Leaving France for UK - tax

[Alex16]

I worked in France for 4 years until November

2009, when I was made redundant and moved back to the UK. In February 2010 I

will receive one final settlement payment from my former employer (this relates

to a profit sharing scheme, and my accumulated holidays), in total it’s

equivalent to about 3 months of salary.

My question is: do I need to pay French

tax and social security over this payment, even though I no longer live there?

Or maybe UK tax, or no tax at all?

I had a look on the web but could not find a

precise answer… any help is therefore much appreciated !

[parsnips]

[quote user="Alex16"]

I worked in France for 4 years until November

2009, when I was made redundant and moved back to the UK. In February 2010 I

will receive one final settlement payment from my former employer (this relates

to a profit sharing scheme, and my accumulated holidays), in total it’s

equivalent to about 3 months of salary.

My question is: do I need to pay French

tax and social security over this payment, even though I no longer live there?

Or maybe UK tax, or no tax at all?

I had a look on the web but could not find a

precise answer… any help is therefore much appreciated !

[/quote]

Hi,

    You should declare this in France and in the UK ; the UK should either not tax it or give an allowance for any french tax paid. I suggest you ask HMRC.

[Mikep]

I'm not so sure about this. Surely if you moved back to the UK in November 2009, you will not be resident in France during the 2010 tax year, therefore a payment in February 2010 should not be taxable in France - provided you have given all the necessary notifications. The payment should be taxable in the UK, but if it's your only income in the UK tax year (to April 2010), there may be little or nothing to pay - remember you get a full year's personal allowance for that year.

You will presumably receive your "Declaration des Revenus" from the  French tax people in March 2010 for all income received in 2009, and you will need to make sure when you return it that they are informed of your November 2009 departure date. If they don't send it, I suggest that you contact them and ask for it - you may be due a refund. If your previous employer deducts tax from the payment in February 2010, you may need to reclaim it after the end of that tax year in March 2011, but should have no liability then in France for income tax or social contributions.

You will probably have to complete the appropriate form (Form France - Individual / Formulaire France - Particulier) and send it via the UK Tax people to your former French Tax office to be released from future french tax hassle.

I suggest that you don't just assume you're not liable, and therefore decide not to return the forms. You will need to jump through a few hoops to ensure a clean departure. Good luck!

By the way, I suggest that you save all your documentation carefully - you will need it when you come up to retirement to claim the appropriate years' credits for pension contributions. I'm just doing that from years 1974-6.

[Alex16]

Thanks for this Mikep - yes, it's worth the effort to reclaim this...For the social security charges that I paid, is it also the tax office that I need to contact, or is it some other organisation (CPAM perhaps)?

[Mikep]

I believe it's the Tax Office for Social contributions - normally your income tax is sorted earlier in the year (July last year for me) and social contributions later (September for me) based on the "revenu fiscal de reference" after any appropriate refunds have been given.

It's URSSAF rather than CPAM who collect your health contributions (as opposed to social contribs) - these used to be 8% of income. (I stopped paying them when we got cover on E121 form when my wife became entitled to her pension). Again, it's all keyed to your Income Tax return, so get that completed asap in the New Year.

[Sunday Driver]

[quote user="Alex16"]

I worked in France for 4 years until November 2009, when I was made redundant and moved back to the UK. In February 2010 I will receive one final settlement payment from my former employer (this relates to a profit sharing scheme, and my accumulated holidays), in total it’s equivalent to about 3 months of salary.

My question is: do I need to pay French tax and social security over this payment, even though I no longer live there? Or maybe UK tax, or no tax at all?

I had a look on the web but could not find a precise answer… any help is therefore much appreciated !

[/quote]

Refer to Parsnips' original advice.

Article 15 of the UK/France dual taxation treaty states that salaries, wages and other similar remuneration derived by a resident of a contracting state (ie, UK) shall be taxable only in that state (ie, UK) unless the employment is exercised in the other contracting state (ie, France).  If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other state (ie, France).