Savings and what is likely to be taxed

[French Frank]

Good morning all. Like your good selves me and my better half are keen to leave the rat race behind and move to France.

Our income is likely to be in the region of 12k per annum gained from bonds(if the rates improve).

What approach would be the best (legally) to avoid paying too much tax?

I understand if we are domiciled officially in France there is a 12% social charge. On how much of our income is this based?

Look forward to your ideas folks.

[Benjamin]

You pay 12.1% on all of the interest earned. In your case £1452 or the Euro equivalent. There are no allowances that you can offset.

[Albert the InfoGipsy]

If your total income is going to be about 12K (pounds or euros?) it will be extremely tight, even assuming that you own a house that doesn't need any work doing. As Benjamin says, you'll be stuck for 12.1% charges but the good news is that you should not be paying tax -- your allowances should cover you.

Have you considered the health insurance rules? As you haven't mentioned pensions then after a maximum of 2 - 2.5 years you'll need to have full private cover and even before that you would be sensible to have at least a basic top-up to your state health cover.

You should also factor in a possible drop in the value of the pound. Lots of people assumed that it would always be about €1.50 to the pound and when it dropped to near-parity it triggered a lot of returns to the UK.

[French Frank]

Thanks for the replies,

After 5 years can we join the state health system, and if so what percentage would we be covered for?

[Albert the InfoGipsy]

Under current rules you have a right to enter the French health system. I hesitate to say that the rules will be the same in 5 years from now! Standard reimbursement is 70%, but there are a few exceptions and things like specs and serious dentistry are only partially covered.

By the way, if you work for a living that gets you straight into the French system.

[French Frank]

Thanks for the info.

Working may be a problem although isn,t it possible to be an auto-entrepeneur and somehow get a foothold in the healthcare system?

[Albert the InfoGipsy]

It's perfectly feasible to get into the system as an autoentrepreneur (AE). It's what I've done. If you have any sort of marketable skill, even if it's only dog walking, you can register as an AE and get the same cover as a Frenchman. However, please don't think that you can register and then not trade, or declare just a few euros a year. At present this sort of thing is possible but many people expect the rules to be tightened.

Certain trades are not eligible for AE, or require formal qualifications or experience, so if you decide to go that route ask a few questions here.

[French Frank]

Thanks yet again,

If I set myself up as an AE is the healthcare benefits proportional to my income?

[Albert the InfoGipsy]

[quote user="French Frank"]

If I set myself up as an AE is the healthcare benefits proportional to my income?

[/quote]

Sorry, don't understand the question. If you qualify for healthcare in France then you get the same as anybody else.

[French Frank]

Just wondering if I only earned, say 5k per annum, would it still enable me and my spouse to have full healthcare.

With the AE system is there a minumum earning that is acceptable?

[velcorin]

There is no such thing as "full healthcare" in France. The state covers 70% of most things, you cover the rest, either from your own resources, or via a mutuelle insurance. The 70% coverage only refers to the official tariffs, most hospitals will charge considerably more, therefore you may get much less than 70% covered by the state, and you meet the rest. Then there's forfaits, dentistry, opitical, hospital accomodation, ambulances, tests, etc, etc........... It is absolutely nothing like the NHS. You many want to look at one of the French healthcare guides on the web. (Fortunately it doesn't effect me much, work fulltime, and a french wife, just costs a fortune!).

[French Frank]

Thanks again, Good Luck

[Aly]

Its worth saying that if you have a serious illness i.e. cancer, diabetes etc you will receive near enough  full cover

[Pixie Toadstool]

Our solicitor (Sean O'Connor) gave me some information which states:

"You only pay CSG , the CRDS, the prelevement social and the contribution additionnelle on your salary or business profits if you are not covered for Medicare from the UK.  Generally you will be covered for Medicare from the UK for the first two years after going to live in France and again from when you become of UK retirement age (60 for women and 65 for men)."

My husband and I are moving to France very soon and took this to mean that we don't pay the social charges for the first two years and then again when my husband becomes 65.  Have I misunderstood or have the rules changed since Sean O'Connor put together the information?  I saw him less than 2 months ago!

Thanks! Pix

[Will]

Pix

As I understand it, the 'medicare' (to use the US term favoured by your solicitor) for two years comes from your British S1(E106) form. The two years is an average length of validity - you may get a few more months, you may get less. It depends on when during the year you apply, and your NI contribution record. For example it is rare for self-employed people to be eligible for two years of cover. Once you reach UK state retirement age, you should be eligible for the S1(E121) form which will give you entry into the French health system.

Any gap between E106 expiry and E121 commencement has to be covered by private health assurance or employment until you have been full-time in France for five years, which also entitles you to join the French system.

CSG, CRDS and PS are not payable on overseas pension income, if you are covered by an E form, but they are payable on savings interest etc.

The E forms entitle you to the same level of health cover as any normal French resident, i.e. a nominal 70% reimbursement.

If you have salaried employment or business profits in France then your E106 is automatically invalidated, and your health cover comes from your contributions to the French health system, so I don't quite understand that bit of your solicitor's statement.

[woolybanana]

I think the poster has been told that you dont pay tax on pension whilst being covered by the E106, and reading the quoted text, that is certainly what could be implied.

[Pixie Toadstool]

Thanks Bill and Woolybanana,

I wasn't thinking about pension income in particular but we will have savings earning interest with any luck and I understood from what Sean O'Connor said that we wouldn't have to pay those social charges on interest earned in the first two years we are there and then again when my husband becomes 65. 

Do you think my solicitor is wrong? That's the important thing!

By the way we don't intend to work at all - that's right Bill we are going to be RETIRED!!!  HURRAHH!!

Thanks!  Pix

[Sunday Driver]

"You only pay CSG , the CRDS, the prelevement social and the contribution additionnelle on your salary or business profits if you are not covered for Medicare from the UK.  Generally you will be covered for Medicare from the UK for the first two years after going to live in France and again from when you become of UK retirement age (60 for women and 65 for men)."

Can't see any mention of tax on pension in the quote...[;-)]

 

[woolybanana]

"I must learn to read" ' rite out 1000 tymz!!

[Will]

Pix

This guide is pretty comprehensive, and generally accurate. It suggests that the CRDS etc is payable on investment income even if you have a E form, though it acknowledges that the pension situation can be a bit of a minefield. I think the statement from your solicitor is a bit ambiguous.

[Pixie Toadstool]

Hi Bill!

That is a very, very helpful link - thanks so much for posting it!

Judie said I just needed to ask you or her for advice rather than pay extortionate amounts to advisors.  However, we will of course employ an  accountant once we're over to ensure all is being completed correctly!

Hope to see you very soon!

Pix

[Sunday Driver]

You will find that making a tax declaration in France is pretty straightforward - check out the forum Tax FAQ for detailed guidance.  If your income consists of pensions and savings interest then it'd probably be a waste of money employing an accountant. 

 

[Keni]

Will - and others - just a thought, you are quoting retiring ages as the date when you becom retired as 60 for women and 65 for men - however, the rules have changed for many - for example a woman of 56 retiring to France now, has to fund or have coverage including E106 for 5 years and then normally you would be in the retired section, but for many women this changes for those born from 1950 to 1955 - those women are on an increasing retirement age scale of 61 to 65. This means surely that medical and social charges will be increasing year upon year for those in that bracket - so now 56 means you get your E121 retirement at 64 (born 1954) etc. This means you must allow for extra social payments and tax for those extra years!

[Will]

Chris, that's precisely why we have used the term 'state retirement age' rather than quoting specific figures. In fact if the present British government has its way the ages will probably change even more.

It's a point well worth bearing in mind of course, though it won't affect those due to retire imminently.

[gjp23]

Sorry, I'm a bit late to this thread but can recognise many of the comments made.  BUT . . . . the French tax regime is so very different to that of the UK that you MUST get professional advice, some of which you should get before you move over as you can put some things in place to your advantage before you come over (e.g. setting up an Assurance Vie before coming to France can mitigate certain tax liability).  You can try the usual suspects like Blevins Franks or Siddalls, although I've found a smaller company called Spectrum to be very helpful (they are registered in both France and UK).

Bonne chance..