Tax Free Lump Sum - Taxed in France?

[Steph1]

I am currently looking at taking benefits from my personal pension, does anyone know if the Tax Free Lump Sum is taxable in France and if so at what level and also what level of tax will apply to the monthly pension payment?

Steph1

[Ron Avery]

Does anyone know if the Tax Free Lump Sum is taxable in France   Yes it is if you are resident in France when you receive it.

What level of tax will apply to this and the monthly pension payment?

Depends on how much you get, as in the UK, French tax rates are dependent on level of income, if you are single you will pay a lot of tax in France, but probably better off if married than in the UK.

[AnOther]

According to a recent article by Blevins-Franks it's not but that goes against everything everybody else says so it may be worth you contacting them.

Surely there must be someone here who has 1st hand experience of the situation ?

[cooperlola]

[quote user="ErnieY"]

Surely there must be someone here who has 1st hand experience of the situation ?

[/quote]Only in so far as I was advised by my accountant that my lump sum would be taxed here, so I took an enhanced pension instead.  My o/h took his lump sum as we were still in the UK at the time.  I took my pension in January '05 though, so things may have changed since, of course.  This is always the proviso.  But, ask a French accountant, for safety!

[Benjamin]

[quote user="ErnieY"]

Surely there must be someone here who has 1st hand experience of the situation ?

[/quote]

What's more likely is that there are people with first hand experience but for whatever reason they're keeping quiet.  [Www]

[Helen]

 A firm of Jersey accountants (who appear to be specialists)  also suggest that the French can't tax a lump sum now but that legislation maybe introduced to enable them to do so.

See http://pkfguernsey.com/latest/46.pdf (page 11)

 

[Ron Avery]

Tell you what Ernie, ask Blevins Frank to pay the tax on your lump sum if they are wrong.

The current treatment on this is as stated by PFK uncertain and most people do as PFK suggest and take it and bank it before moving to France.  I don't know how BF draw the conclusion that just because the French don't have tax free lump sums they cannot tax them, they don't have PEPS and ISAs either but the profits on them are taxable in France.

[Sunday Driver]

Blevins Frank's conclusion is quite correct because the proposed amendment covering lump sums under the DTT has not yet been enacted into tax law, so at the moment, they are not taxable. 

The risk is that if the amendment is introduced during the current tax year - and as a rectificative measure - then those who have taken the lump sum since 1 January may be caught out.  That risk was clearly spelt out in their article.

 

[Bugsy]

For those who haven't read it.

"Tax Free Lump Sum Tax free lump sums are not generally taxed in France, which is good news. There is no equivalent to this in the French pension system, and the French rules were vague. It was generally accepted (although not in writing) that foreign pension lump sums were not taxable by French tax inspectors, although different inspectors in different regions had been known to take different views.

However, there are rumours circulating regarding issue of a law which will allow the French authorities to tax foreign pension lump sums received by French resident taxpayers. If enacted, the text is unlikely to have a retrospective effect unless it forms part of a rectificative tax law. This is still just a rumour, and it is not known if, or when, such a law may come into force, and for the time being, if you take your pension lump sum whilst French tax resident, it is very unlikely to be subject to tax."

.

[AnOther]

So the dilemma is does one declare and hope for the best or stay schtum ?

With the potential sums involved even those of the highest rectitude might pause for thought.

[Benjamin]

Here is an extract from Bugbear's quote from the Blevins Franks article.

foreign pension lump sums were not taxable by French tax inspectors,

although different inspectors in different regions had been known to

take different views.

.........and herein lies the uncertainty.

[lacote0_0]

[quote user="Sunday Driver"]

Blevins Frank's conclusion is quite correct because the proposed amendment covering lump sums under the DTT has not yet been enacted into tax law, so at the moment, they are not taxable. 

[/quote]

Should be most grateful if you could point me to a source for this amendment.

[Iceni]

But how much of the lump sum might be taxable ? The documents that I have show amounts paid into the fund without indicating who paid them so could I pretend that I had paid in the whole amount and offset 25% of that input against the lump received ? What have others done ? 

John

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