Tom Posted November 10, 2010 Share Posted November 10, 2010 Hello everyone. This is my first post on this forum & I really hope someone can guide me on some questions I have relating to the French tax system. My BackgroundMy circumstances are that my wife & our young daughther are resident in France & have been living over here for about 7 years. I myself have remained resident in the United Kingdom for work & health reasons & I have been receiving a U.K. income and have been paying U.K. income tax & national insurance in the normal manner. Due to ill health (I have multiple sclerosis) I am now unable to continue working. I am fortunate in that despite not being able to work I will still receive a reduced salary from my U.K. employer as I was covered under an in-house Long term Disability scheme. It's rather like a long-term phi insurance but is funded direct by my U.K. employer. I continue to be employed by my company but I receive a reduced salary of 2/3rds of my old annual salary. My job title is now "member of the long-term disability scheme" and I am based at home whilst performing no work activities. I continue to pay U.K. income tax and N.I. contributions in the normal manner. My company provides an in-house pension scheme which I will continue to make contributions to. The idea is that I will remain in this situation until I reach normal retirement age (still quite a long way off) and that I will then be granted retirement in the normal manner.So to all intents & purposes I remain a normal U.K. employee & I continue to pay U.K. tax etc. in the normal manner.Incidentally my wife & daughter are covered under the French health system courtesy of an E-109 form that the U.K. authorities provide on an annual basis as evidence of the fact that they are both entitled to health cover in France as my dependants.Anyway, what is now changing is that I am planning, from next year, to move to France permanently to live with my wife & daughther. My wife will become my carer as my illness is now progressing. I plan to become resident in France this will mean that I will have to leave the U.K. tax system & commence to pay Income Tax etc. in France.I am beginning to research the financial implications of joining the French tax system & I am attempting to work out whether I will be better or worse off financially if I go ahead with this. To help me in this I would hugely appreciate it if someone could provide answers/confirmation to the following points: 1) Calculation of French Income TaxOverall salary € 35,000 (notional salary - net of allowances etc.) Our household constitutes 2.5 "parts" (i.e. my wife, myself @1 part each + my daughther @ 0.5 part)So "parts" are in euros 14,000, 14,000 & 7,000 respectively. Income tax charged as follows: Tax band Tax percentage Tax payable Up to € 5,875 0% payable on each part nil So parts charged: € 5,875 @ 0% = € 0.00 € 5,875 @ 0% = € 0.00 € 5,875 @ 0% x 50% = € 0.00 € 5,875 - € 11,720 5.5% payable on each part So parts charged: € 5,845 @ 5.5% = € 321.48 € 5,845 @ 5.5% = € 321.48 € 5,845 @ 5.5% x 50% = € 160.74 € 11,720 - € 26,030 14% payable on each part € 2,280 @ 14% = € 319.20 € 2,280 @ 14% = € 319.20 € 2,280 @ 14% x 50% = € 159.60 Therefore overall income tax payable (i.e. 3 parts combined) is € 1,601 i.e. 4.57% of taxable (net) income Could someome please just confirm that my method of calculation is correct & that I'm not going mad?(!)From what I have read I do appreciate that income tax in France is very low compared to the U.K. and that the bigger "tax" item in Franceis the category of "contributions sociale" which makes up the difference. Also I do appreciate that my tax bands as above mght be slightly out of date. It's just the method of calculation that is confusing me. 2) "Contributions Sociale"Is there anyone out there in a similar position to myself? i.e. receiving a U.K. salary from a U.K. employer but resident full time in France? As I understand it upon entering the French tax system I will be liable to pay "contributions sociale" which I believe now total 12.1 %Am I right in saying that this "tax" would be payable on my full taxable salary and that I would have to pay the full 12.1% amount without any exemption whatsoever? Would this be in anyway exempted under the double taxation treaty with the U.K.? (bearing in mind my circumstances)Also:I have heard that self-employed people in France have to pay a huge percentage for "Contributions Sociale" of up to 43% !!!!!!!!I presume this would not be so high in my case because I am not self-employed? But I am confused slightly on this point as I would be receving a U.K. salary & not a French one. Presumably French employers would also be contributing towards these payments?Can anyone advise/clarify on this point? Finally, just one other thing:Health Cover in FranceI presume I would have to obtain an E106 form from DWP Newcastle to cover myself & my dependants for Health Care in France. My E109 form would no longer be valid in this respect.I believe the E106 form would only be provided on a temporary basis for up to 2 years. Would the E106 (S1)Form definitely also cover my wife & daughter for health cover in France (up to the level of top-up insurance etc.)?After the E106 (S1) form is no longer available to me I presume I would have to take out full private Health Insurance to cover us all up to the time we would all be accepted into the French State Health care system. I think I am correct in saying that once you have been resident in France (& paying tax etc.) for 5 years then you & you dependants qualify to enter the French Health system.Could someone please advise/clarify on this point please? Sorry if this asking too much but just after some basic feedback on these points.I think, dependent upon people's feedback, if things are complicated the next stage might be for me to seek some expert financial advice.Thanks ever so much in advance.Tom Link to comment Share on other sites More sharing options...
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!Register a new account
Already have an account? Sign in here.Sign In Now