CSG

[bixy]

Just received our CSG demand and don't understand it. There is an amount under "Revenus de capitaux mobiliers" which I do understand - this is the interest on savings. There is also an amount under "Rentes viagères à titre onéreux" which I do not understand. On our tax return we enter our UK occupational pensions under this heading, but the amount quoted on the CSG demand is not the same as the amount on the tax return, and in any surely we don't have to pay CSG on our UK pensions.

Very mystified. Can anyone help?

Patrick

[Will]

Revenus de capitaux mobiliers is indeed savings and investment income, which is subject to 'social charges' regardless of its source.

Rentes viagères à titre onéreux are annuities. Here is a Google translation of the official explanatory page, if that helps.

This may also help - it's quite old, so the rates of taxation will have changed, but the principle remains the same. Similarly with this (though I am not too sure of the accuracy of a couple of the statements in there regarding pension income).

This is more up to date than either of the above Living France guides, and is from a generally reliable source.

[bixy]

Thanks for the links Will. It seems to me that where we are at fault is in declaring this annuity income separately from other pension income. We are lucky in that we have occupational pension income, but it seems to me that anyone who has an annuity based pension as their sole pension, as many have, is being taxed quiet unfairly. What do other people do - declare annuity income as part of totalpension income or declare at as we have done?

Patrick

[Sunday Driver]

Why do you feel that people with annuities as their sole income are being taxed quite unfairly? Unlike other investment based income, annuities attract generous allowances which will take most of them outside income tax as well as reducing the base upon which social contributions are calculated.

Having correctly declared your annuity income as an annuity, why do you think you are at fault? 

[bixy]

I suppose I feel that the intention behind the CSG is to tax what you used to be called 'unearned income' - such as interest on cash deposits. If we compare someone in receipt of a 'government' pension - teachers, firemen etc., the pension they receive is not subject to this additional tax. Someone who didn't have a government pension but invested in an annuity will have to pay this additional charge, as well as any income tax. That is where I feel the unfairness comes in.

Patrick

[idun]

CSG and CRDS isn't a tax like other taxes. It is called contribution sociale generalisee and contribution pour le remboursement de la dette sociale as it were done as a bouche-trou for the secu budget one way or another .

Many poor people in France don't pay income tax, but they pay this, it hits everyone on just about everything.

[parsnips]

[quote user="bixy"]Thanks for the links Will. It seems to me that where we are at fault is in declaring this annuity income separately from other pension income. We are lucky in that we have occupational pension income, but it seems to me that anyone who has an annuity based pension as their sole pension, as many have, is being taxed quiet unfairly. What do other people do - declare annuity income as part of totalpension income or declare at as we have done?

Patrick

[/quote]

Hi,

     Given that many UK pensioners , like you , don't understand the fine distinctions between rentes viageres and other types of private and occopational pensions , they can hardly be blamed for "mistakenly"declaring in the fashion which avoids CSG-ie as "pensions, rentes ...etc"  and not as "rentes viageres...etc".

[Sunday Driver]

Patrick

I don't think you fully appreciate the scope of social contributions in France.

They don't just apply to 'unearned income' such as interest on cash deposits - they also apply to employment income and retirement pensions.  That means that UK pensions are liable to social contributions unless the recipient has their assurance maladie paid for courtesy of an e-form or if they have private health insurance. The 'government' pensions that you mention are a different matter altogether as they are exempt from social contributions because they are taxable in the UK.

French pensioners, on the other hand, don't have their healthcare paid for by the UK and unless their pension is below a certain amount or they are in receipt of age related welfare benefits such as ASPA, they pay social contributions like everyone else.  Acccording to CNAV, around half of pensioners were subject to social contributions during 2009.

Perhaps they regard these exemptions for Brit pensions as unfairness..... [;-)]

 

[Sunday Driver]

[quote user="parsnips"][quote user="bixy"]Thanks for the links Will. It seems to me that where we are at fault is in declaring this annuity income separately from other pension income. We are lucky in that we have occupational pension income, but it seems to me that anyone who has an annuity based pension as their sole pension, as many have, is being taxed quiet unfairly. What do other people do - declare annuity income as part of totalpension income or declare at as we have done?

Patrick
[/quote]

Hi,
     Given that many UK pensioners , like you , don't understand the fine distinctions between rentes viageres and other types of private and occopational pensions , they can hardly be blamed for "mistakenly"declaring in the fashion which avoids CSG-ie as "pensions, rentes ...etc"  and not as "rentes viageres...etc".
[/quote]

Another helpful account of how others fiddle their taxes.....[8-)]

People who "mistakenly" do things (your inverted commas) aren't making a mistake at all - they're doing it deliberately. 

Patrick seems to have no difficulty in understanding what an annuity is compared to other types of pension as well as the tax implications, so I'm not sure of the value of describing a dubious tax dodge.

 

[parsnips]

Hi,

       Others may be happy to be soaked by the indiscriminate flat tax "CSG" in order to subsidise the featherbedded work systems and pensions of fonctionnaires and train-drivers etc, but I happen to believe that it is the tax authorities job to assess and collect taxes , not mine. If they want to query my declarations I would of course give them all the information they ask for (you are not obliged to give more or to volunteer information) and I would advise anyone who has, or thinks they may have,wrongly declared anything, to sit tight and see if the tax man asks for clarification. If he does, and you cooperate there is no risk of penalty.  I do not mean that anyone should deliberately omit sources of income from their declaration, but that they cannot be blamed if they declare things in the wrong box.

        In the case of the UK pension annuity the french taxation is particularly unfair, because, as they have no direct equivilent (they can't conceive of a state where some people have to provide their own pensions, and not get a tax-payer subsidised state pension) they treat them as a form of investment which some ,mainly wealthy, french people subscribe to as a tax efficient way to boost their retirement income, not as in the UK to provide ,at great expense, a sometimes tiny pension, which is often all there is apart from the meagre UK state pension.. That is why the CSG exemption is not granted to UK pension annuities, when in all fairness it should be.  

[Sunday Driver]

The workings of the French tax system are in the public domain and available to anyone planning a move to France. If someone chooses to live within such a tax regime, then there's little point in wingeing about its unfairness. 

Your comments indicate a deep seated resentment of the system here which probably explains why you keep intervening with veiled hints about tax dodges.

 

[idun]

Parsnips, if you added together your french tax bill and your CSG etc, would it not be less than paying income tax in the UK?

Also, I do not think that you understand how the pay system works in France. There is the anciennete system which in itself deprives people of decent wages for many years. Employees pay around 20% cotisations each month, plus income tax and their employers, well my husband's had to pay a further 50% of his wages out each month too.

You give the impression that people are getting something for nothing in France and that is not how it is.

[parsnips]

[quote user="Sunday Driver"]

The workings of the French tax system are in the public domain and available to anyone planning a move to France. If someone chooses to live within such a tax regime, then there's little point in wingeing about its unfairness. 

Your comments indicate a deep seated resentment of the system here which probably explains why you keep intervening with veiled hints about tax dodges.

 

[/quote]

Hi SD,

      I do not have a resentment of the french tax system, which treats me very well (so well that I wish I could have my UK government pension taxed here); what does annoy me is , in particular, the CSG , which ,taking up your comment about the system being in the public domain, has soared from about 2% when I arrived to its present 12.1% (almost certain to increase again --retraites) . I get annoyed on behalf of the retirees who get clobbered for this when they have saved a modest amount to try to augment there sometimes inadequate pensions (this applies even more to french nationals who pay CSG on their pensions -over a certain level). I especially get mad about the treatment of purchased annuities( of which I personally have none) as most UK recipents of these have already suffered enough with excessive fees and poor performance  without being deprived of the CSG pensions exemption.  

       I also resent the unbelievable complexity of the system (designed to make work for fonctionnaires?) and the way it is constantly amended  with evermore complex minor adjustments.  

[bixy]

Just coming back to my original point, SD, if you compare someone receiving an occupational pension from the UK with someone receiving a pension via an annuity; both are taxable on their worldwide income but the person who depends on his/her annuity for a pension will also have to pay a further 12% on his/her annuity income. While accepting your point about 'don't come and live here if you don't like it' [I'm paraphrasing], it nevertheless seems unjust to me that one person pays this tax on their pension and another doesn't. I shall continue to declare correctly but I wouldn't condemn anyone for putting their annuity income in the wrong box, because, while they may be breaking the letter of the law, I think they are not breaking the spirit of it, since presumably the CSG is intended to be a tax on investment income such as shares etc.

Patrick

[idun]

The spirit of these nasty taxes was to 'faire baiser' everyone. Sorry I just could not think of a more polite way to put it!

[NormanH]

"it nevertheless seems unjust to me that one person pays this tax on their pension and another doesn't"

I think you would find if you calculated the tax paid at source in the UK on an occupational pension, with the tax that would have been paid if that pension had been taxed in France you will find that the French take less income tax.

A French pensioner would also pay social charges.

[Mikep]

This is all getting a bit heated!

Is it not the case that Annuity income is reduced by a significant percentage before tax is calculated, since a large part is considered repayment of capital? According to PKF Guernsey in 1998 (my copy of their book, since no doubt updated) the amount counted for tax goes from 70% at age under 50 when the annuity was taken out, down to 30% over age 69. Please don't rely on this, but by all means check the current situation for yourself.

[parsnips]

[quote user="Mikep"]This is all getting a bit heated!

Is it not the case that Annuity income is reduced by a significant percentage before tax is calculated, since a large part is considered repayment of capital? According to PKF Guernsey in 1998 (my copy of their book, since no doubt updated) the amount counted for tax goes from 70% at age under 50 when the annuity was taken out, down to 30% over age 69. Please don't rely on this, but by all means check the current situation for yourself.

[/quote]

Hi,

     This is true , but the catch is that many UK pensioners pay no income tax (because of their low incomes),so that %  reduction does not help them , but they still get caught by the CSG which makes no concession for their low overall income.