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PHI and liability for social charges?


Fred

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We moved to France recently and are lucky enough to be early 'inactif' retirees. Unfortunately we cannot yet join the French health service and have to rely on private health insurance. Neither of us is entitled to an 'E' form and whilst my husband has an occupational non-government pension, we do not receive a state pension for several years.

I am about to complete my tax form, as I know we are liable for income tax on the pension and any savings.

My question is: are we liable for any or all of the social charges, or does the fact that we are not entitled to join the CMU exempt us in any way? And if so, where do we indicate this on the tax form?

Any help would be much appreciated - thanks
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Advise again please, we are obviously doing something wrong, or not filling forms in correctly, we have lived here for 4 years, arriving may 2006, our first tax form was filled out 2007, then 2008/9, for all three of those years we have paid social charges, I'm now 64, and hubby is now 65, we have had a mutelle since arriving, no-one we speak to gives us the  same answers, some tell us we shoudn't pay social charges, some say we should, is there an area on our tax forms that we should be filling out, also we have never been liable for tax, or habitation, only our foncier. Thank you

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The treatment of foreign income for the purposes of levying social charges is set down in the French tax code:

- Unearned income such as savings interest is subject to a social contribution made up of three elements totalling 12,1%

- Employment and pension income is subject to the CRDS element only of the social contribution (at a rate of 0,5%) and only if the income is taxable in France by virtue of a fiscal convention and only if you are 'à la charge, à quelque titre que ce soit, d’un régime obligatoire français d’assurance maladie'.

If you arrived in France in 2006 at age 60, then I assume you were able to register for your state heathcare insurance with an E121. If that is the case, then as the DWP pays the financial contribution towards that insurance, you are not classed as being 'à la charge d’un régime obligatoire français d’assurance maladie' and therefore you are exempt from paying the 0.5% CRDS charge on your employment or pension income.

If you have been paying the CRDS charge on that income, then you have been completing your tax declarations incorrectly. If that is the case, then you should read the Tax FAQ (link above) which explains exactly how to fill in the forms in future in order to obtain the exemption. 

As regards the three previous years, you have the option of asking your tax office to make a correction and refund any charges paid in error.  You should refer them to Tax Note 2041GG which covers the exemption and provide them with a copy of your E121.  However, given the likely low amount involved, you may prefer to avoid the hassle and just let things lie.

 

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Thanks Sunday Driver, I sincerely hope you are right.

I had already checked out the tax FAQs (which I find very useful - thanks Cathy) but they did not address my particular circumstances. The FAQ states:

"(a) if your French healthcare cover is courtesy of an E-form, then you are exempt from social charges (contributions sociales) on your UK company and old age pensions.

or (b) if your heathcare cover is under couverture maladie universelle (CMU) and you are paying your quarterly 8% health contributions, then your pension will be subject to social charges. "

I think we, and others in the same situation as ourselves arriving after November 2007 with neither CMU entitlement nor an 'E' form, need an option "c", and I've come across several various opinions as to whether we should, or should not, be paying one or more of the various social charges on hubby's pension.

Is there anyone else out there in the same situation as us? There must be hundreds, but I've not met anyone yet - all the expats we've met so far seem to have carte vitales!

Edit - Having just read your latest post, I looked up Tax Note 2041GG on the internet and interpret this as meaning that if you are not contributing (or not entitled to contribute, in our case) to the CMU, for whatever reason, you don't have to pay the CRDS on (any) foreign pensions, whether state or company pensions. And goes on to recommend that you say something to this effect at the end of form 2047. Have I interpreted this correctly?
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Fred

Please understand that the Tax FAQ was compiled at a time when no-one was in a position to require private health insurance.

You are only liable to the social charge if you are actually paying into the French state healthcare insurance system, either by way of social security contributions through employment or by paying means tested contributions through CMU.  If you do not pay into the system (at that time, this only applied to E-form holders), then as the FAQ explains, you are exempt from the social charge because you are not 'a la charge' of the state system. 

In your case, your healthcare is covered by private insurance, so you are not paying into the French state system.  That means you just write 'Titulaire d'une police d'assurance maladie privée, donc je ne suis pas a la charge de l'assurance maladie obligatoire' in section VIII and leave the amount box blank.

[:)]

Edit:  Post just crossed with yours.  As you will see, your interpretation is correct.

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[quote user="Belle"]Advise again please, we are obviously doing something wrong, or not filling forms in correctly, we have lived here for 4 years, arriving may 2006, our first tax form was filled out 2007, then 2008/9, for all three of those years we have paid social charges, I'm now 64, and hubby is now 65, we have had a mutelle since arriving, no-one we speak to gives us the  same answers, some tell us we shoudn't pay social charges, some say we should, is there an area on our tax forms that we should be filling out, also we have never been liable for tax, or habitation, only our foncier. Thank you

[/quote]

I assume by what you say in your post, that you are not eligible for a state pension provided by an EEC country, is that correct?

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[quote user="Sunday Driver"]

Belle participated in a similar discussion over exemption from social charges on pensions back in November 2009, during which she mentioned that she was in receipt of a UK state pension.....

 

[/quote]

Thanks that answers my question.

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I have just come across an interesting article/guide on http://www.french-property.com/guides/france/finance-taxation/taxation/social-security/social-welfare-levy/ which goes into more detail concerning the differences between the various types of pension/retirement, and liability for social charges. There are also two newsletters, one for 2008 http://www.french-property.com/news/tax_france/french_social_charges_uk_pensions/ and another for 2009 http://www.french-property.com/news/tax_france/social_charges_uk_pensions/ which discusses the subject further. It confirms what you have said, Sunday Driver, but suggests that there are some areas open for interpretation and warns that things may change in the future.....

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