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More taxing questions


Sharkster

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Having done some research can anybody confirm if the below is right and my understanding is correct.  From the table below a family with 2 adults and 1 child would have 2.5 times each tax band i.e. the first 13,787.50 Euros tax free and the next 13,327.50 at 5.5% tax.  Is this correct or am I missing something?

€ 13,787.50

New income tax rates for 2006 are:

Net Income Subject to TaxBandTax RateTax on BandCumulative Tax
Up to €5,515€5,515Nil--
€5,516 to €10,846€5,3315.5%€293€293
€10,847 to €24,432€13,58614%€1,902€2,195
€24,433 to €65,559€41,12730%€12,338€14,533
Over €65,559-40%--

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More or less - here are the 2007 rates:

Taxable Income ()    Tax Rate (%)    Tax ()          AggregateTax ()
Up to 5,614                   0                        0.00                0.00
5,615 – 11,198             5.5                      281.40            307.06
11,199 – 24,872           14                      1,914.22           2,221.28
24,873 – 66,679          30                       12,541.80         14,763.08
Over 66,679                48.09

Two adults and one child = 2½ 'parts'.
Let's take a total household income of 24,000.
Divide the total household income by 2.5 = 9,600.
Each 'part' is then taxed according to the table above (2007 rates).
9,600 - 5,614  = 3,986, taxed at 5.5% = 219.23
Then multiply by the number of parts  - 219.23 x 2.5 = 548.08 tax payable (notwithstanding any other deductions and allowances).

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Jo's description of the methodology for calculating tax is correct.  However, earnings are subject to a 10% deduction prior to the tax calculation.

Two adults and one child = 2½ 'parts'.
Let's take a total household income of 24,000.

Deduct 10% (2,400) leaving a net revenue of 21,600.


Divide the net revenue by 2.5 = 8,640.
Each 'part' is then taxed according to the table.
8,640 - 5,614  = 3,026, taxed at 5.5% = 166.43
Then multiply by the number of parts  - 166.43 x 2.5 = 416.07

Running a tax office simulation on the above scenario, they show a further rebate of 206 leaving 210 tax payable (notwithstanding any other deductions and allowances).

The rates are for the 2006 tax year, declarable in Spring 2007.

 

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Thanks for the information.  Just some final questions.

1) When is the social charge (8% of 97% of your income) become payable, as I have submitted my 2005 tax return which was a little over 1000 euros so the tax office were OK as there is not tax due but I think I will be liable for social charge on this money.  Will the bill come when I receive the avis from the tax office?  Also going forward (2006 return due in May) will I receive the social charge bill when I receive my tax bill and what is the payment schedule.

2) Is the social security charge (8% of income after allowance of 7000ish euros) payable monthly or quarterly as I have submitted my 2005 and 2006 figures to CPAM completing the CMU form and should have my new attestation in 3 weeks with a bill for 2007

3) Looking at next year on the social security side how does it work?  This year my cover ran out on 6th January when my E106 ran out, so will it be the same next year or will it be extended through to September to come in line with the French Tax year?

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[quote user="Sunday Driver"]However, earnings are subject to a 10% deduction prior to the tax calculation.[/quote]

IIRC that's for salaried people? If you're self-employed there is no 10% reduction.

Your local tax office would be the appropriate place to enquire - peoples' circumstances (family composition, nature of employment, age - ad infinitum) vary so greatly it's impossible to give figures other than in the broadest sense, hence my proviso: (notwithstanding... etc. etc.)!

HTH
Jo

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The social charges bill comes out about a month after your tax bill and is payable in full within one month.

The CMU contributions are payable quarterly.  If your assessed amount is less than 33 euros, then they waive the charge.

CMU renewal forms are sent out on 1 August each year to be returned by 15 September.

 

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[quote user="Sunday Driver"]

The social charges bill comes out about a month after your tax bill and is payable in full within one month.

[/quote]

With this being a potentially large bill (8% of 97% of total income) after you first year can be it set up to pay monthly in the same way as tax can?

[quote user="Sunday Driver"]

The CMU contributions are payable quarterly.  If your assessed amount is less than 33 euros, then they waive the charge.

CMU renewal forms are sent out on 1 August each year to be returned by 15 September.

 [/quote]

I am still a little confused by this.  When I completed the forms last week I submitted my avis from 2005 and declared my 2006 income on the form.  Do I have to resubmit the 2006 figures on an Avis in August / September this year or will my renewal be August / September 2008?

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My God you are getting confused and do doubt confusing everybody else, you are not writing a book are you?[:P]

On your CMU form you are only required to give one income figure and that is the one on your last avis.  Yes, you will have to resubmit the 2006 figure in September this year,

You must separate social charges, income tax and CMU payments they are totally different and separate.  Social, charges are payable on UNEARNED income as defined by the French, this is things like rental income and interest received on savings, so the 11% applies to the UNEARNED income part of your income, not the whole income.    As SD has said you get this as a totally separate bill normally after you have paid your income tax, I am not aware of any facility for monthly payments on this.  The CMU payment of 8% after the E 106 expires is based on your whole income less some allowance as mentioned earlier and has as also been mentioned earlier a base below which you do not pay.

 What has not been mentioned as you seem keen to get your budgetting sorted out, is that after the first year , IE when you do an income tax return and pay tax here for the first time, in the next and subsequent years you will get a bill in  January/February for a third of your previous years tax bill and another in May/June, you have to pay these amounts "on account", if you are aware that there has been a big change upwards in your income, you are required to pay more on account.  The "balancing" payment is in September when your submitted tax return will have been assessed and you will receive a bill in September for the residue, so after year one, you will be paying your income tax in at least three instalments, I believe you can malke these on account payments on a monthly basis if you wish.

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I am pleased you have posted that RA.

Sharkster, I just can't think why you would declare 2006 stuff yet. Most of us haven't even got all the figures yet to make a declaration for  2006 revenue, we just couldn't do it yet. So how did they word what they wanted?

I f you didn't know, do not send anything off without keeping a photocopy of it.

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I wish it wasn't called 'social charge' - that implies it's a social security contribution whereas in reality it's a tax,. It's in two main parts, intended to help pay off the national debt (CRDS) and build up a fund against future debt which will build up before (if ever) the current overspending gets under control (CSG). I think I got them the right way round. As it is the health service that is mostly responsible for the debt, you can see why the government coined the 'social charge' euphemism.

My understanding was that the French wanted to charge CRDS/CSG on the full amount of foreign pensions, but Brussels blocked it. The real social contribution, i.e. the 8% for the CMU, is levied on pension income.

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[quote user="Ron Avery"]

My God you are getting confused and do doubt confusing everybody else, you are not writing a book are you?[:P]

On your CMU form you are only required to give one income figure and that is the one on your last avis.  Yes, you will have to resubmit the 2006 figure in September this year,

You must separate social charges, income tax and CMU payments they are totally different and separate.  Social, charges are payable on UNEARNED income as defined by the French, this is things like rental income and interest received on savings, so the 11% applies to the UNEARNED income part of your income, not the whole income.    As SD has said you get this as a totally separate bill normally after you have paid your income tax, I am not aware of any facility for monthly payments on this.  The CMU payment of 8% after the E 106 expires is based on your whole income less some allowance as mentioned earlier and has as also been mentioned earlier a base below which you do not pay.

 What has not been mentioned as you seem keen to get your budgetting sorted out, is that after the first year , IE when you do an income tax return and pay tax here for the first time, in the next and subsequent years you will get a bill in  January/February for a third of your previous years tax bill and another in May/June, you have to pay these amounts "on account", if you are aware that there has been a big change upwards in your income, you are required to pay more on account.  The "balancing" payment is in September when your submitted tax return will have been assessed and you will receive a bill in September for the residue, so after year one, you will be paying your income tax in at least three instalments, I believe you can malke these on account payments on a monthly basis if you wish.

[/quote]

Oh dear.... I think I may have done things completely wrong last week at CPAM.  What I have done is given my declaration for 2005, which is correct, but on the form I have put my earning for 2006 and submitted my paperwork which I was going to use for this years tax return.  I had read another post in the health forum and think I have confused matters completely.  On the form they asked for 'Last Year's Figures' but from what I have read on here today that actually means 2005.  What can I do now?  Can I go back to the CPAM office tomorrow and attempt to explain my mistake and resubmit the form with the correct details (my 2005 income was minimal but my 2006 income is not)

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Right my french is still quite poor so I have used freetranslation.com to come up with an explanation to take with me tomorrow.  Can anybody tell me if it will be understood by a French person

J'ai appelé à votre bureau sur jeudi dernier compléter la forme de CMU et a comis une erreur avec les figures. J'aimerais compléter la forme encore avec les figures correctes et l'apprécierais si vous pourriez téléphoner Montpellier pour les informer de mon erreur.

Que j'ai fait suis déclare ce que mes véritables gains dans 2006, le revenu que je déclarerai pour l'impôt en mai 2007. Les figures que vous voulez sont de ma 2006 déclaration de revenus de ma déclaration de revenu 2005.

Avec merci

English Version

I called at your office on last Thursday to complete the CMU form and made a mistake with the figures. I would like to complete the form again with the correct figures and would appreciate it if you could telephone Montpellier to inform them of my error.

What I have done is declare what my actual earnings in 2006, the revenue I will declare for tax in May 2007.  The figures you want are from my 2006 Tax return from my declaration of revenue 2005.

With thanks

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[quote user="Sharkster"]

English Version
I called at your office on last Thursday to complete the CMU form and made a mistake with the figures. I would like to complete the form again with the correct figures and would appreciate it if you could telephone Montpellier to inform them of my error.

Je suis venu a votre bureau jeudi dernier, pour remplir le formulaire CMU et j'ai commis une (grosse) erreur avec les chiffres. Je voudrais donc remplir un nouveau formulaire avec les chiffres corrects, et je vous serais reconnaissant de bien vouloir telephoner a Montpellier pour les informer de mon erreur.

Avec mes remerciements anticipes.

[/quote]

 

Try this, Sharkster. And good luck.

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[quote user="Ron Avery"]

My God you are getting confused and do doubt confusing everybody else, you are not writing a book are you?[:P]

[/quote]

Totally bewildered by the whole affair.

[quote user="Ron Avery"]

On your CMU form you are only required to give one income figure and that is the one on your last avis.  Yes, you will have to resubmit the 2006 figure in September this year,

[/quote]

I understand now, I am off to the CMU in the morning, see my previous post

[quote user="Ron Avery"]

You must separate social charges, income tax and CMU payments they are totally different and separate.  Social, charges are payable on UNEARNED income as defined by the French, this is things like rental income and interest received on savings, so the 11% applies to the UNEARNED income part of your income, not the whole income.    As SD has said you get this as a totally separate bill normally after you have paid your income tax, I am not aware of any facility for monthly payments on this.  The CMU payment of 8% after the E 106 expires is based on your whole income less some allowance as mentioned earlier and has as also been mentioned earlier a base below which you do not pay.

[/quote]

So for the social charge I would only pay it on the interest from my endowment and any other bank savings and not on earned income which is subject to the normal tax brackets.  Phew, I thought I was in for a huge bill

Thanks Ron for clarifying this and sorry for confusing everybody in the process

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[quote user="5-element"]

[quote user="Sharkster"]

English Version

I called at your office on last Thursday to complete the CMU form and made a mistake with the figures. I would like to complete the form again with the correct figures and would appreciate it if you could telephone Montpellier to inform them of my error.

Je suis venu a votre bureau jeudi dernier, pour remplir le formulaire CMU et j'ai commis une (grosse) erreur avec les chiffres. Je voudrais donc remplir un nouveau formulaire avec les chiffres corrects, et je vous serais reconnaissant de bien vouloir telephoner a Montpellier pour les informer de mon erreur.

Avec mes remerciements anticipes.

[/quote]

 

Try this, Sharkster. And good luck.

[/quote]

Thanks 5-element

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[quote user="Will"]

I wish it wasn't called 'social charge' - that implies it's a social security contribution whereas in reality it's a tax,. It's in two main parts, intended to help pay off the national debt (CRDS) and build up a fund against future debt which will build up before (if ever) the current overspending gets under control (CSG). I think I got them the right way round. As it is the health service that is mostly responsible for the debt, you can see why the government coined the 'social charge' euphemism.

My understanding was that the French wanted to charge CRDS/CSG on the full amount of foreign pensions, but Brussels blocked it. The real social contribution, i.e. the 8% for the CMU, is levied on pension income.

[/quote]Thanks Will, that is what I thought originally but as you say, the confusion of calling it a "social charge" does not help!  Gets me all confused.  I understand the difference between the two alright but wasn't so clear about how the CRDS/CSG was levied.  Certainly last year it was only charged on interest earned on savings and I was just making sure I wouldn't have to pay on the whole lot next year.  I'd pay up, you understand but it would have been a shock I'd have liked to know about in advance!  Ta.
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Actually it's in all our interests to keep referring to these levies as a social charge rather than a tax.  In the recent EU court case, the French government argued that social charges were a form of taxation and therefore all foreign income should be charged.  The EU said no, the charges weren't a tax, and on that basis, they ruled that foreign employment earnings and pensions are exempt from social charges - providing that the individual's heathcare costs were being met by another member state. 

That means that people retiring on company/private pensions are exempt from social charges, but only during the period of validity of their E106.  After that, they have to pay CRDS.  Once they are in receipt of their UK state old age pension and their E121, then they are exempt form paying CRDS from then on.

It's only 0.5%, but it may as well be in your bank account than in the state's.

 

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[quote user="Sunday Driver"]

Actually it's in all our interests to keep referring to these levies as a social charge rather than a tax.  In the recent EU court case, the French government argued that social charges were a form of taxation and therefore all foreign income should be charged.  The EU said no, the charges weren't a tax, and on that basis, they ruled that foreign employment earnings and pensions are exempt from social charges - providing that the individual's heathcare costs were being met by another member state. 

That means that people retiring on company/private pensions are exempt from social charges, but only during the period of validity of their E106.  After that, they have to pay CRDS.  Once they are in receipt of their UK state old age pension and their E121, then they are exempt form paying CRDS from then on.

It's only 0.5%, but it may as well be in your bank account than in the state's.

 

[/quote]

I have been following this for some time, thank you Sunday Driver, and Will, for this. (i.e. not paying CSG)

However, it is NOT our experience - we (husband with E121) and me (on his E121). We have HAD to pay Contributions Sociales (small in our case, as we have low income, from my UK state pension, and his small private pension - he is not yet entitled to state UK pension). The charge is 0,5% on ALL our Revenus Etrangers, that is, our 2 pensions.This we paid in November 2006, for 2005.

We were told step-by-step by our local Hotel des Impots, how to fill our Tax Return form. The insisted that we enter all our revenue in Box TL of form 2042 - I now know that apparently, we should NOT enter anything in that box, except "unearned income", and certainly not the sum total of our pensions.

When we were sent our demand for CS in October, I went to Hotel des Impots, saying I had "made a mistake" with the way I had filled our initial Tax Return, i.e. TL box. The (very unhelpful, condescending and patronising woman there) looked it over, asked all the right questions, and concluded that no. it had to remain that way.

After this, I composed a letter which I addressed in recommande, where I explained that since we were on E121 form, our pensions were not taxable for CS.

The reply I eventually received was that my request was rejected, it just reiterated what I had been told, and did not even mention or acknowledge pensions or E121.

The next step would have been to go to Montpellier, where there is a "conciliateur fiscal du departement", and/or the Tribunal Administratif.

At that point I just gave up, as I began to feel paranoid and thought that our local Hotel des Impots could make our lives difficult and I just could not face it.

But now, another tax year looms on the horizon.
So my first question is:

We are soon going to receive our "pre-filled" tax return form. Does it mean that this form, is going to be pre-filled WRONG so that we end up having to pay CS again this year, and then again and again?

My second question is: If we fill our tax return the way it ought to be, i.e. ignore the instructions of our local tax office, what happens then? Once the tax return forms are filled, does anyone know WHERE they are processed? Is it in a centralised national office, or is it in the local Hotel des Impots?

Is there anyone else who is being wrongly charged, unable to change the situation?

In our case, it is not a huge amount, but of course, it is in proportion to our income, so proportionally, it is substantial enough.

I know I should just fight this really, going to the conciliateur, by I am not cut out for those kinds of legal battles, having had in the past, unusually awful experiences with the French Inland Revenue (they did sort out their mistakes in the end, but only IN THE END).

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