French tax matters

Some readers may have been subjected to social charges on income on non-French investments. A ruling by the European Court of Justice that such charges may not be not due has been upheld by the Conseil d'Etat and must be adopted by the French revenue. You have until 31st December to claim a refund for 2013 charges.
Details can be read here : Social charge decision
comments to taglines82@gmail.com

Social charge on rental property in UK

Dear Val.....................very glad to hear someone has had their social charges on UK rental/property dropped.; did they give any clues as to how they succeeded as several of us are still battling with the Montauban tax office and Mr Gullotin (quite a appropriate name under the circumstances).

 However I guess if a precedent has now been set there is always the possibility that more of us maybe lucky.

 Thanks for all the information that has filtered through from Taglines with regards this issue.

Christine Hargreaves.

Val says

I will phone the lady who has achieved it tomorrow to see if she can offer any help.

Comment to  taglines82@gmail.com
Monday evening
Have just phoned the lady to discover her pleasure is with her social charge on pensions being reduced and she has not actually heard anything about the UK rental charges. So sorry for all those raised hopes, the fight continues for many... and we still have not had our social charge bill!!

Dropped , the charge on rental income in UK

A reader In Varen  is pleased she has now had  the charge originally demanded in France  dropped on her rental property in England. So with their social charge being dropped as well,  she is back to how she was last year.
Comments to    taglines82@gmail.com

Solvit for your problem without legal proceedings

SOLVIT is an on-line problem solving network in which EU Member States work together to solve without legal proceedings problems caused by the misapplication of Internal Market law by public authorities. There is a SOLVIT centre in every European Union Member State (as well as in Norway, Iceland and Liechtenstein). SOLVIT Centres can help with handling complaints from both citizens and businesses. They are part of the national administration and are committed to providing real solutions to problems within ten weeks. Using SOLVIT is free of charge. See http://ec.europa.eu/solvit/site/index_en.htm 

Di Hope discovered SOLVIT in her researches in to the social charge. You never know when it may come in useful.

Comments to  taglines82@gmail.com

Gregory Honey's letter works

People are using the letter on TAG sent by Gregory Honey [ modifying  for their needs] and then  taking to the tax office in Montauban to claim an error and reduction. Two people have contacted me to pass on thanks and say ... IT WORKS.
Comment to   taglines82@gmail.com

Deidre and Greg come up TRUMPS.

It certainly pays to appeal ! 

We have had a dramatic reduction in our social charges bill. 

As pensioners in receipt of UK Government pensions we knew we are NOT a burden on the French state. The UK International Pensions Centre told us that the UK automatically sends £2,500 per 'State' pensioner per year to France. But you DO need to provide CPAM with your E121 / S1 plus a CPAM-stamped copy to your tax office. 

Attached is a précis of our experiences plus the original letter we sent to the tax office.   

I hope this helps,

Deirdre and Greg

Dear Val

As Deirdre has written to you concerning our problems with Social Charges, I thought that I would bring you up to date. I apologise for the wordiness, but I thought that the context of the events and out actions may be relevant.

In summary, we no longer have a problem with any of our Pensions, but still have an outstanding issue with our UK Rental income.

Early in September, we went to the Tax Office in Montauban & queried some items that the local Tax Inspector had filled in on our form 2047-K, section VIII, boxes 8TL & 8TV

In both cases, The amount filled in was our Total UK-paid pension Income, comprising :-

- State ‘old-age’ Pensions

- Private Pensions

- Employment-related pensions

- Government Civil Service (Teachers) Pension.

We were told that we needed to provide a copy of my S1 & Deirdre’s E121.

We contacted CPAM, who sent us copies of the forms, with their ‘rubber-stamp’ (tampon) on the 3^rd page.

We then gave these forms (+ photocopies of our Cartes Vitale – possibly overkill). I have attached a copy the letter (page 2 below) that we wrote, to accompany these documents. It may assist others wishing to appeal.

In Mid-October we received our Social Charges bill, containing our Total Pension income under CRDS charged at 0.50 % and under CSG charges at 6.60 %

This seemed as though our S1/E121 forms had been ignored.

The Social Charges Bill also contained our UK-related Rental Income (Gross amount minus expanses) without any mention of UK-paid tax.

We then wrote a letter of appeal, covering the Pensions (S1/E121-related) & Rental Income (Subject to a separate Double Taxation Agreement (Articles 2,6 & 24).

The day after sending this second letter to the Montauban Tax Office, we received an letter from The Montauban Tax office with an adjusted amount due.

Our Pensions were no longer included in any way, other than the total refund/charge reduction was the amount of our claim relating to our Pension.

We will let you know how we get on with our appeal for the removal of our Rental Income.

We hope this clarifies matters for your readers.

Greg and Deirdre.

                                                                                                Address,
                                                                                                82140 Saint-Antonin-Noble-Val,                                                                                         Tarn et Garonne

                                                                                                FRANCE

                                                                                                Phone no

                                                septembre le 11, 2012

SIP Montauban,

SAID Secteur 2,

436 Rue Edouard Forestie,

BP 620  82080 Montauban CEDEX

N^o fiscal          xx-xx-xxx-xxx-xxx

Conjoint N^o     xx-xx-xxx-xxx-xxx

Object             Formules S1 et E121, plus les copies de nos Carte Vitales

Messieurs,

            Suite à notre rendez-vous à Montauban, lundi le 3 septembre , nous vous prions de trouver ci-joint les documents S1 et E121 que CPAM nous a envoyés.

Nous voulons nous assurer que nous payons les charges correctes et non pas plus que nécessaire.

Ces documents prouvent que nous sommes tous deux retraités depuis 2009 et que nous sommes exonéré de charges sociales – « convention Franco-britannique sur la double imposition; article 19 (pensions UK)/article 6 (Location UK) ».

Nous vous serions gré de rectifier les charges sociales en fonction de notre statut.

Dans l’attente de votre courrier, veuillez accepter, messieurs, l’expression de nos sentiments distingués,

Name(s) & Signature(s)

Social charges again

Lucky are those who have only just received demands for social tax, which was invented some years ago when the unemployment rate was 15% - and seemed such a brilliant idea that they went on with it. I am a pensioner with an income below the tax level, but nevertheless I receive a huge bill at this time every year, which has to come out of my savings account. This year & last the amount was 1/3 less - not much comfort as it exactly reflected the drop in my income, which comes from investments.

The tax office have always allowed me to pay in 2 instalments.

On a happier note : for all those who began to receive their state pension after they came to live in France, & who therefore do not get the fuel allowance, someone in Europe has said it's unfair (which it is) & that from now it must be paid. Details & the demand form on Overseas Pensions, heating allowance.

                                                                                              Jenny B., Aveyron
Val says
I cannot see how you can pay social charges when your income is below the tax level Jenny. Unless it is on your investment income. (Are they charging social charge on your pensions ?) Have you had an accountant look at your accounts. I have come round to the fact that paying an expert is going to save you money in the long run.
JENNY says " yes it is on the investment income" 

Why the long letter below.

About a week ago I phoned Michael Annett , tax advisor to ask for help on these worrying  for many, social charge issues.
 He explained in detail everything he has  now set out in his letter, well was I  going to remember all that! I talked him into putting it in writing for TAG , something he was initially loath to do as he had once been unfairly lambasted in an online forum. I explained TAG was a community magazine and not an online forum , hence the letter.
What I ended up feeling from his words of wisdom is you need a very knowledgeable accountant or tax adviser  His letter is long and I have had to import it into microsoft word to get it to fit in to the format of TAG
I sent an email yesterday to Di Hope saying she was right the charges are unjustified but maybe she was quoting the wrong bit of legislation and I loved part of her reply below.

I will naturally keep you posted on developments and any authoritative advice I receive from official sources.  In the meantime, I'm going to concentrate on more entertaining things like bottling sloe gin and making mincemeat.  If I get thrown in jail for refusal to pay taxes, I'll get very drunk before I go!!  And thanks for that advice about the TV - James came quickly, spent a very hot time on the roof in the blazing sun and I can get my daily quiz show and soap fix again!
Di Hope

Reply from a Taxation Advisor with the Company Pelican Consulting

Dear Mrs. Johnston,  Further to our discussion this morning, some comments for you. With all best regards, Dr. Michael Annett     [ mpfa@pelican-consulting.fr ] Social charges on pensions Firstly, there is absolutely no relation whatsoever between the healthcare system (e.g.. CPAM) and the social charges on pension income. There is an exemption from some of the social charges on pension income if not a liability to the French social security system as a whole.  As far as healthcare was concerned, the only way in which to show non-liability to the system was to show the E121, now the S1, since this confirmed that all healthcare costs were paid by the person's host country social services. Accordingly, the relation is between the E121/S1 and some of the Social charges. The general exemption from social charges on pension income stems ONLY from having an EU State Old Age pension, since social charges cannot be applied to income which is being paid due to social charges themselves having formerly been paid.  This exemption has been extended by the EU to all pension income in the case of British nationals resident in France. The Franco British double tax treaty This has been the cause of many issues, mainly due to tax offices applying the Treaty's provisions a year earlier than they should have. Essentially, as far as International Treaties are concerned, there is a master international treaty that states that, unless otherwise indicated in a particular Treaty, the effective date of entry into force of a Treaty is the last date on which the countries party to that Treaty legally ratified it. The Franco-British Treaty, pursuant to this start date system, can be seen to therefore become applicable from the 1st January 2010. However, article 31 of the new Franco-British double tax treaty clearly states that the Treaty will become effective only once both countries have terminated their relevant legal procedures for bringing the Treaty into effect.  Then the the same article confirms the applicable date of the Treaty for France being the start of the following tax year.  French civil law states that no law can be effective until it is published in the 'Journal Officiel', which, in the case of the Treaty was not effected until January 2010.  This being later than the UK's date of completion of its legal requirements means that the applicable date of the provisions of the Treaty is the start of the following tax year - 1st January 2011. Changes in the new Franco-British double tax treaty The Treaty did not change the manner in which income was generally assessed, but it did change the manner in which the French assimilated the effect of the foreign-assessed income, the new system resulting in a tax credit being given on this income. Essentially, the new system is that world income is assessed , and French tax calculated in the normal manner.  This total tax is then expressed as a percentage of the assessable income.   Then, this tax percentage is applied to the foreign-assessed income in order to provide the tax credit to which the taxpayer is due. Changes in the manner in which foreign-assessed income is Declared Foreign-assessed income, such as government income and foreign rentals, are declared in section VI of the pink 2047 form, and then transferred to box 8TK on the main blue 2042 form. Issues with the tax office on pension, government and foreign rental income The first point to bear in mind is that, just as with every country, the French tax forms are intended for French nationals declaring their income.These forms are not specifically designed for foreigners or income that falls under the provisions of a double tax treaty. Therefore, whilst a French national would declare income in section VI of the pink 2047 form, this is then, yes, liable to the social charges. However, a foreign national declaring, for example, UK rental income, in the same section of the form, would not be liable to the social charges. So there is a conflict in the manner in which income is to be treated. Sadly, the provisions of the double tax treaty came into effect before the tax authorities changed their computer systems, causing many incorrect assessments. However, article 6 of the Treaty which covers foreign rental income does still quite clearly state that this income is assessable in the UK.  Full stop.  Accordingly, it is not assessable and cannot be assessed in France. As a result, is not and cannot be made liable to the social charges. Furthermore, and as a safety clause, article 24 which deals with the double tax provisions, states equally clearly that in order to compute French taxation the foreign income will be taken into account - but note that the expression is 'taken into account', and not 'assessed'.  The article then goes on to state that it is not the UK tax paid that is taken into account by the French, but French tax computed in the French manner ... and hence the tax credit as mentioned above. Incidentally, the French tax credit applies whether or not UK tax has been paid. So, clearly, not only is their no right to assess foreign rental income in France, this is confirmed by the manner in which the French account for this income as part of the taxpayer's world income. Now, one reason for which the tax office may apply the social charges can be pursuant to their view of mitigating tax evasion and in order to raise an objection from the taxpayer as to the assessment dues ... so as to then be able to ask for Proof that the rental income has been declared to the UK tax authorities (since too many people don't, in the belief that this is not necessary). Contentions with the tax office One word of warning, as the procedure for complaints and Rectifying incorrect assessments is fairly defined, you should use a professional as frequently taxpayers initially try themselves before seeking profession help, only by then things are frequently too advanced for the tax authorities to accept possibly being in the wrong, to then only confirm prior decisions, and the whole process is then geared to only being solved in court. Finally, unfortunately this year there have been many errors with the tax assessments.    Dr. Michael Annett     Diverses qualifications professionnelles britanniques en  Comptabilité, Fiscalité, Droit, Finance et Gestion de  Patrimoine Université Aix-Marseille Diplôme Universitaire  en Gestion de Patrimoine, Master I, Master II et Maitrise  en Droit, Fiscalité,  Gestion, Finance et  Gestion de Patrimoine   [ mpfa@pelican-consulting.fr ]      PELICAN consulting www.pelican-consulting.fr Consultants in wealth management, financial investments,  banking operations, finance and mortgages,  independant insurance brokers and international taxation. Val says Michael Annett is available to take on your cases  against the tax authorities   and he can be contacted at mpfa@pelican-consulting.fr