cost comparison - CMU - cotisations - PHI

[chessfou]

I have done a fairly thorough breakdown of our comparative costs under the three different schemes. All calculations are for two people (my wife and I, late 50s).  The most difficult of the three to calculate was the PHI, not least because  many (eg April) won't even quote if you have an existing condition. It looks like AMI might take those with existing conditions, so I have assumed that they would take us but I have bumped up their middle (confort) tarif by the current annual cost of our medications.

The figures are expressed as % of what we were expecting to pay p.a. once our E106 runs out in January - 8% of income (CMU-B) + 11% social charges + mutuelle top-up. That lot being "100%". Surprisingly, both the alternatives are cheaper; most surprisingly the self-employment route. Self-employment cost is based on all cotisations + 11% social charges + mutuelle top-up (and, of course, the cotisations include other things as well, not least a potential pittance of a pension but every little helps). Admittedly, "active" income will be small in comparison with our pension incomes and someone with a much larger income from self-employment would find that route by far the most expensive of the three.

CMU-B: 100%

self-employment: 90%

PHI: 91%

So, for us at least, not a huge difference in cost but an apparent "no brainer" (as they say)  when it comes to a choice.

[caramac]

Thankyou Chessfou that's really interesting.

I've been looking at the "active" approach to the present situation myself, but have been having real problems trying to get a handle on the levels of cotisations for different types of activity - would you be able to elaborate a little on the level of costs and for which "regime"?

[cooperlola]

Chessfou, the 11% social charges on any income from abroad would still apply though, even if you had additional income from your employment here, wouldn't they?

[Deimos]

I think so much depends on you income and the sort of costs for your PHI (i.e. age, health risks, cover required, dependants, etc.).

Then we come to the "how many in different incomes bracket" question - raised before and a lot of disagreement and nobody (myself included) knows except the French authorities.

I think the cost aspect would not present a strong argument to the various officials (MEPs, etc.).  Things like "many will not have adequate income to afford PHI" whilst true and significant for those people, will probably not raise much sympathy with many MEPs.

My own opinion is that in the short term many will not be radically affected financially - but that is based on my assumptions about people moving to France and their income sources.  Either way I think cover obtainable, chronic and existing conditions and EU residence rules are the stronger points to gain MEP support.

Ian

[chessfou]

caramac,

It does depend (a bit) on what you would be registering as (in my case "Prof.Lib."). However, you can play around with the URSSAF calculator to get an idea of cotisations:

http://www.urssaf.fr/profil/independants/services/calculer/acces_direct_01.html

If your expected turnover is low, make sure you check for the average over 3 years (you will see that your "overpaid" cotisations start to be repaid, although as from Jan next year it should, in general, be possible to pay only what is due on your expected turnover rather than the present "forfaitaire" system, thus avoiding any overpayment in the first place and that may be a great deal less than the calculator shows).

You can also use the following (very, very approximate) figures to calculate the cotisations due:

13% allocation familiale, CSG, CRDS;

13% assurance maladie;

10% retraite, invalidité, décès

===

35-36% but because of the complex calculations, try using 30% as an overall figure.

cooperlola,

Yes, of course, 11% social charges applied to all UK pension income under the CMU-B and self-employed calculations (not applicable, of course, to the PHI route, since then one would not be a charge on Sécu).

Deimos,

Of course, such figures depend upon all sorts of differences (and have nothing whatever to do with MEPs & lobbying) but I thought it would be enlightening to see some "real" figures (well, almost real since I have hidden them behind percentages). How else can anyone go about making a sensible decision on what to do? Especially those of us who have to do something in the next 4-5 weeks (our E106s run out at the beginning of January and I certainly wouldn't want to be trying to sort all the paperwork in the run-up to Christmas (whether it be the "self-employed," PHI or chuck in the towel and emigrate option - I don't accept the "do nothing" option as a sensible one).

[Ron Avery]

"Yes, of course, 11% social charges applied to all UK pension income under the CMU-B and self-employed calculations (not applicable, of course, to the PHI route, since then one would not be a charge on Sécu)"

Don't see how 11% social charges which do not apply to any UK pensions are part of this calculation at all.  You are confusing the 11% social charges paid on ALL UNEARNED income ( PHI held or not) with the 0.5% CRDS payable on total income (if you do not have an E form) and also the 8% of RFR charge for CMU base.

[chessfou]

No, no confusion on my part (E&OE) as far as I know.

If you have an E106, you are not in charge of French system and so you don't pay 11% social charges on UK pensions.

If you don't have an E106 and you are in charge of French system (i.e. CMU-B or self-employed - in my example - or, indeed, employed) then UK pensions are subject to the 11% social charge.

If you don't have an E106 and you are not in charge of French system (PHI) then the 11% social charge should not apply to UK pensions (as is the case when you move on to an E121).

[Ron Avery]

Sorry Cheesfou but you are totally confused, there is no such thing as 11% social charges on UK pensions. If you have been paying it you shouldn't be.

What you are referring to is the 0.5% CRDS social charge levied on total income which is not payable if you have an E121 or 106.

11% social charges CSG etc are only payable on UNEARNED income such as rents and savings interest,  If you don't believe me do a search on social charges or CRDS, its all there.

[chessfou]

Here you go, quick search reveals SD's post:

[quote]

Payments towards the 'social fund shortfall' etc, are called the

contributions sociales (or 'social charge').  They normally amount to

11% of all earned and unearned income with no lower threshold, ie from

the first euro.

The 8% you mention is the contribution made towards state heathcare

cover (CMU).  It's actually 8% of your total taxable income less

allowances, over an approx 8,000€ threshold.

You are exempt from the 11% social charge on your UK earned income

and pensions if you are not 'a la charge' of the French state heathcare

insurance system, ie if you have an E106 or E121 form and therefore you

don't pay the 8% CMU contribution.  If you are paying the 8% CMU

contribution, then the 11% social charge applies to your UK earnings

and pension.

If you are currently paying the 8% CMU contribution, but losing this

entitlement, then your UK earnings and pension will in future be exempt

from the 11% social charge.

All unearned investment income attracts the 11% social charge regardless.[/quote]

http://www.completefrance.com/cs/forums/1064067/ShowPost.aspx

.

Well, that's me and SD confused then, albeit we are "equally" confused.

[Ron Avery]

Chesfou I can see your reason for confusion as SD also wrote this

"You do not pay any social charges with your income tax - your tax avis does not include them.  They are all billed separately - that's what the brown Avis d'imposition Contributions Sociales is for - and they are payable later in the year than your income tax.

This is how your total income is split for the calculation:

Foreign earnings and pensions attract CRDS at 0,5% - except for holders of E-forms or those who will be subscribing to private healthcare insurance under the new ruling.

All unearned income attracts CSG at 8,2%, CRDS at 0,5% and PS at 2,3% = 11%.

The brown avis also shows the amount of CSG which is deductable from your next years tax declaration". 

 Over to SD I think, IMO you need to substitute 0.5% for 11% in most of SD's post.  I know which version I think is correct and its the one pasted above!

[cooperlola]

Well, Ron, your analysis was what I thought was the correct one, until I saw SD's post - and given his history on here I am rarely inclined to doubt him.  As I have yet to do my first return since coming off my E106, I'm don't know for sure as it hasn't affected me yet.  But I really would like to know as obviously it could seriously affect the difference, for some people anyway, between the cost of swapping state for private healthcare - a subject close to my heart at the mo'!

[Sunday Driver]

The copy and paste information in Ron's last post is correct.

The earlier link he posted was my response to a query by another member who was confused over the 11% social charge and the 8% CMU charge.  In that reply, I decided to keep things simple and (hopefully) understandable by referring to the social charge as the "11% social charge" and the CMU charge as the "8% CMU contribution".  I did not see the value in complicating things by introducing the various strata values of the social charge.

Apologies if I've unwittingly caused further confusion.

 

  

[cooperlola]

Thanks S/D, I thought for a horrible moment that I'd owe 11% of my pension for the year I was affiliated to the CMU - on top of the 8%.  And it would have made a pretty substantial dent in the French exchequer if all the people on occupational pensions weren't contribuing that sort of amount to the CSG once they went private.  Although of course, those living on investment income are going to be paying rather less tax, aren't they?

[Ron Avery]

Coops unless you are raking in a mint, the CRDS payment on income of 0.5% payable unless you have an E form is not a significant amount.  I donated mine towards filling the black hole in the French finances, as I was not aware as many were not at that time, that could opt out of paying it. One question this does raise however, is do you still have to pay this 0.5% with PHI or are you only exempt whilst another country is picking up up your tab. I think the answer is you do have to pay but thought I'd ask anyway.  I have also sent you a PM.

[cooperlola]

Nope, not a mint - I wish!

However, those living on say, rental income from a UK property, plus maybe some return on investments, would have to pay 11% as that is classified as "unearned" is it not?  For them, that might represent a fair sum - at least something towards the cost of private insurance, non?

[Ron Avery]

AFAIK They will still have to pay the social charges on rental income and savings interest etc after the CMU changes, the exemption that you get under an E form is ONLY from the 0.5% CRDS payable on total earnings.  CSG and the prelev social will still have to be paid on "unearned" income so nothing changes......... or does it?

[chessfou]

OK, now I am confused!

First there is the confusion between social contributions of 7.1%, 8% and 11%.

     CSG     CRDS     PS

1   6.6%     0.5%      0        Total 7.1%. UK pensions 7.1% (on 95% of gross); source: 7.4 & 7.6 of below quoted

2   7.5%     0.5%      0        Total 8%. employment/self employment 8% (on 100%?); source: "Profession Libérale" 6e ed, Jan 2007.

3   8.2%     0.5%      2.3%  Total 11% investments, rental, capital gains; source: 7.6 of below quoted ref.

Then there is the confusion over whether they are to be paid (or not) by those without an E-form.

Here follows a quote from:

http://www.french-property.com/guides/france/finance-taxation/taxation/social-security

[my bold, highlighting the "inactive" bit]

[quote]

7.4. 'Retired' Persons

If you become resident in France, and in receipt of a pension,

the rules that apply in relation to social security contributions will

depend on whether or not you have reached the official age of

retirement.

i. Retired Persons

Retired expats from within the EU reaching the official age of retirement are not liable for social security contributions, or the social welfare levy, on their state pension, government service, or private pension.

Neither will you pay health contributions, as you will be covered through E121 arrangements.

ii. Under Age of Retirement

If you are under the official age of retirement, and living on a government service or private pension, then you will pay the social welfare levy on 95% of your gross income, at the rate of 7.1%.

[/quote]

My opinion remains that they are payable unless you have an E-form (or, maybe, PHI).

Ron, SD,

If you are still certain that you are correct (that they are not payable), please can you point to any source(s).

[chessfou]

Bill Blevins also agrees on the 7.1% (x95%) levy on pensions (without E-form):

http://www.livingfrance.com/Editorial.aspx?brand=LVFOnline&category=LVFAdvice%20-%20tax&story=SPED03+Aug+2007+09%3a41%3a25%3a587&page=2741

[Ron Avery]

You and me both.  Well I'm not at retirement age and I have only ever paid social charges on my savings interest and not any on my pension. So I would dispute the statement about pension receivers (of UK pensions) below retirement age pay social charges on their pensions. Perhaps French early retirees continue to pay social charges, nobody I know does on their pension alone and nobody on here in 3 years has ever disputed the oft quoted statement that social charges are only payable on "unearned" income, maybe Les Lauriers can shed some light on this..

There is some fudging of the facts in both statements referred to, the social levy (CRDS)  is not payable if you have an E form, not because you are at retirement age although the two would normally go hand in hand.  Perhaps somebody who has actually paid social charges on a pension can confirm the opinions of the "experts" as its not my experience.

[Boiling a frog]

I have a Government pension but do not have any E forms and have never paid social charges .My understanding was that these remain taxable in the UK and were not the subject of Social charges in France

[Deimos]

[quote user="Ron Avery"]Coops unless you are raking in a mint, the CRDS payment on income of 0.5% payable unless you have an E form is not a significant amount.  I donated mine towards filling the black hole in the French finances, as I was not aware as many were not at that time, that could opt out of paying it. One question this does raise however, is do you still have to pay this 0.5% with PHI or are you only exempt whilst another country is picking up up your tab. I think the answer is you do have to pay but thought I'd ask anyway. [/quote]

There is also the emotional issue.  Some (not so much here) go on about "how you expect full state health cover yet have not contributed in France" (and they ignore the 8% CMU charge).  Anyway, I have not contributed to the massive French finances "black hole" (they had it well established before I arrived here - so I really don't see why I should contribute towards paying it off).  It is interesting that some might say "well you live here so you should contribute like everybody else" - but they why can't I join the CMU "like everybody else".  They cannot have it both ways.  Previously I would have adopted a similar attitude to Ron, but now, with the FR gov. current approach  I will be adopting a different attitude - I will be saving every penny I can and taking everything I can (legally).  I will thus be avoiding CRDS if allowed when I next complete a tax return.  Not worth going back over previous years though.

Ian

[Sunday Driver]

[quote user="chessfou"]

My opinion remains that they are payable unless you have an E-form (or, maybe, PHI).

Ron, SD,

If you are still certain that you are correct (that they are not payable), please can you point to any source(s).

[/quote]

The only definitive source is the French Tax office.

According to Tax guidance note 2041GG, the treatment of the social charge is as follows:

 

REVENUS DE SOURCE ÉTRANGÈRE SOUMIS EN FRANCE À L'IMPÔT SUR LE REVENU ET IMPOSABLES À LA CONTRIBUTION POUR LE REMBOURSEMENT DE LA DETTE SOCIALE (CRDS)

Les revenus d’activité et de remplacement de source étrangère sont assujettis à la CRDS dans les conditions et selon les mêmes modalités que les revenus du patrimoine, lorsque ces revenus sont mposables en France, en vertu de la convention fiscale applicable et dans la mesure où la personne physique est à la charge, à quelque titre que ce soit, d’un régime obligatoire français d’assurance maladie.

Il s’agit notamment des pensions de source étrangère.

Pour les personnes percevant des revenus d’activité ou de remplacement provenant d’un autre Etat membre de l’Union européenne ou de l’Espace économique européen ou de Suisse, la définition de personnes à la charge, à quelque titre que ce soit, d’un régime obligatoire d’assurance maladie est précisée par les règlements communautaires n°1408/71 et n°574/72.

Les revenus sont retenus pour leur montant avant application des déductions pour frais professionnels (déduction de 10 % ou des frais réels) ou de l’abattement de 10 % sur les pensions.

Les contribuables doivent porter au paragraphe 8, ligne TL de la déclaration n°2042 le montant brut de ces revenus déclarés par ailleurs aux cadres I et V de la déclaration n°2047.

Il est recommandé d'utiliser à cet effet le tableau n°VIII figurant à la dernière page de la déclaration n°2047.

 

So, if you are 'a la charge' of an obligatory health insurance scheme (ie, you are registered for CMU), then you must pay the social charge.  If you have an E-form, then you are 'a la charge' of the UK, so you do not pay the social charge.  Similarly, if you have PHI, then you are 'a la charge' of yourself, so no charge to pay.

 

[chessfou]

SD,

The trouble is that the text you have dug up refers only to the CRDS.

The more important bit is the CSG.

I will have a rummage around www.impots.gouv.fr but don't you think it would be surprising if both Blevins and whoever wrote the French-Property guide had got this so outstandingly (and identically) wrong?

[chessfou]

OK, here's a start (124):

Précis de Fiscalité :

PF/LI/1°P/T3/C6 (updated 1 Sep 2007):

A. CONTRIBUTION SOCIALE GÉNÉRALISÉE (CSG)

...

...

124

1. Contribution sociale sur les revenus d'activité et les revenus de remplacement

(Code de la sécurité sociale, art. L. 136-1, L. 136-2, L. 136-3, L.

136-4, L. 136-5 et L. 136-8 ; Loi de financement de la sécurité

sociale, art. 10, 11 et 20).

a. Sont assujettis :

•

les personnes physiques qui sont à la fois considérées comme

domiciliées en France pour l'établissement de l'impôt sur le revenu et

à la charge, à quelque titre que ce soit, d'un régime obligataire

français d'assurance maladie ;

[NB: "revenus de remplacement"  generally mean pensions and such-like]

However, I can see no sign of a 7.1% figure.

Right now, though, my head hurts, so I shall go and open the bottle of Chablis which is to accompany tonight's baked pasta with smoked salmon.

[cooperlola]

So (and please, yes or no only) - people with private health insurance will not be liable to either charge - correct?

I am composing a letter to French MPs and MEPs, so this could be a good point to make if it's going to hit the French state wallet.