Taxes

[Connie]

I receive a Civil Service Pension from the UK which I pay tax on, a small State Pension from which I am exempt from paying tax. Would it be beneficial to pay Tax on my Civil Service Pension in France or leave it as it is in Britain. I pay just under £9 a month. Any help would be appreceiated.

[Chrissie]

I thought that any UK government pension HAD to be taxed in the UK.  But I'm far from being an expert, so expect someone else to correct me!

Good luck

Chrissie

[Suandpete]

Both my husband and I receive government pensions and can confirm that there is an arrangement between France and the UK where all government pensions must be taxed in the country in which they were earned - so unfortunately (or fortunately) you do not have the choice.

 

Su

www.inchocks.com

[Redcap]

I need to refresh my memory here! I know I will be paying tax at source on my Police pension in UK which is fine as I din't think it will be as  much as what I would pay in French tax, (am I right?).  The only other income I will have will be interest from savings in UK societies, and will certainly be under the 4,262€ (about £2939) lower tax threshold (2003)where I believe no tax is payable on income below that.

So if I use form R105 to apply to have my savings interest paid gross of tax in UK, what tax will I pay on it in France? I've read about social charges of 10%, will that be the only tax or have I got it all totally wrong?  Perhaps if I'd been self employed I might have a better understanding of all this, trouble is all I've done through my working life is collect my payslip and leave it all to the finance office to sort out!!

Regards,

Bob

[Hereford]

It is not quite so simple as just looking at income liable for tax in France, as we discovered today when visiting the tax office for an explanation of our tax bill this year.

When you fill in your tax return in France you have to put in a box the amount of income that is to be taxed in the UK - e.g. govt pensions, rent.  Plus of course income taxable in France, OAP, interest (UK or France or elsewhere).

After allowances (various deductions) from the French taxable income they add remaining worldwide income. Then work out the tax due IF all was taxable in France. Then.... divide this answer by world income and multiply by that which is taxed in France to give tax payable. Plus of course the 10% social charges on interest.

So:        Worldwide income 22742

             Taxable in France 14164

Potential tax on 22742 = 1707

so: 1707 divided by 22742 multiplied by 14164 = 1063 and this is our tax bill. Plus 10% social charge later.

In our case we are paying more tax than we would in the UK (if 10% is incl)

Therefore even a small amount of French taxable income can attract some tax!

Hope this has not totally confused you!

Hereford.

 

 

[LesLauriers]

[quote]It is not quite so simple as just looking at income liable for tax in France, as we discovered today when visiting the tax office for an explanation of our tax bill this year. When you fill in your t...[/quote]

It is very difficult to comment given the scant information you have provided, but here goes: If I assume that you are a couple without children and are under 65 then I calculate that on a pension of 14164 and savings interest of 7540 (total 22704) the tax due (IF it was all taxed in France) would be 301€ plus 766€ social charges.

(Just recalculated this on the basis that if you are over 65 the tax falls to 132€ !!!)

Update: Looking at this again it appears you are declaring a pension of 7540€ and other income of 14164€, in this case based upon a couple over 65 in France the tax would be 562€ so still much less than you have ben advised.)

Even if your French tax office took the view that all of your worldwide income was taxable as if it was unearned income the tax payable would only be 1233€ plus social charges.

 

My advice would be to go back and ask them to recalculate it for you I cannot see how they arrive at 1707 unless they are treating you as a single person.

My understanding is that they add your UK income to your French taxable income to establish the rate of tax payable on your French income.

I would be interested to know how you get on and for the views of others in this situation, from my own experience I can say that I have found varying levels of knowledge amongst the staff in the tax offices and it can depend upon who you speak to! Good luck!

 

SORRY!!  Finally realised that you are talking Pounds not Euros !!!  My excuse is that we do not use them here!!  It,s about right dependent upon exchange rates.

Yours confused in France!

 

[LesLauriers]

[quote]I need to refresh my memory here! I know I will be paying tax at source on my Police pension in UK which is fine as I din't think it will be as much as what I would pay in French tax, (am I right?). ...[/quote]

It is possible, but unlikely, that French tax would be higher than your UK tax, it depends upon your family circumstances, in your case, if I am correct in assuming that you have at least 1 child, then I strongly believe that your tax would be lower in France. Sadly you are stuck with being taxed in the UK.

With regards to your UK savings, the French tax authorities should add this to your UK pension in order to calculate your tax payable. This will be in addition to the 10% social charges payable on your interest.

The actual tax you will pay is dependent upon the amount of pension you receive. In addition to income tax and social charges you may also be liable to pay health charges for the period between the expiry of your E106 and the start of your E121, unless you or your wife is already drawing UK old age pension and you are on an E121 already.

[Hereford]

Thanks Leslauriers!  We confused you, sorry. (We were talking euros)  The 22724 was world wide income after all French deductions, (10, 20% etc). Our UK income is rent not pension.

 

We have been able to check that the 1063 euros is correct. The reason our "tax" is higher in France is because of the 10% social charge which in our case is on 6025 of interest.  Our fault for having our income in that form..... The actual income tax is of course lower than it would be in the UK.

 

The difference is around 200 euros. We are a husband over 65 and a wife below 60.

 

We are not complaining - we enjoy life here in France and other things (council tax) are cheaper.

 

Hereford

[Redcap]

[quote]It is not quite so simple as just looking at income liable for tax in France, as we discovered today when visiting the tax office for an explanation of our tax bill this year. When you fill in your t...[/quote]

<Hope this has not totally confused you!>

Yup, It has!!:

I think if I leave everything taxed in the UK, then I should have a nil tax bill in France, except 10% social charges. Am I correct that this 10% is not on my occupational pension but it is on savings interest?

Regards,

Bob

P.S I've edited, to say that I don't know how the above quote(in the box) got there!  I tried to put the quote between the arrows using the 'quote button' but it did'nt work!  Just to add more confusion !!

 

 

[Hereford]

Not necessarily, it will depend on income taxed in France as well as Uk.  The French take your total - worldwide income - to decide tax rate (i.e. as if all was taxed in France) and then apply that rate to income taxable in france. Everything except govt/teachers/civil serv pensions (i.e. paid by a govt. dept) and income from property will be taxable in France. Even interest arising in the Uk.

For instance if taxable in France is 10,000 euros (after allowances) and worldwide income (after same allowances) is 20,000 euros the tax payable will be half of the figure shown on the "bareme" (i.e. chart showing tax on any given level of income). Plus of course the 10% social charge on interest. All figures in France net of "allowances". It does not affect us so we are not sure where tax paid in UK on pension comes into calculation, if at all - perhaps someone else can comment? Interest is always taxable in France (if you live there!!) even if paid and taxed in UK. UK authorites will arrange repayment of tax deducted.

Sorry this is really confusing to explain here and impossible to work out without using one's own actual figures. I think you should go to the local tax office and ask them, they do seem quite helpful.

 

Hereford

[Boiling a frog]

[quote]<Hope this has not totally confused you!> Yup, It has!!: I think if I leave everything taxed in the UK, then I should have a nil tax bill in France, except 10% social charges. Am I correct t...[/quote]

Re your police pension this is taxable in the UK you do not have a choice.

When you file your tax return in France you complete the very last box on the back page showing your UK pension income (Net) and also give the tax authorities a covering letter explaining why you are taxed in the UK

Probably better to give them a copy of your P60 also

You do not pay 10% on this pension

With regard to any other income ie interest on savings you are quite  right apply for the interest to be paid gross in the UK declaire it on your French tax return and you will be taxed on it including a 10% social charge

Better to file a French tax return at the first oppertunity as this will determine how much you will pay for medical cover when your E106 runs out