Social Contributions

[POB]

My wife and I are resident in France having both taken early retirement from Local Government neither of us are of State Retirement age. Our Local Authority pensions are our sole income and are, of course, taxed at source in England. Our E 106 benefits expire in December after which we will be contributing to the State Health system. I have read widely, including, of course, this Forum, about Social Security contributions but am still not clear as to whether we will be required to make any other Social payments. Can anyone advise please

[Ron Avery]

Although you are correctly taxed in the UK, you still have to make a tax return in France.  If your E 106 expires this December then you probably arrived in France in 2005, in which case you should have made a tax return in May this year.  If this is the case, approach your local tax offiice now for advice, they don't bite.

If you arrived in 2006,  you will not make a return until  2007, so when your E 106 runs out, as you say, you will have to join the French Health system and pay into the CMU, but you must get a letter from the UK to say that you are no longer entitled to E 106 cover before you can join the French system.  The amount you pay will be based on your joint income, it is roughly 8% of your income over about 7000€ for a couple, a lot less than you paid NI in the UK.  If you do not have a tax return to show CPAM, you will need to show your P60's or do an attestation of income for the preceding year.

[POB]

Thanks Ron you must spend hours advising us poor innocents,

As you surmised we did arrive in 2005 and we did make a tax return in May and have now received a “Avis D’ impot” which I, wrongly, assumed would identify our Social Charges merely the ceiling for voluntary contributions. We have visited the Hotel des Impot 3 0r 4 times and they were very helpful and didn’t even nibble let alone bite, but on our first visit we did experience the “State Pension” confusion and I am concerned to avoid similar confusion over other aspects. I will shortly visit the CPAM with the aforesaid “Avis D’ Impot” but who else? With so many different agencies, involved I want to pay my proper dues but avoid through misunderstanding making unnecessary payments.

[Ron Avery]

There is no need to do anything until December when your E 106 expires, unless you need a top up mutuelle which is a different issue   You should receive a letter from Newcastle in december to say that your E 106 is expiring, but get on to them if you have not had one by mid December.  This letter is important as you cannot join the French system without it  You have to take the letter to your local CPAM with your avisd'impots for 2005 along with your carte vitale(s) and all the things you took when you got your carte vitale with your E 106, birth/marriage certificates, etc etc .  You should keep your Carte vitale, but after you get in the French system it is necessary to update it (mise à jour) at CPAM or a pharmacy when you have been accepted into the French system.

They will take copies of all your papers and send it off to the regional office, but unless there is a real problem, you are accepted in the French system on the day you apply.  After a couple of weeks or less, you will receive an acceptance letter from CPAM and a statement of what you have to pay, via l'URSSAF (the collections agency), l'URSSAF will send you a bill.  Usually you have pay by cheque or Tip for the first instalment but you can set up a preleve with the first payment. You will get a letter from l'URSSAF telling you the date and amount of each subsequent payment, it is normally paid  on a 6 monthly basis but calculated on a quarterly basis!!

[POB]

Thank you for your help Ron, that is now very clear although, just out of interest, the local CPAM consistently maintains (every time we see a different member of staff we ask again) that we cannot have a Carte Vitale until we contribute direct. We do receive re-imbursements for medicines, doctors visits etc. Things have become simpler, at the chemist, since we joined a top up mutuelle we now have a card, from the Mutuelle, which the pharmacy accepts in total payment and presumably they recover the relevant bit from the CPAM.

Tidying up my hard drive yesterday I found a document I must have downloaded a while back although I don’t remember from whence but it is a 72 page English translation produced by Ministere de L’Economie des Finance et De L’Industrie summarising French Taxation and Social Charges. It’s as clear as any official document but indicates that once I contribute to CPAM I must also contribute 6.6% to CSG and 0.5% CRDS. This is based on earned or “substitute” income and works pensions constitute substitute income.

[Sunday Driver]

CSG = Contribution Sociale Generalisée
CRDS = Contribution pour le Remboursement de la Dette Sociale

They are taxes which are allocated to paying social charges. They will be taken into account when calculating your income tax.

Everybody pays to some degree, .05% on UK pensions, 11% on unearned income (eg, bank interest), 11% on "capital gains" etc etc.

[Owen]

Hello POB,

What Sunday Driver has stated is misleading in your circumstances. UK Government/ local authority pensions are not subject to CSG/CRDS. You should have declared this income in the right box on your French income tax return ie; in Box TK of the 2042 in order to avoid a demand for CSG/CRDS. If, by mistake, you entered this income in other boxes then you should obviously chase this up with your 'Hotel des Impots".

This income will, however, be taken into account when assessing your contributions for healthcare once the E106 has expired and a separate demand will be issued.

Because E106, by definition, is of limited validity many CPAM offices will issue an "attestation" including a social security number but will not issue a "carte vitale". They will do so once you start paying contributions after E106 has expired.

Regards

Owen

[email protected]

[POB]

Hello Owen,

Guess what I prefer your version, but I have checked my copy of the 2042 and its declared in box TI this being where the official at the Hotel des Impots advised us having established that the income was as they seem to term it “State Pension”. My wife is as we speak wading through the definitions of the various boxes but can you point me to some document or authority I can point to if I need to persuade the official that he advised me to enter it in the wrong box. As mentioned before I’m happy to pay my dues but I don’t want to pay more than required.

[Owen]

Hello,

You need to check this with another source but the "state pension" ie; the UK old age pension IS taxable in France and therefore any tax paid in the UK can be reclaimed. I also think it would be subject to CSG/CRDS but at a reduced rate.

But you are not yet in receipt of the state pension but a government service pension, hence the different tax treatment.

Regards

Owen

[email protected]

[Ron Avery]

Owens.  I hasd always believed that box TK was corect for a UK civil service type pension but was told by several people at the time and the French tax office help line  that the correct box for this was was TI. The French can confuse you as they call state pensions, pensions paid by the state, i.e service,  local authority and civil service pensions,  but not the old age pension.!

Have a look at http://www.completefrance.com/cs/forums/682848/ShowPost.aspx

You will see a lot of people were confused earlier this year, but we were told that TI was the correct box.  The fact that Pob does not pay tax in the UK does not exempt him  from all social charges, we all pay them but pay far more on un-earned income, I think you have to pay a small amount of CSG and CRDS as SD has indicated.

[POB]

Sadly it seems that TI is the correct box but I am a lot clearer now and at least I had allowed for these charges in my draft budget so I'm poor but honest. Thank you everyone for your contributions.

[Owen]

Hello Ron,

I have read the thread and can see why there is confusion, but the proper place for an individual to establish his position is the "Hotel des Impots". I would add that I am in receipt of a UK government service pension, arranged a personal interview at my local tax office and as a result I have never paid a cent of French income tax or CSG/CRDS on this pension. (Been here 13 years).

Obviously i am pleased with this arrangement and it would appear in any case to be in keeping with the France-UK Double Tax Treaty. I think it is Article 18 of the Treaty that applies.

Regards

Owen

[email protected]

[POB]

Hi Owen,

This is where there seem to be inconsistecies between Tax Offices because like you we have had, in fact, two personal interviews and the advice, which we did not challenge, was that TI was the appropriate box. I have looked at the Double Tax agreement and Article 1 defines what is covered i.e Income Tax, Surtax, Corporation Tax and Capital Gains tax but looking at the reverse National Insurance for example isn't covered. I am, however, tempted to consult an accountant and get my posistion sorted out for future years. If your argument is right it would clearly be worth it!!

POB