France / UK Double Taxation - only paying tax on pensions in France

[idun]

Have I understood this. I have to prove to HMRC that I live permanently in France so can then get a form from them to hand into the impots and only pay income tax on my pensions in France.

That including the state pension, which I reaslise doesn't get taxed in the UK but does get 'counted' as income never the less.

Sorry if this has been gone over before but I am really wondering if this works. No government pensions involved.

Thankyou

[AnOther]

You need to submit the France Individual form with your French tax return.

http://www.hmrc.gov.uk/cnr/form_france.htm

You are mistaken that the state pension is not taxed in UK. Until HMRC receive the France Individual from duly stamped by the French tax authorities it remains taxable but is subject to relief according to your tax code. Depending on your total income this may mean that you do not actually pay tax but that is not the same as saying it does not get taxed or is not taxable.

Once the France Individual form has been fully processed reckon on a delay of up to a year or even 18 more for any refunds of UK tax which may be due to you to materialise.

[idun]

Now my problem is that I want to do this the other way round and the impots are not playing fair.

HMRC say that there is a treaty, but it only seems to go one way.

The impots insist that all french income has to have impots paid on it in France and that there is no way that they will allow it 'just to be taxed in the UK'.

And yes, I had understood about the tax allowances in the UK on pensions.

Thankyou for your reply, it looks like HMRC are honoring the treaty and les impots are not. Time to stir the hornets nest me thinks.

[mint]

Ano is right.  The UK state pension has always been subject to tax but it is paid gross to pensioners. 

[idun]

Yes, I do know how UK tax works and apparently they are very generous with people retiring to France who haven't got government pensions. Whereas les impots are not.

[Jay]

The impots insist that all french income has to have impots paid on it

in France and that there is no way that they will allow it 'just to be

taxed in the UK'.

Are you talking about world wide income or French income? Tax on French income is paid in France. There seems to be some confusion here.

[AnOther]

[quote user="idun"]Now my problem is that I want to do this the other way round and the impots are not playing fair[/quote]I don't think you quite get it yet.

As I understand you for some reason you want to choose to pay your pension tax in UK not France and if so than that is just not possible, where you pay your tax is not a question of choice and if you are a French tax resident then the Impots are absolutely correct in taxing you on it and there is no hornets nest to stir.

[idun]

I am not confused. Our pensions are french and we are UK residents. Donc, if british pensioners (non gov pensions ofcourse) do not have to pay UK tax but can opt to pay french tax on their UK pensions, as there is a treaty that allows them to do so.

Then why can we not do this the other way round, as there is a treaty.

As far as how much we pay will not make one iota of difference to us. BUT it will mean that we give the money to the government of the country in which we live and frankly we want to do just that.

[krusty]

idun have you been drinking ?

in your first post you state "I have to prove to HMRC that I live permanently in France "

now you say you live in the UK ??? 

confused of Norwich

[idun]

LOL I know what I wrote, because if it were the other way round, then that is what we would do. And pay less tax ofcourse.

I just wanted to see if it was working properly for those who have moved to France from the UK. And saying that we were in the reverse situation would have clouded the issue.

I am not a drinker.

[Gardian]

[8-)][8-)][8-)]

[AnOther]

[quote user="idun"]Our pensions are french and we are UK residents.[/quote]Do you not think that it might have been quite useful to have revealed these rather important facts in your initial post and yes, you are confused - on 2 fronts [8-)]

1. Dual tax treaties are designed to ensure that an individual does not pay tax twice on the same income however the mechanisms by which that is achieved are down to the actual terms of the specific treaty and crucially, the tax legislation in each participating state - which means that they are not necessarily a symmetrical 2 way street.

2. You are still mistaken if you think that UK (non government) pensioners can opt to pay tax in French or UK. For a French resident there is no opt about it, state and private pensions are taxable in France as part of a recipients world wide income and the only choice which is open to them is whether or not to submit the forms to have them paid net in UK.

Actually there is a 3rd point which is your assertion that it 'will not make one iota of difference to us'. The level of tax you will be liable for on any given amount will absolutely vary between France and UK. Obviously the fine detail will depend on individual circumstances but without getting too deep into it in France there are four marginal tax rates, 5.5%, 14%, 30% and 40%, whereas in UK you have only two, 20% and 40%, the tax free allowances and thresholds are different too so it is not hard to see that the tax due on a given amount can never be equal in both countries.

I applaud your motive in wishing to pay your tax in the country where you live, oh that it were that simple, however I fancy your altruism might take a knock if you do the sums and reach the conclusion that it's cheaper to pay the tax in France after all.

Be careful what you wish for [;-)]

[idun]

I don't think that your figures are other than for french residents. These are the current figures for non residents, there is an abattement of 10%, but no other allowances are made, ie for a couple or children and it is done via retenue a la source or as it would be called in the UK PAYE:-

TAUX ET MONTANT DE LA RETENUE A LA SOURCE

REVENUS DE L’ANNEE 2009

La retenue à la source applicable aux sommes perçues à compter du 1er janvier 2009 est calculée selon le tarif publié ci-après.

0 % moins de

13 977€ PA

12 % de 13 977

à 40 553

20 % au-delà de

40 553

We then do a UK tax return and deduct the tax we have already paid in France. What diference would it make to us if we had to pay it all in the UK and none in France, where we no longer live. Absolutely none.

All I wanted to know is if this treaty works. As for all it looks like it should, and seems to from the UK end, so why can I not get someone in Noisy le Grand CINR to say it does and give me some documentation. Also they seem adverse to replying to my correspondence about this.

PS

If a treaty has been reached about double taxation allowing UK pensioners to opt out of paying UK tax on non gov pensions and only be liable to pay tax in France. Then why can't we? HMRC is being deprived of revenue if this is only a one way street and frankly I will kick up about this. As I say we will not be any worse off. Income tax in the UK is higher than in France and we pay no more than the higher amount, but UK pensioners who are french residents, would be worse off if this stopped.

[AnOther]

I did not know about the different tax rates for non residents so maybe you would pay no more or less, as I say it depends on the numbers.

As you seem unwilling to understand or accept the nature of a dual tax treaty I'll withdraw from the topic but wish you the very best of luck in 'kicking up' about it [;-)]

Maybe if successful HMRC will place you on their Christmas card list [:D][:D][:D]

[Will]

I must come to Idun's defence, because I happen to have known this person, in the Internet sense, since the very early days of this forum - I'm talking more than 10 years ago when it was quite a different place. Idun probably knows more about France and French life than the rest of us put together. So please, no more patronising comments. The situation is confusing - and the UK/France double taxation agreement does not help.

Article 18, Pensions, reads:

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid in consideration of past employment to a resident of a Contracting State shall be taxable only in that State.

Article 19, Government Service, goes on to say in paragraph 2:

Pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a local authority thereof, or, in the case of France, a statutory body, to an individual in respect of services rendered to that State, authority or statutory body shall be taxable only in that State. However, such pension shall be taxable only in the other Contracting State if the individual is a resident and a national of that State without being also a national of the first-mentioned State.

So I can understand the French tax officials' insistence that a French pension is taxed in France.

The document can be found on line at http://www.hmrc.gov.uk/international/france.pdf

The French version is at http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_4688/fichedescriptive_4688.pdf

How it applies was discussed recently here (despite the topic name):

http://www.completefrance.com/cs/forums/3/2216197/ShowPost.aspx#2216197

This might be useful too: http://www.completefrance.com/cs/forums/2/2158879/ShowPost.aspx#2158879

[Sunday Driver]

As one would expect, the Dual Tax Treaty is alive and well in France and its provisions are documented on the Impots website.

If you go to the website, select 'Particuliers' then click on the 'Vos Préoccupations' tab and select 'Vivre hors de France' from the drop down menu, you can access the relevant conditions for the taxation or non-taxation of French pensions.

There is also a handy chart which shows which pensions remain taxable in France and which are taxable in your new country of residence.

 

[Will]

I think Article 18 means that if you have a pension (other than one arising from public service) it is taxable in the state in which you are resident. Just as we have always advised. Though it is not clear, in either language version, from the wording of the treaty thanks to the insistence on using terms like 'contracting state' and 'that state'. The paragraph about public service pensions, although it does not apply in this case looks particularly confusing and I can imagine how a French tax official could get bogged down in it before realising that it is not relevant here.

This interpretation is borne out by the table which eventually comes up following SD's link.

It might be a good idea for Idun to forward this table to the impôts office in France; they don't seem to be fully aware of how the double taxation agreement should work. The direct link to the table is: http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_5349/fichedescriptive_5349.pdf

[idun]

Sunday Driver and Will, I have looked at all these things on both sites. I called Noisy le Grand and they insist that we have to keep paying french tax, in spite of the link on their site saying that we don't. I have written and got no reply from them as yet, how long that wait will be, I have no idea.

As HMRC seem more organised with the forms and Nottingham do quite happily issue them to uk pensionable french residents (non gov pensions bien sur), I have called them. I just thought I would check on here to see if this worked in the real world. Which it would appear to.

As we still have french bank accounts I want all this in writing and sorting out before we have to do our next declaration. I do not want any disputes what so ever, so I do not want them emptying our french accounts or putting them in debit, which I know that they do when the mood takes them and leaving us with a Banque de France problem.

We already have what I consider a grave problem which I will post about later today.

[Will]

If you feel your local tax office in France is mistaken, you can refer to the conciliateur fiscal for your département. See here (again, you have to follow the links as per SD's post above).

[idun]

I suppose that that would be something else we could do and maybe I should be contacting them about, well my next post!

[Patf]

Having re-read this thread, I think I have probably missed the boat with the comment I was going to make, nevertheless will rush in where angels fear to tread:

The retirement pensions in France aren't exactly comparable with the UK OAP (which is taxed in the country of residence.)

They are more like UK occupational pensions (which are taxed in the country of origin.)

So perhaps the french fisc are right and HMRC wrong?

[idun]

I know little of british pensions. We were in our twenties when we left. So do not know how french pensions compare to occupational pensions in the UK.

[Will]

I think you will find that under the terms of the France/UK double taxation agreement the only occupational pensions that are taxed in the country of origin are public service pensions. Others are taxed in the country of residence.