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Guidance needed please on changing over to French Tax system


Tom
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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 Background

My 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 Tax

Overall 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 France

is 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 France

I 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

 

  

 

 

 

 

 

  

 

 

 

 

 

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Hello Tom and welcome to the forum.

Leaving aside the taxation issues and saying that my experience is quite a number of years old, have you looked into claiming Incapacity Benefit prior to leaving the UK? A good source of initial information is the Directgov website. If you were to be succesful you would then be entitled to an E121 (or today's equivalent number). If this were to be granted you and your family, as your dependants, would automatically be allowed to enter the French health system in the same way as a French person and your health costs would be covered by the UK system so you would still need top-up insurance. The establishment of the classification of "incapacity" would also enable you to clain an extra half share against income tax thus moving you up to a three person household.

I would also check out your continuing entitlement to on-going incapacity salary from your employer if you were to move abroad but you have most probably already done this.

Depending if my assumptions about an E121 are correct there is another small benefit which you would be entitled ti in France but I don't want to cloud your main issues at the moment.

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As your wife and daughter live in France, that means you yourself have been French tax resident for the last seven years, and so will have been declaring your total worldwide income in France (won't you?) even if you have paid tax elsewhere.

If you become French resident yourself, then if you spend most of your time there you and your employer would normally become liable for French social security payments rather than NI on your income. This could make life very complicated and expensive for your employer. If your income takes the form of a pension rather than employment income then you need to be covered by an E form yourself in France, otherwise you will become liable to take out private health assurance.

You have one possible get out. Because you will have been declaring your income in France for the past seven years, due to your dual resident status, that should enable you to claim that you have been French fiscal resident for more than five years, which should qualify you for health care under the French sécu.

 

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What Will said.[:D] (Seriously, Tom, he's really good at this stuff and has real-life experience of the ins and outs of a duck's wotsit on this subject!)

However,  another possible thought re the healthcare is that as your family is resident here and has been so for 7 years, there is an outside chance that you might be able to piggy-back onto their CMU entitlement.  You'd all pay (8% of your RFR) but it is a possibility.  Your family needs to apply as residents since before November '07 and when you move over you could join as a dependent.  The snag is that the authorities may not accept this, especially  if you still technically "work" in the UK.

If you get a disability  S1 (what used to be an E121) then you are subject to the same criteria as in the UK (ie you have to be proven to be unable to work and are subject to regular assessments.  There is also less and less chance, imo, of S1s being issued for this reason once the old Incapacity Benefits get replaced. Those already in the system may be OK but how simple these will be to get now is uncertain.  It would be interesting for the forum to know what the DWP says to you when you apply.

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Sorry but I have to disagree slightly with Will in that coming to live in France whilst still technically employed in UK will not necessarily require your employer to do anything - unless you perform work for them in France. If you live in France but work in UK paying tax and NI then you should qualify for a workers E106 which is indefinitely renewable on an annual basis.

Possession of a workers E106 does not require you to actually spend any time in the UK. I was quite surprised at this but being in receipt of one myself I recently asked HMRC what the minimum was as I was (am) considering reducing my working time but was told that as far as they were concerned as long as I remained employed and paying tax and NI that was good enough. I can also say for a fact that in 3 years HMRC have not asked either myself or my employer for any proof of what time I do spend in UK although I have stated it on the renewal form each year.

Even if you managed to persuade the French that you have been resident for 5 years then as quickly as one problem evaporates the complexities of your salary arrangement would kick in so I think your best course of action would be to try for a workers E106 and then stay on it as long as you possibly can.

Bonne chance

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Won't you still be paying your NI contributions and UK tax from this 'salary' you are receiving from your employer?

If you are then surely you will just get your E109 as per usual or E106. That is what we get from the french to hand in to the UK authorities as we are exactly in the reverse situation, well more or less.

As you did not mention declaring your income in France for the last seven years, so, did you?
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Tom .............

Blimey ........... this is a complicated one and may I first of all express my regret at the (health) situation you find yourself in. Having said that, there wasn't a hint of self pity, and for that you deserve the utmost respect. Hope that doesn't sound patronising - it's not meant to be.

Your thread is entitled 'Guidance on Tax', so maybe a start there:

I plugged your €35k in to my French Tax spreadsheet (I really ought to market it!) and I got your €1,601 number precisely, but ......... you've failed to deduct the 10% upfront, so the figure comes down to €1,111. However, what really matters is whether you continue to be taxed in the UK or in France. It's getting out of my field of knowledge as to whether your remuneration circumstances allow you to become a non-UK tax payer and taxed solely over here. Probably not, since it sounds as though it may be advantageous (and possibly non-negotiable) for you to remain on the payroll as an employee and continue to pay NHI, tax etc as if nothing had changed.

However, if that wasn't the case, and your gross income was solely taxable in France and there was no NHI liability for you nor your employer in the UK (advantageous for both parties), then the calculation is different.

My spreadsheet (on a guess of say €55k gross) comes up with €3,631, but of course you'd have to deduct your current UK tax & NHI liability from that, so probably not too bad.

The more that I think about this, the more I think that you really do need professional advice on this, rather than our well-intentioned semi-guesses over what can or can't be done. It's not so much a question of how you stand with your current status, as how you might be better off (given your intention to become a French resident) by agreeing a change in your payment circumstances with your employer. Presumably you've discussed the question of retirement on ill health and your income becoming a pension?

Moving on from tax and to your health circumstances, it will of course as others have already said, be vital for you to have 'E' cover in one way shape or form. All that I'd say is that if you have MS medication requirements, these will need to be supported by an 'E' form, otherwise you'll be in to enormous cost.

If any of the above is of any help, please feel free to PM / email me. I can send you my spreadsheet referred to above. Also, OH has MS and she has received fantastic support from the French health system - but you need to prepare for your arrival over here (better than we did!)   

 

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I would defnitely agree with professional advice being needed. I can also see AnO's point, and agree that it's not so much the tax situation - which is governed by the double taxation agreement - but the health care aspect that is the major difficulty. Whether you could get what was previously the 'workers' E106 I don't know. It would be great if you could, but I would rather doubt it now that it's an A1 form, to which the same considerations would seem to apply as to the former E101. But it's all speculation because the revisions to the E forms only came in this year so there are few 'odd' cases that can be referred to. Whether or not the system would allow you to have a 'workers' form when you aren't working, only those who operate the system can say.

I do know at least one person in a rather similar situation, who although still paid a reduced salary by the former UK employer definitely comes fully within the French health system - but he was in the French system pre-2007 when it all changed.

I offered the 5-year fiscal residence as a possible way round the problem but that depends on you having followed the correct procedure and declared for tax in France as well as Britain.

 

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We are in the gardening leave situation for the time being and so the french salary is treat as a french salary for a non resident, cotisations are deducted at the appropriate rates and retenue a la source is deducted for les impots sur le revenue.

We got the new form earlier this year and it would be renewed next year if husband was not retiring then. And perhaps the CRAM or whoever will pay his pension will issue an E121 to us, or not? that we do not know.

What we do know is that income has to be declared in both countries and french tax paid is deducted from the amount that is owed in the UK.

Is the French Embassay site in London of no help with this. There is plenty of useful info on there, I'm always surprised that it gets so little mention on here.
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Will, I do not understand why you are bringing the E101 (A1) into the equation, that would only be relevant if the OP were being sent abroad to work by his employer or was self employed and working abroad, neither of which is the case. Also the E106 (workers or otherwise) is now an S1 not A1 as I'm sure you know.

"Whether or not the system would allow you to have a 'workers' form when you aren't working, only those who operate the system can say."

Technically the OP is still working, it's just that he's not actually performing any duties, and whilst the initial qualifying criteria may require you to be performing at least some work in the UK - I don't know for sure but the question is there on the application form - I repeat that in my own case, now into my 4th year on a workers E106, recent enquiries to HMRC revealed that so long as I remained employed and paying tax & NI I did not have to spend any time in UK at all to remain entitled.

On the face of it then I can see no obvious reason why the OP has not got a fair chance of getting a workers E106. Even if that meant for the initial year complying with any minimum time requirement I'm sure that could be 'accommodated' and it would definitely be worth the effort.

I completely agree that professional advice is a must in this instance however amateur advice and real life experiences from forums like this still have a valuable contribution to make even if it is only to educate the enquirer on what questions to ask the professionals !

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AnO, please don't let's get bogged down in A1/S1/E101 etc discussions. I only mentioned the E101 as a side issue, because it did seem to me that the narrow distinction betwen the closely-related former E101, E102 and E106 had been eroded by the May 2010 changes. That is borne out by the fact that the current application form (CA8454) makes no specific mention of form numbers, and also that there are several references on line to the fact that the 'normal' E106 is now an S1, but the 'workers' E106 is an A1 - such as here.

However, looking into the subject more deeply - because if you are using an S1 while employed then I would rather believe you than a web site -it seems that this official site does clarify the matter of form numbers. My understanding would be that under the current system, even if you have an S1, if you work you still need an A1 to prove that you pay NI in UK.

In reality, of course, the number on the form is not the issue at stake, it is whether the OP is eligible for one. I'm not sure whether what is, in effect, indefinite sick leave counts as being 'employed' as far as the bureaucrats are concerned. I can only compare this with a close friend in a similar position who, although still being paid by his former UK employer, is covered directly by the French health system, not via an E form from the UK. But he has been resident in France for considerably longer than five years.

And because there is so much contradictory information and experience, the only real answer is to consult a specialist, whether in HMRC or an independent advisor, because there may well be other factors that have to be taken into account.

But anyway, as the OP has been fiscally resident in France according to the French requirements for the last seven years, then that could qualify him to join the French system - as long as he has been meeting the requirements of the system and making a French tax declaration for that period. I definitely don't know for certain, but think it would be well worth pursing this question through the official channels.

 

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I agree, it's only likely to add to the confusion not clarify it.

Re the NHS web site, again it refers to working abroad plus the CA8454 application form itself has never mentioned any specific E form so nothing can be read into that.

I'm still awaiting my latest renewed E106, a 63 working day backlog according to HMRC, but when it does eventually arrive I will be sure to see note what it is actually called this time, E106/A1/S1/P45/V5C etc. etc. and if it differs from previous ones.

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We live in the UK now. Husband on gardening leave and his employer is in France and gets his french salary and does not go into work ever. We get an E form from France to hand in, in the UK.

So yes, E forms are important in either direction and probably more so if one is going to be a permanent french resident.

And the french do understand the notion of retraite anticipee, goodness knows enough people do it for various reasons in France.
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Tom, I do hope you haven't given up on us and are hanging in there through the back and forth of conflicting advice!

Several people have proffered the sensible advice that you seek professional help and of course they make a good point.  However, I would caution you that accountants, solicitors and financial advisors - however good and up to date on the financial and legal implications of what you are about to do - are not necessarily as up to date on the subtleties of the healthcare situation and the implications of the various options available to you, as they might be.  Without suggesting that they won't be able to help, I would advise you to make 100% sure, to your personal satisfaction, that any course of action suggested to you, guarantees entry into the health system for all of you.  Without that, imo, little else will matter.

Bon courage.

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Hello everyone. Sincere apologies for the delay in getting back to you all but my computer broke down yesterday lunchtime & I haven’t been able to access the forum since. I am writing this on a friend’s laptop.

Firstly thank you for your kind words & for your support. Much appreciated I assure you.

I'm quite overwhelmed by the effort people have gone to on my behalf. There I was thinking that I was being a bit cheeky in asking so many questions.......

Sincere thanks to everyone for taking so much trouble to try to assist me with this rather difficult & complicated problem. The thoughts & suggestions provided in these replies are very, very useful to me indeed.

I think I now have a lot to think about!

Thanks also Gardian for running a check on my income tax calculation..................I wasn't taking leave of my senses afterall! Very useful. Again much appreciated.

I think I'm already a fan of the living France forum!

To answer one of the points raised by people:

Yes when my wife became resident in France she contacted the French tax authorities & made them fully aware of our exact circumstances. She sent them a recorded delivery letter setting all relevant details including my U.K. employer, my U.K. salary & my name/address details in the U.K.

She made it clear that her husband would remain resident in the U.K. & that he would continue to pay U.K. income tax & n.i. contributions. 

She stated her belief that in view of the fact she was wholly dependent upon my U.K. salary to live in France and was not going to perform any work activities in France, she should not be deemed liable to pay any French income tax or contributions sociale. She also made it clear that she was going to be provided with an E109 form from her husband supplied by U.K. authorities to enable her to access the French health system. She later on filled out & returned a tax return on this basis.

Since that time neither of us have been contacted by the French tax authorities in relation to the question of income tax or contributions sociale. I think it was simply considered that as I myself remained resident in the U.K. and paid full tax & n.i. contributions in the U.K. that no further French tax returns were deemed necessary in relation to my wife by the French authorities. The only contact she has from them is in relation to the annual demands for tax fonciere & habitation.

I suppose, however, that on this basis my wife does qualify as having been fiscally resident in France since the time she started living over here. Despite the fact she has not paid any French income tax or contributions sociale.

Bearing this in mind I suppose there is indeed an argument that she (after 7 years) should now qualify for the French Health system having been resident in France for a period greater than 5 years.

I think it would make sense to now put this suggestion to the French health authorities & see what they say in response.

 

Healthcare aside, the overwhelming issue for me is whether or not, if I take up French residency, I will be faced with a tax bill which will be substantially higher than that I am currently paying to U.K. authorities on my U.K. income.

If it is mandatory for me to move over completely to the French tax system I can realistically afford to pay a low income tax figure combined with a higher "contributions sociale" figure of up to 12.1%

There is no way on earth, however, that I could afford to pay a "contributions sociale" figure of up to, god forbid, 43%! As a self-employed person in France is asked to do.

My concern in this is that it is extremely unlikely that my U.K. employer would be prepared to pay any sort of "contributions sociale" figure that was higher than the existing n.i. contribution that they provide on my salary. Since agreeing to place me on their long term disability scheme & allowing me to live in France, if I choose to do so, they have become increasingly difficult in their dealings with all members of the Long term disability scheme. A sign of the times I think. Whilst there is no doubt over their agreement for me in principle to live in France. I have this in writing from them. They have since made it clear to me that any additional financial costs that I may incur in doing so (e.g. taxation) will be at my sole responsibility.

Fair enough I suppose under the circumstances.

So this is my dilemma.

Is there any way that I can take up full time residency in France whilst continuing to pay U.K. income tax and n.i. via my employer in the U.K. on my U.K. salary?

I have to say I think this is extremely unlikely if not possibly against all of the rules in place.

Maybe I am missing something on this but I am racking my brains to try to work out what I may have missed.

Greyman, I hope you don’t mind me asking but how in simple terms do the French tax authorities handle your situation bearing in mind you are employed by a U.K. employer but spend very little time back in the U.K.?

Is there a "middle-road" solution that would make use of the double taxation agreement between the two counties which might ease my burden?

As people have suggested I think it is now time for me to seek professional advice on what I think is a quite complicated set of circumstances. I also take your point cooperlola concerning the importance of the healthcare consideration in all this.

Thanks so much to everyone who has tried to help me with this.

Thanks to your invaluable input I now recognise the main points / areas of concern that I need to address.

A huge thank you to all concerned!

If you can stand anymore of all this I will let you know how I get on!

Very best to you all!

Tom

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If you can find a way to get an S1 (ie your healthcare contributions paid for by the UK) then you will not pay the hefty cotisations which you would be liable for if you were self employed or employed in France.  Solve that problem and the rest will be easier and cheaper.

You and your family should have been filling in a tax form here every year, no matter where you have been liable to pay tax.  This may prove an obstacle to your using your family's residence here for the last seven years as a way to get healthcare for your family from the French end.  ANO's approach of trying to get what used to be a worker's E106 seems a good suggestion to me if your tax office agrees that you are entitled to one.

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Tom, as I understand it you are currently employed and paid a salary exactly the same as each and every other employee of your company, the only difference being that they do not expect you to turn up and do any work and that being so I can see no reason whatsoever why you cannot move to France at any time you like and at zero cost to your employer either in monetary or administrative terms, under the circumstances it will make no difference to them where you live.

As has been said I think you will almost certainly qualify for a workers E106 under which you will continue to pay tax and NI on your salary and receive health care in France so you need not bother yourself with with calculations on where you would be better off tax wise, not that you really have a choice in the matter.

If you become French resident then although you will be obliged to submit a tax return each year itemising your worldwide income as far as your UK salary is concerned you will receive 100% exoneration for tax paid on it thus your annual devis for that will be for €0,00. You may however have to pay some tax on any other income such as interest and dividends etc., if you have any that is.

Although it's possible that your wife could qualify for healthcare based on the length of time she has lived in France I would suggest that you fully explore the E106 route first as it will certainly be more advantageous for you.

How far away from UK state pension ages are you I wonder ?

I agree with Coops that any professional advice you seek should be from someone well versed and experienced in the subject.

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Hi,

       I have kept out of this one , as I agree with others that qualified professional advice is essential. You should choose your adviser very carefully , and it occurs to me that the "Anglo French Chamber of Commerce" may be able to guide you to someone. Another point that occurs to me is that as you are now being paid ,but perform no work, then, in effect, you are being paid for work previously done IN THE UK; you could therefore be considered as in the same position as someone working and paying tax in the UK but resident in France. Someone in that position is entitled to a worker's E106 (S1) and continues to pay tax in the UK because that is where the work is done (in your case--was done).This would be an argument which you might usefully employ if necessary.

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Tom

Your fiscal residence status in France comes out of legislation, not choice. The UK-France double taxation agreement (here) is the official document; you will probably find this summary rather easier to follow.

You will see that if you have a wife and/or children in France, the French authorities regard your French home as your principal residence so expect you to make a tax declaration each year. It doesn't matter if they don't actually ask you to do so or send you forms - the onus is on you to make your first declaration, and after that you are in the system. Neither does it matter that you pay all your taxes in UK, the double taxation agreement sees to it that you are basically only taxed once on any particular sum so in most cases there will not be any tax payable in France. You have to do this in your situation because France taxes you as a couple - you have no choice in this either - even though UK treats you as individuals. There are many advantages to making a tax declaration in France, it's a great pity that this was not explained to you before.

The confusion between social security contributuions - like NI in UK - and 'social charges' in France, the latter being a form of extra income tax, is understandable. It's true that social security and other payments can take a large chunk out of a self-employed person's income, and if you are employed your employer has to find something like 40% of your salary in 'employer contributions'. So being employed by a UK company while you live in France is not something to be entered into lightly. That's why an E form, or the current equivalent, is looking like the best (maybe the only?) option. If you have paid full NI contributions up to now then you should be able to get an S1 whether you remain fully employed or no - but this type of S1 lasts 2-3 years maximum. The 'workers' S1 will give you up to 5 years, by which time you should have gained full French residence.

I hope it goes well.

 

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[quote user="AnOther"]Tom, as I understand it you are currently employed and paid a salary exactly the same as each and every other employee of your company, the only difference being that they do not expect you to turn up and do any work and that being so I can see no reason whatsoever why you cannot move to France at any time you like and at zero cost to your employer either in monetary or administrative terms, under the circumstances it will make no difference to them where you live.

As has been said I think you will almost certainly qualify for a workers E106 under which you will continue to pay tax and NI on your salary and receive health care in France so you need not bother yourself with with calculations on where you would be better off tax wise, not that you really have a choice in the matter.

If you become French resident then although you will be obliged to submit a tax return each year itemising your worldwide income as far as your UK salary is concerned you will receive 100% exoneration for tax paid on it thus your annual devis for that will be for €0,00. You may however have to pay some tax on any other income such as interest and dividends etc., if you have any that is.

Although it's possible that your wife could qualify for healthcare based on the length of time she has lived in France I would suggest that you fully explore the E106 route first as it will certainly be more advantageous for you.

How far away from UK state pension ages are you I wonder ?

I agree with Coops that any professional advice you seek should be from someone well versed and experienced in the subject.
[/quote]

 

Cooperlola & Another, thank you for the above two responses.

I have to say that what you are saying really does, potentially, completely change things around for me. If I can achieve what you are suggesting then this would undoubtedly solve all of my problems.

I intend to now talk with a financial expert on all this and also to investigate my eligiblity for a worker's E 106 or S1 certificate.

Thank you so much for guiding me on these crucially important aspects.

I have to be honest in saying I am very, very surprised that it is possible for someone in my position to live in France but to continue paying tax etc. on my U.K. income via my U.K. employer. Very pleasantly surprised if this is definitely the case! Maybe I was naive in my thinking that if you lived permanently in France that you had to pay income tax in France. I think I now stand corrected in this.

Also, I take your point on the fact that in my familiy's current & previous situation we should still be submitting income tax returns in France & that it is our responsibility to do this. I honestly did not realise this.

Thanks again everyone. I am greatly appreciative of all your combined guidance on this!

Sincerely, Tom

 

 

 

  

 

 

 

 

 

 

 

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[quote user="Will"]

Tom

Your fiscal residence status in France comes out of legislation, not choice. The UK-France double taxation agreement (here) is the official document; you will probably find this summary rather easier to follow.

You will see that if you have a wife and/or children in France, the French authorities regard your French home as your principal residence so expect you to make a tax declaration each year. It doesn't matter if they don't actually ask you to do so or send you forms - the onus is on you to make your first declaration, and after that you are in the system. Neither does it matter that you pay all your taxes in UK, the double taxation agreement sees to it that you are basically only taxed once on any particular sum so in most cases there will not be any tax payable in France. You have to do this in your situation because France taxes you as a couple - you have no choice in this either - even though UK treats you as individuals. There are many advantages to making a tax declaration in France, it's a great pity that this was not explained to you before.

The confusion between social security contributuions - like NI in UK - and 'social charges' in France, the latter being a form of extra income tax, is understandable. It's true that social security and other payments can take a large chunk out of a self-employed person's income, and if you are employed your employer has to find something like 40% of your salary in 'employer contributions'. So being employed by a UK company while you live in France is not something to be entered into lightly. That's why an E form, or the current equivalent, is looking like the best (maybe the only?) option. If you have paid full NI contributions up to now then you should be able to get an S1 whether you remain fully employed or no - but this type of S1 lasts 2-3 years maximum. The 'workers' S1 will give you up to 5 years, by which time you should have gained full French residence.

I hope it goes well.

 

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Will. That together with your earlier respones provides brilliant advice. Thak you very much!

I am cringing somewhat over the tax declaration issue but I do have my wife's letter on file & that I hope will help to mitigate our lack of action on this. I too wish I had obtained advice from someone like your goodself at an earlier time. This would have made things easier for us both I think.

At least we can show that despite not having submitted the required French tax returns we wouldn't have, im any case, been liable to pay any tax...................might possibly help our cause  a bit perhaps perhaps.

I am going to contact the Aglo-French Chamber of commerce & ask them for advice on who I should seek guidance on this all from.

Thanks Will.

Sincerely, Tom

 

 

 

 

 

 

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I most certainly agree with Will and would say that you have been misinformed about not having to make a french tax declaration.

Sadly fonctionnaires do not always know or understand their own jobs.

As I said, we are in exactly the reverse situation.

What I would do is call the NI people and ask them about gardening leave and paying NI contributions when living in France and ask them about an E form or S form. Frankly I cannot see why you cannot do the reverse of what we do. It will keep up your UK pension as ours keeps up the contributions to the french pension system.

In France I would explain that you are getting a salary payment from your employer in the UK which is a 'retraite anticipee' and that you no longer have to go to work, but will have to pay NI and UK tax on it, (if in fact that is the case).

We lived in France for 27 years and returned to the UK a couple of years ago when my husband was allowed to go on gardening leave by his french company. We get an E106 for the pair of us from the french securité sociale each year which we send to Newcastle. Our CEAM's, (EHIC in the UK) are also issued by the french.

AND as I said, declare tax in both countries and we actually pay in both countries, but I would doubt that you would pay in France as income tax is 'higher' in the UK.
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For advice on a workeres E106 then HMRC are the people to talk to.

As for telling the French that you are a 'retraite anticipee' I think that could be a big mistake and the least said the better. If you can present them with a workers E106 then that is all they need to know, you would not be breaking any rules or telling any lies if you left it at that. If you start making it complicated for them then they could just shut down and adopt the course of least resistance which would be to demand that you pay here and once made such decisions can be very very difficult to reverse.

What it boils down to is whilst you remain employed and paying UK tax and NI then in theory and practice your position is no different to mine (and also Greyman's it transpires, both with workers E106's) and the Impots have never made any enquiries into how much time we do or do not spend in UK or out of France, nor would I expect them to as it's irrelevent. The E106 means that they are being paid by UK for my (our) health care (and BTW probably getting more than they would get out of me personally in tax etc. if I were paying it in France to boot) and my tax is covered by the dual tax treaty and thats really is all there is to it.

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The poster will do as they wish won't they, but if asked that is exactly what they should say.

We most certainly had that question asked in the UK, as to when and where husband actually put in a day's work and when I rediscovered the expression 'gardening leave', that covered it.

I wish I could remember all the english words I have forgotten over the years!!
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