Living, but doing nothing in France

[Linzi]

I am sure this subject has been covered many times before, but I can't find information exactly relevent to my intended situation - so apologies in advance to all the people yawning right now.  I do need a starting place and any help and information anyone will kindly give me.

I intend to buy a small home in France to live in all of the time.  I want to keep my home in the UK, renting it out and use the income to live on (alternatively eventually selling it and dumping the money in the UK bank for interest).  Sounds simple but I've hit a brick wall regarding contributions etc.

My bank accounts are all in UK and the rent would be paid into one of them.  I would just draw what I needed for my day to day living via card whenever.  As my income is 'unearned' - am I classed as a business in France?  Do I have to pay the £50 a week towards health contributions on this basis (as though I was running a small business).

I assumed I would pay tax at source on the money in the bank and hopefully continue to voluntarily pay NI to the UK, paying privately for any health care I might need.

I am 52 and 11 years of my UK retirement age.

I had also hoped to earn about £30/50 a week via E-bay whilst in France, although I could drop that idea if needs be (I am a spinner of wool and spinning teacher for fun mainly here).

Please - can someone work the miracle and tell me there is a way of leading an unencumbered life?

Very, very, many thanks - Linzi

[LesLauriers]

You will be a French tax resident and will therefore have to declare your worldwide income for taxation in France.

Given your circumstances you will probably pay less here than in the UK, and you will be legal!

[sue-J]

I'm in the same position. If you spend an afternoon browsing the finance section here I'm sure you'll find the answers. They seem to be:

If you pay tax on your income in the UK, you can't be taxed for it again in France, but you should declare it on your French tax return. I'm sure someone will be along in a while to clarify this. Your rental income in the UK is subject to tax as income, plus you'll pay tax on the savings interest paid by the UK bank.

My own thoughts are to maintain bank accounts in the UK, at the moment I pay voluntary N.I. contributions in the UK, so I'll maintain those as long as possible. In your case, if you have an income from rent in the UK it's probbly advisable to maintain that, and not try and sever all links with the uk. If you sell the house and stash the monoey in the bank it will be slowly eaten away by inflation, if you keep the house, you may see ( as long as the housing market remains reasonably bouyant) a better return from the investment in the long term.

As your are heading up towards 55 years old you may, if you have only a small income in the uk, be able to migrate to tax-free status in the uk at age 55, at which point the bank interest will become 'tax-free'.

But whatever you do, don't burn too many bridges, or rush into selling your UK house, as there are many ex-pats in Frnace and elsewhere for whom it didn't work, and feel trapped as they can no longer return to the UK and buy a house.

My two-euros? Keep the house in the short term - especially as it's generating an income.

[saddie]

You can't choose to pay tax where you wish otherwise we would all be taxed in the Isle of Man!

If you are a French resident you pay tax in France and income is income to the French authorities however gained. The only exceptions to this as far as I can see is those who receive pensions payed direct by the government eg police,teachers in which case it is taxed at source. You can continue to pay into the state pension scheme and they will be able to give you an estimate of what you might receive and the cost. You will have to join the French health system and pay -- see other posts on this forum for ideas about amount.

 

 

[Viv]

I am interested on the EBay point as this seems to have been skirted over in the replies and this is an area that I am interested in.

I have been advised previously on this forum that I would need to register as a business in France to have an ebay shop, I don't question the source that gave me this info, I just wonder how it is possible to circumvent it.

[Bobdude]

But don't forget you will still have your tax allowance to come off the rent you receive in the UK - if you are a couple and the property is in joint names, each of you has the allowance. Unless you are renting out a palace you are unlikely to be liable to UK tax on the rental income on one single property. We rent out our UK home, and have to submit a UK self assessment declaration because of this. The rental income has to be declared on our French declaration but is not taxable in France.

[Nick Trollope]

I can't see the point of voluntary NI contributions in the UK if you are living in France, as I am convinced they only count towards pension entitlements.

If you live in France, then you may be entitled to some medical cover - using an E106 (or whatever), but it won't be for very long. All the advice we have been given is that, if you want any medical cover in France, unless you are over retirement age, then you must contribute to the French system - as you surmise, this will cost you a minimum of £50/week. The service is excellent (as I found out today - different story!) & even if you are not covered, basically cheap. I certainly have not got out what I have put in, but you never know.

You cannot run any sort of business in France without being registered (apart from a couple, B&B's for one). Registering as a business will also register you in the system. If, however, you only earn £50/week, then your contributions can (and will) be deferred.

 

 

[Teamedup]

NickTrollope, I can see a great advantage in someone with only 11 years to their pension age continuing to pay voluntary contributions. What they need to do is get a pensions forecast and see how many years they have to pay to get a full pension and then continue paying.

We have always paid this.

[Dick Smith]

Absolutely, TU - Nick must be a lot younger not to be constantly thinking of his pension - I know I am!

[Debra]

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[Linzi]

Thanks for all your replies and messages - it still seems very conflicting; some are saying I need to pay health contributions in France and others seem to still keep the UK contributions going.

It may help to clarify that I am a single woman who (fortunately, and obviously I know you will say "you don't know what will happen in the future") has never needed particular health care - it is only the pension aspect that I am interested in, and only then because I have contributed all of my life and don't see why I should throw anything away.  I take the view that if anything serious did happen to me, then I wouldn't particularly want to be around anyway if I couldn't pay for myself, or still ride a motorbike!  Therefore, it goes against the grain to contribute £50 per week just on the off-chance.  I would rather have the money in my pocket and pay out for myself if necessary.

I can happily live on that £50; my investments taking care of everything else and keep capital for emergencies.  Surely there should be some way legally around this.  I will need to pay tax on the rental income anyway and also dividends, savings and the like - I am not trying to dodge that issue.  I just feel it seems so unfair when I am not asking the French government for anything whatsoever.

I am in Limoges for a few days in 2 weeks to see how I feel about the area.  In the meantime, I suppose I am still hoping that someone will say "you can do this . . ."!

Thank you all so much again

Linzi

[Debra]

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[Linzi]

[quote]I've answered below, to the best of my knowledge now from asking similar questions lately: some are saying I need to pay health contributions in France and others seem to still keep the UK contribu...[/quote]

Ah - Eureka Debra - I think you may have hit a chord!

This is the first time I have heard anyone mention a percentage, rather than a flat rate!  My £50 that I mentioned was what I thought was a minimum amount on a weekly basis (around £200 per month).

Therefore, it follows (provided I understand you correctly) that if I earn (after costs) say £500 in a month, then I only pay £40 for the whole month into the French contribution system?

If that is so, then it is music to my drooping ears!

Many thanks - Linzi

[Linzi]

[quote]I've answered below, to the best of my knowledge now from asking similar questions lately: some are saying I need to pay health contributions in France and others seem to still keep the UK contribu...[/quote]

Ah - Eureka Debra - I think you may have hit a chord!

This is the first time I have heard anyone mention a percentage, rather than a flat rate!  My £50 that I mentioned was what I thought was a minimum amount on a weekly basis (around £200 per month).

Therefore, it follows (provided I understand you correctly) that if I earn (after costs) say £500 in a month, then I only pay £40 for the whole month into the French contribution system?

If that is so, then it is music to my drooping ears!

Many thanks - Linzi

[Debra]

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[Debra]

as you surmise, this will cost you a minimum of £50/week.

Where does this minimum come from, Nick?  Is this if Linzi wanted to continue with her spinning stuff and would therefore be classed as a small business?  She did say she could let this go, so if she didn't do this and was just a resident with income from savings and rental of her UK house, wouldn't she then just pay the 8% plus top-up policy for healthcare (assuming this is compulsory along with the 8%)?

[Teamedup]

RE rental income in the UK when a french resident.

 

We had thought about buying somewhere in the UK to rent out a couple of years ago and I was told by various sources and I'm pretty sure that I contacted the tax office too at the time that we would be taxed in the UK on rental on Uk property. And in fact there was something about the tennant being able to deduct the tax due from the amount they paid us and they would forward it to the tax man.

It would have also required declaring in France along with the amount of tax we paid in the UK.

We didn't go into it any further.

 

If you end up running a business here, then your social charges will be high. There is no way round it and it is not as simple as just paying National Insurance. The social security system here has many different facets to it and all require paying. If you don't go for the business thing, ie do not start trading on e-bay, then on there is an allowance and then you will have to pay 8% on your income when your E106 has expired. I don't know what they would count as regards income in France an what you would be charged on.

 

Maybe you should talk to a french accountant about this.

 

It sounds like me that you need to contact the DWP in Newcastle and get a pension forecast too.

[Debra]

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[LesLauriers]

Debra, check out this site as I think it will clarify a lot of your questions:

http://www.frenchentree.com/fe-legal/DisplayArticle.asp?ID=3915

[Debra]

Thanks, leslauriers, already found it on this, and of course it makes sense now (tired after first day back to schooling the kids, is my only excuse)

http://www.direct.gov.uk/BritonsLivingAbroad/Money/MoneyArticles/fs/en?CONTENT_ID=4000107&chk=yThhza

of course income from anything in the UK is taxable in the UK, just as rental income from a French property is taxable in France.  Apologies to everyone for having a dipsy moment or three!!

[Debra]

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[Teamedup]

I never asked about our UK tax situation at the time. Everyone we spoke to knew that we were not residents in the UK. I would ofcourse have looked into it a little more if we had gone ahead with such a purchase.

Likely it would have been kif-kif for us as we would still have had to declare it in France and then we would have paid tax on it, even if we hadn't in the UK.

This 8% is for what exactly. On a french salary the stoppages, (there is no PAYE) are over 20%. And for someone who is running a business it is a lot higher still.  8% doesn't sound like a lot to me, especially as there is an initial allowance before that is paid.

I looked at the thread on the other board and someone said that they paid 1500 euros a year for their CMU. They haven't understood, the CMU is free. If they pay then it is not the CMU they are on. I wish they would close the loopholes mentioned. It seems fundamentally flawed, although it hasn't been in place that long, that someone can just move here and pay cash for a property and get free treatment, when french working people are having to pay high cotisations and their mutualists and cannot afford to buy anywhere. Les uns et les autres, and I wish that they would close this loophole.

 

EDIT, the CMU de base is free, that means completely free no mutualist to pay either. This person who says that they pay 1500 euros would have a revenue of at least  18750 euros, I take it that the 6000 odd thousand euros would be on top of that too that are the CMU allowance.

 

 

[Debra]

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[Teamedup]

If you aren't employed in France?

Well if you are a french resident and are working in France for a company in another country, then that is something else. And you could well have to open a 'branch' of that business in France. Panqur has posted about this recently as there seem to be variations as to how you can do this. Really needs discussing with an accountant. I don't think that the 8% thing would have anything to do with that at all. Many other organisations would want paying apart from health care and it could be, far more than 8%.

[LesLauriers]

Teamed up said

"EDIT, the CMU de base is free, that means completely free no mutualist to pay either"

If only you were correct TU!!!!!!!!!!!!!!

You clearly have little understanding of the system, the CMU base can be free, but not for everyone!

You pay 8% of your RFR after an allowance of 6965€for cover under CMU base. If you are paying for base you do not get complementaire.

For example a person whose E106 has expired and has yet to qualify for an E121, living on a company or government pension and or savings interest, will pay the 8%.

It is all explained on the government sites.