into the calculation of tax on your other income. This is a new measure and may not last long, as a radical reform of the tax system is underway. It seems quite likely that gains may be taxed at the marginal rate in future, so for now, if possible take sufficient out of your investments before you become french resident, to last a year or two.

       Dividends are subject to an allowance of 1525€ (single) or 3050€(couple) -most are also given a tax-free allowance of 40%. They are then added to your other (pension etc) income and taxed on the sliding scales.

        If you have investment bonds which are life insurance linked -as most are ,even  minimally , then they will be treated as french life assurance plans and only the gains are taxed  at your marginal rate, and for bonds which are over 8 years old there is a fixed tax-free allowance of 4600€ (single) and 9200€ (married). As this allowance is against the gains , you will see that you can take much larger amounts in total tax-free.

       As for proving your figures the system is that you declare the figures for all except capital gains without any paper proofs , but supply paperwork if asked for.

       For capital gains there is a special form, but you can also declare on plain paper sending copies of documents showing aquisition prices ,  and sale prices. I have always found this method easiest. You can also set losses against gains for up to 10 years after making the losses

       As for age, if you are over 65 you get a special allowance if your taxable income is under22 930€ (2010 income), or , regardless of age if you have a certain level of disablement (80%) or a military or civil injury pension for at least 40% disability.  The allowance is 2312€ if your taxable is less than 14220€ or 1156€ if the taxable is between 14220€ and 22930€. This level of disablement also gives rise to an extra 1/2 point on your family" quotient" which reduces your tax.

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At one time I would have agreed that the lure was involved. I also really enjoyed my work.

Now the "zing" has gone out of working and the Power and Water Industry in the Middle East can live without me and me without it.

Its time for a new chapter of life. I've seen too many power stations, too many desalination plants, too much sand, too many airports, too many airline meals.

A gentle tour around Europe is called for, and maybe a book.

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Unfortunately it's 100% about lucre for me as I can honestly say that I haven't experienced enjoyment or 'zing' in my work for a very very long time.

The last vestiges I may have had have been well and truly beaten out of me with the blunt club of non stop bullsh1t [blink]

PS: You forgot to mention too many Arabs [Www]

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  • 2 weeks later...
Hello parsnips you posted that:

Dividends are subject to an allowance of 1525€ (single) or 3050€(couple) -most are also given a tax-free allowance of 40%. They are then added to your other (pension etc) income and taxed on the sliding scales.

Are you sure the tax-free allowance is still in place? After surfing the net to try and understand Sarko's grab on our hard-earned dosh, with all the new capital gain taxes now in place, I found this website: http://www.french-property.com/news/tax_france/changes_2011/

which states that the tax relief on dividends have been removed, but the 40% abatement is still in place. Any thoughts on the subject you have will be gratefully received.

With the new capital gains tax, any losses can be used for upto 10 years, (I have plenty of them!) which is a good thing. Would anybody know how to declare your profit/losses for the tax year? For a very simple example: if I made 500 pound profit on one share and a 500 pound loss on another share for the tax year, would I have to send in the relevant contract notes to prove there was no capital gain for the tax year, or simply not declare anything, as legally no profit would have been made?
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Hi,

     What has been removed is a "credit d'impot" of up to 115€ (single) or 230€ (married ) which was put in place  to compensate for the perceived  double taxation of dividends from companiesz whiuch had paid corporation tax or the equivalent.

       As to declaring gains and losses on sale of shares , technically you should declare on forms 2074 (in detail) or on plain paper , then transfer totals to form 2042 box3VG. Losses for 2010 on 2042 box 3VH with form 2074 or plain paper, and for previous years on form 2041 SP or plain paper. All supported by copies of transaction documents. Or, you could , if the losses cancel out , not declare anything, but be prepared to declare with all documents , if the tax office queries your declaration, -I am not recommending this, and you would be risking a "control" which might throw up problems. If you have all the documents you might as well declare properly in the first place.   

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Thank you very much for your reply parsnips.

I suppose we should be grateful that the treatment of share dividends have not been too affected yet.

For this year's tax form I will have a capital gain to show for 2010, but more than enough losses from 2009 to cancel out the 2010 gain. Should I sent in all the contract notes from 2010, and then enough contract notes from 2009 showing the losses, or send in all contract notes from 2008 and 2009? September 2008 was when I became a French resident.

Last year I did not have a capital gain to declare, and did not send in any contract notes, and my accounts were accepted without requesting any evidence of gains/losses, but as you say if I have all the evidence to support my claim it would be best to send in all the documents, just not sure which ones to send. The pile will certainly keep somebody occupied for quite some time sifting through them all!
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Hi,

       You should send in details of all relevant losses (including those made in the last 10 years , before becoming french resident-after all they will tax you on gains made partly in those years) with copies of supporting paperwork. They will then keep the details on record to be set against future gains.

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Many thanks again parsnips, your replies are much appreciated.

Sorry for having seemed a bit dense with some of the questions I have asked, to be honest I never had enough gains in the UK to worry about declaring them, and it is only with the changes that have come into place in France this year I have needed to think about declaring anything.

As regards to being able t
o go back 10 years, I only wish I still had some of my contract notes from that time frame, unfortunately I think I destroyed a lot of them when we moved to France, thinking I would not need them again.[:(]

Once again many thanks for taking the trouble to assist me in my plight.

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