VERY IMPORTANT INFORMATION RE 2011 DECLARATIONS

[cooperlola]

I have no reason to doubt Sunday, I'm sure he's right.

It will be interesting to see your calculations, Gardian.

In the meantime, all I really want to know myself is whether everybody believes that the tax FAQ is correct, or should be changed?

[Gardian]

OK, HIGNFY over.[:)]

The first thing to be clear about is that arriving at the Taux Effectif is crucial in all this. From there, it's simply a case of applying the tax bands and any decotements (for a low assessment or charitable donations etc).  How you get to the TE is another thing.[:-))]

Just 3 very simple examples, which by definition are generalisations. In each case, I have assumed Partner 2 (P2) to be in receipt of roughly £6k of State Pension and £6 of Occupational Pension, taxable in the UK. Let's say €14k gross, €1.4k tax paid in the UK. (Please don't pick me up on the detail of exchange rates & tax due - they're rough numbers!)

So, with P1 receiving non-taxable in the UK pension totals of €16k, €20k, & €24k in Cases 1, 2 & 3 respectively, the numbers for old system / new system are:

Case 1:   €337 / €442

Case 2:   €876 / €944

Case 3:   €1268 / €1332 

I've taken no account of CSG payments or any other income sources in these examples: they're just that - examples. The point of the above is to demonstrate that there is some effect, but it's quite small at those levels of income, which would probably apply to most people. The effect will be greater at higher levels of income (statement of the blooming obvious!).

[suej]

 Thank you Gardian, that's interesting and I can see where our incomes fit into the bands you give as examples.   It's what I suspected but I couldn't get my head around the arithmetic...

I know it's not a vast difference but I'm not exactly jumping for joy at the thought of losing  100 euros just because they've changed the method of doing the sums - and I know I can't  blame France,  this is the result of negotiated changes ............grrrrrrrrr  .

Here , we received the old forms and I've completed them as per old guidelines- we'll see what happens

Thanks for doing the sums.

[allanb]

Gardian, sorry, but that's not what the taux effectif is.

The TE is the average rate of French tax that you would pay on your world-wide income if all of it was taxable in France, taking into account all the allowances and lower rate bands that would apply if it was all from French sources.  By definition, therefore, the TE is not affected by tax treaties. 

The tax bands, etc, are not applied to your French taxable income.  They have already been taken into account in calculating the TE.  The tax you pay in France (subject to certain deductions, like charitable donations and perhaps the décôte for small amounts) is your French taxable income multiplied by the TE.

What is affected by tax treaties is the amount of your income

that is actually taxable in France, and the method of giving relief (if

any) from foreign tax.  I think that's what has been thrown into confusion by the infamous Parthenay letter.

[idun]

Please don't think that changes since Sarkozy has been President only affect this and a 100€ is little really.  He has cost us, well I reckon about 15000€ to be honest.

He has done some very very mean and nasty things and we just got caught up in the cross fire, as these changes were aimed at the french themselves in the past few years. He had to pay for his presidential aircraft by robbing the poor nez pah![:@]

[parsnips]

Hi,

     The taux effectif still exists BUT it is no longer used to avoid double taxation of UK rents and govt. pensions. The notes to secVI form 2047 (where we are now told to declare govt. pensions) state "revenus imposables de source étranger ouvrant droit à un credit d'impot égal au montant de l'impot français correspondant à ces revenus (VOIR PAGE 3 DE LA NOTICE EXPLICATIVE)". The notes on page 3 (read from top of page to the line before 2) explain how this system , which is specified in the "new" DTT , works and lists the countries to which it applies --this is the only place where the forms do not tally with the arrangements under the new DTT as the UK is not (yet) listed. This is not surprising because as we see from the shambolic actions of the tax offices  they only seem to have become aware of the change about a month ago.

     Next year , they may (or not) put this right. But this system is not the "taux effectif", which is specified in note 2).

     The same notes also refer to rents, but it seems that the tax offices (at least that at Parthenay) anticipates such confusion as to which french tax regime to apply that they have invited those concerned to attend at their tax offices.

[suej]

 

You are right Idun, the changes Sarkozy has made do affect everyone in a variety of ways- and some of them seem sneaky little maybe-no-one- will- notice-this affairs too.. 

I agree that 100 euros is not a negligible sum, particularly when added to all the other rises in cost-of-living/taxes we are experiencing and every increase hits us and our modest incomes.

On the other hand, I do think that  my husband and I are not really in a position to complain too much. No-one forced us to make the decision to come and live in France, that we did of our own free will and with our eyes open and so when the system( be it French,British or Franglais) works against us all we can do really is take it and get on with life and with enjoying all the positive and lovely advantages that we've found here  -  and exercise the grey cells in trying to work out cheaper and cheaper ways of doing everything!!

[Gardener]

Is the 2011 Connexion Tax Guide up to date with these changes?

[Patf]

I bought the May edition of the Connexion yesterday and the new rules aren't mentioned in there(as far as I can see.)

They advertise the Tax Guide already  on sale for 9.50€, so it was probably prepared for print before everyone woke up to the changes.

[parsnips]

[quote user="Patf"]I bought the May edition of the Connexion yesterday and the new rules aren't mentioned in there(as far as I can see.)

They advertise the Tax Guide already  on sale for 9.50€, so it was probably prepared for print before everyone woke up to the changes.

[/quote]

Hi,

  Has anyone got the Guide ? Does it cover the changes ? If not ,advise all your friends not to waste 9.50€!     Would disappointed customers be justified in demanding their money back?

[Gardener]

I have two advert emails from the connexion since this started and there doesn't appear to be anything alerting people to these big changes. Fail

[JohnRoss]

How close do you think the following method would be using the on-line tax calculator at http://www3.finances.gouv.fr/calcul_impot/2011/simplifie/index.htm

Fill in the form using the sum of all pensions including UK govt pension like teachers etc in 1AS and 1BS for the xyl. Put in all the other bits and pieces but nothing in either TI or TK as the calculator cannot handle that. Run the program and note the tax to be paid. Take the figure of Revenu net imposable ou déficit à reporter and subtract that part of the pensions declared that was the UK govt pension to give what would have been called all French gross assessable income under the old system. This figure would then be divided by the Revenu net imposable ou déficit à reporter or total world assessable income figure and the tax to be paid multiplied by this result giving a close approximation of the tax to be asked for.

I have tried it on previous years and the results have been quite close to what they actually asked for. ..................JR

[allanb]

[quote user="parsnips"]Has anyone got the Guide ? Does it cover the changes ? If not, advise all your friends not to waste 9.50€!     Would disappointed customers be justified in demanding their money back?[/quote]

I haven't seen the Guide, but I wouldn't be surprised to find something like "correct at the time of going to press" in the small print.

To be fair, I don't know whether anybody has enough information to report the supposed changes as a fact.  What do we have?  Two copies of a bad translation of a very unclear letter that has apparently been sent out by two local tax offices, and some notes apparently added to the declaration forms sent to one or two people.  Nothing from the national tax office, as far as I know.

If I were the editor of the Guide I'm not sure I would announce anything on that basis.

[JohnRoss]

Received this morning from the Parthenay tax office in response to my questions and my sending them a copy of the letter shown earlier in this thread.

Effectivement, comme la lettre que vous avez reçu le précise, la Convention entre la France et la Grande-Bretagne a été modifié avec application au 1er Janvier 2010.

De ce fait, vous devez inscrire vos pensions d'Etat ligne 1AS (et 1BS pour les pensions de Madame) et les reporter cadre VI de la déclaration 2047 puis ligne 8TK de la déclaration 2042.

La section VII de la déclaration 2047 ne concerne plus les ressortissants britanniques.

Translation: Indeed, as the letter you received states, the Convention between France and Great Britain has been modified to apply from 1 January 2010. Therefore, you must enter your state pension line 1AS (1BS and for pensions of Madame) and see part VI of the 2047 declaration and the declaration line 8TK 2042. Section VII of the 2047 declaration no longer applies to British citizens.

Comments?................JR

[parsnips]

[quote user="JohnRoss"]Received this morning from the Parthenay tax office in response to my questions and my sending them a copy of the letter shown earlier in this thread.

Effectivement, comme la lettre que vous avez reçu le précise, la Convention entre la France et la Grande-Bretagne a été modifié avec application au 1er Janvier 2010.

De ce fait, vous devez inscrire vos pensions d'Etat ligne 1AS (et 1BS pour les pensions de Madame) et les reporter cadre VI de la déclaration 2047 puis ligne 8TK de la déclaration 2042.

La section VII de la déclaration 2047 ne concerne plus les ressortissants britanniques.

Translation: Indeed, as the letter you received states, the Convention between France and Great Britain has been modified to apply from 1 January 2010. Therefore, you must enter your state pension line 1AS (1BS and for pensions of Madame) and see part VI of the 2047 declaration and the declaration line 8TK 2042. Section VII of the 2047 declaration no longer applies to British citizens.

Comments?................JR[/quote]

Hi,

     Well , there you are then, further proof if proof needed. I don't think anything is going to come direct to us nationally. I think nobody thought about this situation until the forms were in the post. The notes have not been amended (see page 2 of the notes to 2047--UK is not included in the list of countries for tax credits on govt. pensions). The badly translated letters (different from different offices) are an attempt to shut the stable doo,r but the confusion horse has already bolted.

[allanb]

First comment: it doesn't really clarify anything unless they define what they mean by a pension d'état.  That would appear to include the UK state retirement pension, which as far as I know is still taxable only in France, and evidently doesn't belong in either section VI or section VII, only in section I.

Second comment: maybe this doesn't affect many people, but the final sentence is badly stated; nationality has nothing to do with it.  Section VII applies to anyone who has income which is not taxable in France because of a treaty; some British residents in France have income from countries other than the UK.  And not all expatriates with UK income are British.  

[cooperlola]

Quite, Allan.  This bit : "La section VII de la déclaration 2047 ne concerne plus les ressortissants britanniques" is total b*l*x.  This is why it can be so misguided to just take what the tax office says as gospel, and why the suggestion that if you need help you should ask them is a bit dubious, imo.

If I were in the position of having UK taxable income to declare, I'm afraid that I would just follow the French language instructions on the tax form (ie do what I've always done!) and let them sort it.  The whole thing is, after all, a bureacratic change (a swap from an allowance for tax already paid to a credit for it) so let them deal with it.  If they can't be bothered to change the written instructions on the original form - then that's their funeral, not yours.

[Boiling a frog]

Perhaps they were replying specifically to John Ross who is a Britanique ,presumably and who has a Government pension.

Under what circumstances can you envisage a British person completing Sec VII

[Boiling a frog]

What is a Pension détat

It is defined in the tax treaty ,I believe Sec 18 and 19

We do not need to concern ourselves with what the French consider a pension d,etat because the British receiving a pension from Britain abide by what the UK define as a Pension dÉtat or Government pension.

A State pension is NOT a Government pension, by definition

ARTICLE 18

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and

other similar remuneration paid in consideration of past employment to a

resident of a Contracting State shall be taxable only in that State.

ARTICLE 19

GOVERNMENT SERVICE

1. Salaries, wages and other similar remuneration, other than a

pension, paid by a Contracting State or a local authority thereof, or by a

statutory body of either, to an individual in respect of services rendered to that State, authority or statutory body shall be taxable only in that State.

However, such salaries, wages and other similar remuneration shall be

taxable only in the other Contracting State if the services are rendered in

that State and the individual is a resident and a national of that State without

being also a national of the first-mentioned State.

2. Pensions and other similar remuneration paid by, or out of funds

created by, a Contracting State or a local authority thereof, or, in the case of

France, a statutory body, to an individual in respect of services rendered to

that State, authority or statutory body shall be taxable only in that State.

However, such pension shall be taxable only in the other Contracting State

if the individual is a resident and a national of that State without being also

a national of the first-mentioned State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries,

wages and other similar remuneration and to pensions in respect of services

rendered in connection with a business carried on by a Contracting State or

a local authority thereof or by a statutory body of either.

4. Notwithstanding any other provision of this Convention:

(a) the pensions referred to in paragraph (4) of Article 81 of the French

tax code (code général des impôts) shall be exempt from United

Kingdom tax, regardless of the nationality of the pensioner, so long

as they are exempt from French tax;

(b) the pensions referred to in section 641(1)(a) to (g) of the Income

Tax (Earnings and Pensions) Act 2003 and benefits paid by reason

of illness or injury following the termination of service in the

armed forces or reserve forces referred to in section 641(1)(h) of

the Income Tax (Earnings and Pensions) Act 2003 and injury and

disablement pensions payable under any scheme made under the

Personal Injuries (Emergency Provisions) Act 1939 shall be exempt

from French tax, regardless of the nationality of the pensioner, so

long as they are exempt from United Kingdom tax. However,

paragraph 2 shall apply to such part of any income from those

pensions as is not exempted from United Kingdom tax.

[JohnRoss]

Ok well here is the email I sent to the Parthenay tax office:

 

Plusieurs personnes de nationalité britannique résidant en France ont reçu une lettre comme celle ci-dessous.

Est-ce à dire que d'une pension du gouvernement du Royaume-Uni doit maintenant être déclarées à la page 1 du formulaire 2047-K au titre des Pensions, Retraites, Rentes? (Cette pension n'etait pas imposable en France avant le nouvel accord.) De plus cette pension devrait maintenant être inclus dans la section VI du formulaire 2047-K et pas dans la section VII?

Doit cette pension du gouvernement du Royaume-Uni être incluse dans 1AS la page 3 de la forme 2042-K et aussi dans 8TK la page 4 et pas dans 8TI ?

 

(Pick holes in the French if you like languages were not my subject)

 

I then enclosed a copy of the letter in French shown earlier in this thread. You will note I referred to the pension as a government pension and not a State pension but you cannot blame the French for seeing both as state pensions. You will also note thet I mentioned that the government pension was not taxable in France prior to this new agreement. So to my mind I don't think that there was any doubt in the tax inspector's mind to what I was asking him. So I think I will add my teacher's pension to my old age pension and put the total in box 1AS (2042-K) and the teachers pension gross in VI (2047-K) and 8TK (2042-K) and see what happens! Earlier in this thread others have suggested that this is the way to go and I must on the evidence agree with them or should I ?.............JR

[Boiling a frog]

The French definition of a pension dÉtat for the purposes of the double taxation treaty is different from the UK definition.

If you receive a pension from the UK and live in France you go with the UK definition.

If you receive a pension from France and live in the UK you go with the French definition

Here is Article 19 Sec 2 in the French version

Les pensions et autres rémunérations similaires, payées par un Etat contractant ou l’une de

ses collectivités locales ou, dans le cas de la France, par une personne morale de droit public,

soit directement, soit par prélèvement sur des fonds qu’ils ont constitués, à une personne

physique au titre de services rendus à cet Etat, collectivité ou personne morale ne sont

imposables que dans cet Etat. Toutefois, ces pensions ne sont imposables que dans l’autre Etat

contractant si la personne physique est un résident de cet Etat et en possède la nationalité sans

posséder en même temps la nationalité du premier Etat.

The UK version

Pensions and other similar remuneration paid by, or out of funds

created by, a Contracting State or a local authority thereof, or, in the case of

France, a statutory body, to an individual in respect of services rendered to

that State, authority or statutory body shall be taxable only in that State.

However, such pension shall be taxable only in the other Contracting State

if the individual is a resident and a national of that State without being also

a national of the first-mentioned State.

State (old age ) pension does not fall into the defenition of a Government pension so remains taxable in France

[JohnRoss]

And from this your conclusion for folk like me is?..........JR

[cooperlola]

Yes, BaF, I suppose when you take into account the fact that the response was aimed directly at JK, then maybe saying that VII can never apply to British nationals does simplify things.  However, a look at section 16 of the notes does seem to me to include other scenarios for, amongst other things,  people working for French companies in certain specific cases and industries in other countries - my point is that there's nothing to say that they might not be British - it's just too sweeping a statement, imho.

[suej]

 

 I suspect that yes, 'Government ' and 'State' are a bit ambiguous and interchageable when translated for/by the french tax system.. Depending on who you talk to in the tax office a Govenment Pension can be interpreted as government, ie civil service or teachers, pension OR equally, as a STATE pension .

When I'm trying to talk about it there I tend to labour the point  and refer to my teacher's pension  as 'une pension payée par le gouvernement suite à mon emploi dans l'Enseignement qui est toujours imposable en Grande Bretagne.'  My state old -age pension I refer to as 'pension de vieillesse du Securité Social britannique qui est imposable en France'  probably not perfect French  but it has at least twice clarified the difference.

I'm  with Cooperlola on this- they've sent me old-type forms and old-type instructions and I've completed them as they stand . If there is a problem with that the onus is on them to put it right and sort it ................and hopefully not dare to pretend it was my fault in the first place!!  Fingers crossed!

  

[allanb]

[quote user="cooperlola"]If I were in the position of having UK taxable income to declare, I'm afraid that I would just follow the French language instructions on the tax form (ie do what I've always done!) and let them sort it... [/quote]I have a lot of sympathy with that view.  The trouble is that to make sure that you don't pay too much tax it isn't enough just to declare your income: you need to declare it in the right place on the form.  And there isn't always enough information on the form or the accompanying instructions to be sure about that. (Example, as already mentioned: what is a pension d'état?)

"Letting them sort it" assumes that they will take the trouble to find out what each item is, check whether it's in the right place, and change it if it isn't.  I don't have nearly enough faith in them to rely on that.