Social Charges

[BobDee]

Sorry if this is a dumb question, but I am confused how the Social Charges are applied. Have just completed the first tax return and on entering the figures into the Impots tax calulator, (http://www3.finances.gouv.fr/calcul_impot/2008 ), it seems that a major percentage is also added to the total bill for Social Charges.

Am I right in saying that if you are both over retirement age and you receive health care via a 121 declaration that you do not pay social charges on top of your tax bill or do you still have to pay charges based on an annuity income. The Tax FAQ's seem to say that OAP and company pensions are exempt from Social charges but are other types of income also exempt?

BobD

[Sunday Driver]

As per the FAQ, OAP and company pensions are exempt from social charges where you hold an E-form, but annuity based pensions and other investment income is not.

 

[BobDee]

SD , Many thanks for that, Just a supplementary, does this mean that on savings account and annuity income, one can expect the 14% rate plus an additional 16% rate to be levied?

BobD

 

[Sunday Driver]

No, just the straight 11% social charge (the sum of CSG, CRDS and PS).

Edit:

PS:  the social charge on the annutity income is based on the amount after the tax relief.

Quick example though the on-line calculator:

Two persons in tax foyer.

Annuity income declared 10,000€

Base for calculation of tax 7,000€  (revenu fiscale de reference)

Base for calculation of  CSG/CRDS/PS is also 7,000€

CSG = 574€    CRDS = 35€    PS = 61€ 

Total = 770€   which equates to 11% of the 7,000€.....[:D]

 

[BobDee]

So the result from the calculator shows the  tax payable (A) plus the Social Charges (B) payable, the sum of which (A+B)  is your liability?

Viz:

 Compte tenu des éléments que vous avez saisis, le montant de votre impôt net à payer s'élève à  A (auquel il faudra ajouter  B de contributions sociales supplémentaires)

If this is so, the overall tax payable amount seems quite a bit more than the UK figure. 

BobD 

[Ron Avery]

Nobody has said French income tax is always less than UK tax Bob, it depends on your circumstances amd the make up of your income.

If you have a lot of unearned income you pay tax on it and 11% social charges, so you might end up paying more tax than in the UK.  The income tax and sociale charges are billed separately by the way.  Look upon sociale charges as NI and your contribution to the welfare of your new adopted country[:D]

[BobDee]

Thanks Ron for the clarification.

Have to say that the way the French Tax system treats savings interest has come as a bit of a shock. Working through the calculator the following results seem appropriate,

Situation:  Married couple, both above normal retiremant age (65)

1) Having a joint pension  of €20,000  Pay €136 Tax  and no Social Charge.

2) Having a joint pension of €20,000 and an annuity of €5000 Pay €482 Tax plus €220 Social Charge

3) Having a joint pension of €20,000 and an Annuity of €5000 and bank savings interest of €10,000 pay €1968 Tax plus  €1320 Social Charge.

Moral is, it seems, dont rely on that savings nest egg as an income source if you want to keep your tax bill low.

BobD

[Ron Avery]

"Have to say that the way the French Tax system treats savings interest has come as a bit of a shock." 

 I think that statement is true for an awful lot of us coming from a culture of being enticed to and rewarded for saving. Its this penalisation of savings that tempts a few to all intents and purposes, honest and upright citizens,  to conveniently forget their UK savings accounts and/or  pay tax on them in the UK, hoping that they will never come to the notice of the French tax authorities, thereby avoiding paying sociale charges.

There have been many on here over the years who have said they been advised to do likewise by well meaning "friends", but in this age of information sharing I think the chances of avoiding detection reduce by the day and the longer the evasion, the stiffer the penalty[blink].

[suein56]

[quote user="BobDee"]

Moral is, it seems, dont rely on that savings nest egg as an income source if you want to keep your tax bill low.

[/quote]

Which is why many French invest in Assurance Vie (s) as early as they can afford to.

Sue

[AnOther]

If the sum of the tax and charges you'd be liable to pay is equal to or greater than that which you can earn on it in interest, be that in UK, France or anywhere, then under the mattress would seem as good a place to keep it as any [;-)]

I doubt even the French tax man had got bed bugs trained to snitch [:D]

[Sunday Driver]

How do you work that one out?  France doesn't apply a tax/charges burden in excess of 100%......[:)]

 

 

[lmc]

Hi

Just a note about the tax on interest from savings.  The flat rate applied by the bank on many kinds of savings accounts is indeed 16%. 

HOWEVER, you do have a choice as to whether you want the bank to apply this rate and receive your interest net of tax or whether you do not want them to apply the rate and receive your gross sum of interest.

The only people who the 16% flat rate works out better for are people who are already in the 40% tax bracket.  If you have chosen to receive your interest net of tax you can always change your mind.  You just need to see your banker about it and sign a form.

If you choose to receive the gross sum then you must declare it on your tax declaration and your tax liability will then be calculated from it on the progressive income scale.  It is a bit more paperwork for you but you do end up better off.

This does not apply to EVERY type of savings account but definitely to lots of them.  Go check with your bank.

Lisa

 

 

[Ron Avery]

Just a note about the tax on interest from savings.  The flat rate applied by the bank on many kinds of savings accounts is indeed 16%.

That only applies to OFF SHORE accounts surely and they still have to be notified to the French tax man whether offshore or not 

[tigerfeet]

[quote user="Sunday Driver"]

As per the FAQ, OAP and company pensions are exempt from social charges where you hold an E-form, but annuity based pensions and other investment income is not. [/quote]

What happens with a couple which only one has the E121 the other can be covered health wise but are both still exempt from social charges ?

[Ron Avery]

As they are taxed as a couple, have an E 121 as a couple,  I'm sure you can work that one out for yourself.

[milkeybar kid]

[quote user="Ron Avery"]Just a note about the tax on interest from savings.  The flat rate applied by the bank on many kinds of savings accounts is indeed 16%.

That only applies to OFF SHORE accounts surely and they still have to be notified to the French tax man whether offshore or not 

[/quote] Off shore flat rate in 2006 was 18% steadily rising, at some point 32%. These days it is to no advantage - there is no hiding place ( and quite right).Yes, we declared it in France so as to pay social charges. [:(]errr and we had a reimbursement from France of the 18% we paid! I see no advantage in paying the withholding tax, better to have it paid gross off shore and the lesser tax in France. I can't see the advantage of paying a withholding tax , can you? or  am I missing the plot[:)] 

[Nell]

E121 - If covered by this, am I correct in thinking that I am exempt from Social charges?? Brain hurting from the whole tax form issue, so a simple reply of yes or no would be welcome[:)] and if the answer to my question is Yes I will be more than happy....[:D]

Oh - just one more question - How does the taxman know I have an E121 (on ill-health grounds), is there somehere on the form to put this that I have missed?

Roll on June, when thoughts of tax forms will be a distant memory and the sun will shine all day every day!!!![Www]

[gosub]

No[:)]

[Ron Avery]

[quote user="Nell"]

E121 - If covered by this, am I correct in thinking that I am exempt from Social charges??[/quote]

Its all in the FAQ's, but for clarity, you are only exempt from sociale charges on pensions, not paying sociale charges on unearned income.  If you follow the advice in the FAQs in relation to exemption from CRDS  and write what is described they will know that you have an E121because you will tell them[I]

[Nell]

Cheers Ron. Believe it or not I had already written that statament on my 2047 form, but had forgotten about it! Is it time for a glass of vin yet?

[tigerfeet]

[quote user="Ron Avery"]As they are taxed as a couple, have an E 121 as a couple,  I'm sure you can work that one out for yourself.[/quote]

I have found some information which may suggest you are wrong Ron , see what you think.

quote    "Where an individual holds either Form E121 or E106 in their own name, any UK pension income received by that individual will be exempt from French social charges. For social charge purposes, this exemption only applies to the holder of the form, and not the household (unlike the health-care position). Social charges remain payable on all other income."

from this page

http://www.livingfrance.com/expert-advice-expert-advice-social-charges-in-france--29890

[Ron Avery]

If Blevins says its true it must be[Www]. On the other hand perhaps you should ask him how you divide up your incomes that count for CRDS, pro-rata, or 50-50 and then put that on the tax form?  In practice you are covered as a couple for Health care and exempt from these sociale charges as a couple,  so unless you have millionaire son I really would not worry about it!!

If you do decide to pay it, unless you are paying wealth tax. paying or not paying the 0.5% CRDS is not exactly going to break the bank.

[tigerfeet]

confused , SD said the social charge is made up of CSG ,CRDS & PS total 11% , but Ron is using just CRDS ??

[Ron Avery]

Sorry Tigerfeet, you can sought it out for yourself, I don't know if you are taking the proverbial but I am not answering any more of your questions. Apologies if you are not, but the answer to your point has been answered so many times that I really cannot be bothered to even find a link to one.[:@]

[Sunday Driver]

[quote user="tigerfeet"]

[quote user="Ron Avery"]As they are taxed as a couple, have an E 121 as a couple,  I'm sure you can work that one out for yourself.[/quote]

I have found some information which may suggest you are wrong Ron , see what you think.

quote    "Where an individual holds either Form E121 or E106 in their own name, any UK pension income received by that individual will be exempt from French social charges. For social charge purposes, this exemption only applies to the holder of the form, and not the household (unlike the health-care position). Social charges remain payable on all other income."

from this page

http://www.livingfrance.com/expert-advice-expert-advice-social-charges-in-france--29890

[/quote]

Not according to the French impots. 

Tax guidance note 2041GG states that  "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 imposables 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."

An individual who is covered on a partner's E-form under the 'ayant droit' principle is registered for healthcare without being 'a la charge' of the obligatory assurance maladie, therefore meets the criteria for exemption from social charges on foreign pensions.  Holding their own E-form is irrelevent.