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Tax

Posted by Ciratis - Created: 14 years ago
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7 replies (Showing replies: 1 to 7)

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Posted by Rick W - 14 years ago

Many thanks for your prompt responce Voltaire , as much as I'd like to stay within the 'french social security system / pensions ' , the draw of substantially better wages in the private yachting sector far out weighs continuing to struggle on shore .

     The three main ' impots ' ( fonciere , revenue , habititation ) that one pays as a single person cannot be justified , so be warned if you want to buy a house on the CDA , make sure your on a salary of at least             € 40,000 pa ! thanks once again Volt

       Rick w    

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Posted by Voltaire-188960 - 14 years ago

Hi Rick,<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 

This all depends on exactly what you are going to do. Are you going to sell your house in France, or at the very least rent it out? For the UK the time ruling (180 days out the UK) discussed works well for what you plan to do. The French system, however, works on economic area of interest. If you maintain a house here and do not have one elsewhere, the French will argue this is your main home and will want to tax you, despite you being out the country most of the time. This is not rocket science as some might say different either way, but the point is that the four economic tests are open to interpretation, so getting rid of your property is the safest way, to steer clear of any French claims on your hard earned cash.

 

If you leave France, you cannot continue to contribute to the French system. Are you wanting to contribute just for pension rights? If so, as a British citizen, (I’m assuming you are) you can contribute to the UK system, giving much the same benefits. There is a European ruling on pensions that the last European country you live in must collate all your contributions and pay them out to you, so this may be the way forward. If it is for health cover, you are out of luck. A private international health cover plan is the only choice for you.

 

Hope this helps

 

Volty

 

“Opinion has caused more trouble on this little earth than plagues or earthquakes.”

 

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Posted by Rick W - 14 years ago

Hi there

       whilst on the issue on tax / impots etc I'd be interested if anyone can give me a little advice as regards the following , at the moment I work for a french company and have done for the last 10 years , I also own a small appartment on the C-D-A ( my principal home ), I therefore pay all french taxes due , Impots revenue , impots fonc etc ( all at maximum rate as I'm single ! ).

       If as planed I decide to switch jobs and move into the private yacht market , paid offshore , what is my position as regards the killer Impots revenue ?

        Also I'd like  to continue with the French social security system who would contributions have to be made to ?

         thanks

 

        

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Posted by Voltaire-188960 - 14 years ago

Hello Ciratis,

 <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

As to whether you should still be paying tax in the UK, really depends on what on or, at least, where your income is. However, if you are living here, you are a French resident and, as such, a French tax payer. There is no time set that makes you a tax payer, it merely being dictated by the “where is your home” test. The six month rule outlined by Icarus does not exist in France and is only applicable to the UK. There are four tests under the French rule, but bluntly put, if you live here you are resident.

 

To fill out an R85 is ideal, and even the R105, however, foreign accounts are not taxed well in France, so beware its treatment for tax as it is liable here! It is best to keep balances as low as possible in foreign accounts.

 

Whether you should pay NI contributions, often depends on who you are. Many argue that younger people will never see the benefits. The daily Telegraph is a paper aimed at the over 35’s and, as such, this might be good advice. As you have just left university, you may want to think twice and get some advice before doing it.

 

You may keep your ISA in the UK, but you can no longer add to it, as it will become “ringfenced” off. This sounds good until you realise it is taxable in France and that there are far better ways to invest it, with greater tax efficiency. If you plan to stay here I would get rid of it.

 

The suggestion by Icarus that all money earned in the UK being subject to French tax is not correct and is a dangerous statement, as it very much depends what it is. Many people here will have rental income in the UK and any tax is payable in the UK (although exempt, it must still be declared in France). Other pensions are taxed the same way, so always check!

 

Icarus is absolutely right about financial advisers. Be careful, choose one that charges a  fee, as these tend to be less biased and much more knowledgeable than the commission driven salesman. Check they are authorised here (they at least have a “carte professionnelle”.) Do a little of your own research first and ask your adviser questions you know the answers to. If they look lost, move on. Never ever write a cheque for any investment to a financial adviser. The only payment to them should be the fee. Always check the charges on anything you do before signing it. This sounds like common sense but you would be amazed at how many people don’t do this and get ripped off.

 

I wish you luck.

 

Voltaire

 

Voltaire quote “The best way to be boring is to leave nothing out!”  Oooopps!!

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Posted by Icarus-184675 - 14 years ago

Correction - 4th paragraph: 'Any money earnt there is subject to FRENCH tax' sorry about the typo

 

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Posted by Icarus-184675 - 14 years ago

Right this comes with the usual warning about only being opinion, so don't sue me. Also some comments are general not just for your case.

You pay tax in France if you live here for more than 6 months in the year, you work here and are paid by a French based enterprise or your financial interest i.e. bussiness are here. There is a similar test for Britain, but if these things conflict you don't pay tax twice!

The p85 is a form to tidy up your affairs in the U.K. For the first year when your tax interest are split between both countries the two tax authorities usually operate on a split year principle, i.e. the U.K getsmoney from all earnings until you left the U.K and France thereafter. This is usually to your advanage as you benefit from lower tax rates in both countries. I think it is technically possible to appeal against this decision.

Once you have left U.K. any money earnt there is subject to U.K tax, therefore you should declare it as not U.K taxable.

The inland revenue has downloadable copies of their forms and tons of booklets explaining this you should get forms P85, R105 and IR138, there's also a booklet to explain NI and a form to pay voluntary NI contributions.

Whether or not to pay NI contributions is a matter of opinion - your U.K pension may not be worth very much. If you stay a long time in France you will get more through your French one. Factors in favour include being near retirement, not working in France and being eligible for class II NI contributions. If you are only staying a year in France then you continue to pay British NI class I contributions.

You cannot keep an ISA and there is no need to because all interest and dividends will be tax free, for unit trusts you can de ISAify the trust but ask for dividends to be paid gross, for savings accounts you may need to move the money into a new account.

As for taking financial advice. By all means speak to an advisor but their main interest is in selling savings products. A good one will find something suitable for your needs, a bad one will sell you a worthless proiduct (at least not an endowment mortgage!!). In any case take their advice with a pinch of salt.

If you have not earnt anything in France last year, you can forget about taxes till next spring, otherwise you should have made a tax declaration! However contrary to popular belief French income tax is not more than the U.K. (it's a lot less if you have a family) Social security costs and VAT on the other hand are higher but hard to avoid.

Hope this helps    

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Posted by yjme-181229 - 14 years ago

Think your best bet to get it all sorted out would be to have a look in the AngloInfo Information Pages under Financial and Legal and go and see someone who really knows the legalities inside out, otherwise you may get conflicting advice and be even more confused! I'm sure it is straightforward but best have proper advice maybe?