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Tax query - pension lump sum


martyng
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Trying to fill in the various forms for the first time - we moved here last July 14th following retirement, but on the 30/31st of July I got my (forces) pension lump sum and also my last month's salary. Do I need to declare these particular items on the 2047/2042 just because they came into my (UK) bank account after we became resident here?
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[quote user="martyng"]Trying to fill in the various forms for the first time - we moved here last July 14th following retirement, but on the 30/31st of July I got my (forces) pension lump sum and also my last month's salary. Do I need to declare these particular items on the 2047/2042 just because they came into my (UK) bank account after we became resident here?[/quote]

Hi,

      Have you formally registered a date of leaving the UK to take up residence in France on form P85, or form" France individual"?( In my opinion the money you received was due on your last day of employment ie. before you came to France, the date it entered your account being incidental). However, if this was not the case then I suggest

 you take advantage of the fact that you can be here as a tourist for 3 months , to move your ("official") date of change of residence to ,say, 1 August.

   If you have registered your move,and were you to declare this money, then if your total income for the period 15 July to 31 Dec 2009, is less than about 18000 (including the lump sum )you will pay little or no tax. If it is a lot more , you can declare on 2042 at boxOXX" revenus exceptionnels et differés ", which has them treated in a special way to avoid unfairness,------- or , as an innocent foreigner , unversed in the french tax system you could omit to declare the lump sum altogether and see what happens (my bet is-nothing)

     There is are special tax treatments for "rupture du contrat" and "departe en retraite", but there are so many versions, none of which seems to exactly fit, that I would only get into discussing them if none of the above work.

 

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Having personally recently taken a lump sum as part of converting a pension pot into a QROPS I have to say that it's all a bit of a grey area, if for no other reason than that the notion of tax free anything really doesn't sit well with the French system.

This issue must have affected many so it's surprising we don't see more posts about it.

To anyone who has taken their lump sum since being here, I'm sure we'd be interested to hear from you.

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Anton I think you know better than that. 183 days is one factor in determining residency however if you moved with the intent of living here you became resident on day 1.

Tax free lump sums are definitely a very grey area:

http://www.frenchentree.com/retiring-to-france/displayarticle.asp?id=30433

http://france.angloinfo.com/countries/france/pensions_uk.asp

http://www.livingfrance.com/expert-advice-finance-tax-tax-how-pensions-are-affected-by-french-tax-laws--5046

http://france.assetz.co.uk/french-tax-taxation-guide-living-in-france.htm

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As the lump sum is part of a military pension you will not be taxed on it in France in any case. Military pensions are taxed in the UK under the dual tax agreement. As the lump sum comes under UK tax and is not taxable in the UK (mine was not) there will be no tax to pay.

As to the declaration of this sum on a French tax return, that has to be your decision. I know what I would do! Before anyone jumps down my throat, I declare my RAF pension on my French tax return every year.

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[quote user="Bob T"]As the lump sum is part of a military pension you will not be taxed on it in France in any case. Military pensions are taxed in the UK under the dual tax agreement. As the lump sum comes under UK tax and is not taxable in the UK (mine was not) there will be no tax to pay.

As to the declaration of this sum on a French tax return, that has to be your decision. I know what I would do! Before anyone jumps down my throat, I declare my RAF pension on my French tax return every year.

[/quote]

Hi,

 OOOPS! I really should have spotted that!Bob T is absolutely correct.You are supposed to declare your UK taxed government pension, although it cannot be taxed here--it is used to calculate your tax rate for other income which may be taxable here. I would certainly not declare the lump sum, and if it were me I would not make a declaration at all this year . Start with a full year's declaration in 2011, and ask then on the forum how to complete it.  

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Many thanks to parsnips, anOther, Bob T et al for their contributions. All very worthy replies and I will take them on board when I come to fill in the forms. The RAF pension was certainly going on - I am aware that although it is a UK govt pension I still have to declare it (and I have a local govt one as well!). BoB T - we will have to meet sometime and bore ourselves silly with RAF stories - I live just down the road from you.
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[quote user="AnOther"]Anton I think you know better than that. 183 days is one factor in determining residency however if you moved with the intent of living here you became resident on day 1.

Tax free lump sums are definitely a very grey area:

http://www.frenchentree.com/retiring-to-france/displayarticle.asp?id=30433

http://france.angloinfo.com/countries/france/pensions_uk.asp

http://www.livingfrance.com/expert-advice-finance-tax-tax-how-pensions-are-affected-by-french-tax-laws--5046

http://france.assetz.co.uk/french-tax-taxation-guide-living-in-france.htm
[/quote]

Residence is a question of fact in France. I am not going to banter about this but my reading of the legislaton is that your Worldwide assets can be assesed if the French authorities deem you to be resident if your centre of fiscal interests are in France but they go after the sharks not the minnows . However there are a probably one hundred wealthy French people living in Switzerland for every wealthy citizen of the UK living there.

The only English Language text book on French taxation which I have paid serious money for agrees the situation, on tax free lump sums, is confused but recommends having them paid before you move to France.

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