“In this world nothing can be said to be certain, except death and taxes”. So wrote Benjamin Franklin in a letter to Jean-Baptiste Leroy in 1789, and still true today, but the big question for me is “Where to pay my taxes?”
A few years after arriving in France, I wrote to HM Revenue and Customs querying if I could have the income tax on my UK pension deducted here rather than in the UK. I still have their written reply saying that provided I was permanently resident in France and a French National, I could receive my pension gross and declare it here for taxation.
So, after five years I took the family on a long and complicated bureaucratic journey culminating in our gaining French Nationality as well as retaining our British Nationality. In short I have both a French and a UK passport. I should emphasise though that the tax issue was only an incidental reason as I wanted us to have nationality anyway.
Next stage, I again wrote to HMRC enclosing copies of their letter and my nationality papers, but another setback ......... because my pension is government based, i.e. a police pension, I would have no choice than other to pay income tax in the UK. They did apologise for their previous misleading information, which I accepted graciously.
Now I appreciate that taxes are inevitable, but as my and my children’s present and future rest in France, I would prefer to pay into the French system, but until recently, I accepted that this could not be. However, the double taxation agreements have been updated and the rules now include government based pensions. As I am now a single parent, with two dependant children I would be be considerably better off under the system here.
Well, I’m taking a pause right now, so what’s stopping me?
I discovered a rather disturbing condition relating to my dual nationality, in that one must be French and no other. So, if I am to go ahead, I must renounce my British nationality at the British Consulate (£229). A fairly simple procedure, but what a big step to take. Being born and bred in Britain it would seem like severing a cord, but practically why not?
Is being British whilst living in France just a feel-good idea, or are there any practical reasons for me to hang on to the status?
I think you need the advice of somebody who really does understand European Law. I was told by a lawyer, who is unfortunately an academic and not in practice, that double taxation and several other things such as social security, pensions, maternity benefits and similar were originally intended to be not exactly merged but made transferable between member states. Only some of those things has ever happened and double taxation, according to him, should not happen. I asked him because I hold trust fund savings in a UK bank for my two daughters which are tax free because of their ages, but under my name. The bank warned me to keep shut up here because since those accounts are in my name and earn quite a bit of interest they would want to tax me. So I asked my lawyer friend and he invited one of his colleagues along for a beer who knew and said that several things including double taxation or taxation of a trust fund should never happen since such and such a treaty has been in place. I am not sure where you should start with seeking advice, but because there is so much contradictory information from the public services of both countries I think you need it.
No Carol, absolutely you do not have to renounce your British nationality as a matter of course. Only if you receive a UK government pension and you want to be taxed at source in France.
Interesting comments. Nationality has nothing to do with taxes - as far as the UK revenues is concerned they will tax any property income, government service pensions which sometimes includes local authority pension schemes and the military pensions in the UK. All other sources can be taxed in France - if that is what you decide. Oddly they do not tax the Old Age Pension. All other UK income can be taxed in France but they do talk to each other and thus you cannot get personal allowances against tax in both countries.
My local tax-man queried earlier this year whether I wasn't being taxed at source on my UK state pension in which case I shouldn't be declaring that income here. I told him so far as I knew I was, and have been for most of my working life, non-resident for tax purposes in the UK and therefore no tax would be deducted at source. Anyone know if that is right?
As for the nationality issue, every time I b**** to French people about not having the right to vote despite the fact that I live and pay my taxes here, someone says "Why don't you just take French nationality?" To which the basic answer is that I don't want to. Dual nationality is tempting, I must say. My son has both and so does my grandson. But renouncing my UK nationality is a step too far.
As to whether there are practical drawbacks, I could see there might be problems with my UK bank accounts and credit cards but as Brian said from the word go, this is one where you need solid professional advice.
Be vey careful. I was told by my Prefecture and my Mairie that if I wanted French nationality I would have to renounce my British one. However others have told me that is incorrect (which doesn't surprise me as I have had similar problems before which required an avocat to sort out (nice fees natch)). However another problem has emerged that if I want to write a "British" will to have effect after 2015 I must still be British when I write it. Therefore I think that if i want to do a will like that I will have to wait for an application for French nationality until after 2015. Incidentally I have also been told that if you are British by right you can always re-apply for British nationality after receiving French nationality. Like Brian I have cross border investments in a trust (but not one originated by me) and this is causing huge but to an extent avoidable difficulties with the new French tax laws. I am fully resident in France but any UK assets must be included in all French declarations and in addition the law now states that any trust outside France must be declared annually. You only pay tax on any income taken but there are ISF issues.
No need to renounce - france and the UK accept dual nationality. However - if "they" want you to pay tax it does not matter what your passport says - not the same thing at all
I was talking to HMRC yesterday on similar topic.
Two private pensions have recently kicked in and, subsequent to taking my tax-free lump sums, I received a letter from HMRC advised me that future paymets would be taxed at source.
I'm tax resident in France so I contacted HMRC to ask whether it would be possible to receive the pension payments tax-free as I would have to declare them on my French tax return and didn't want to end up paying tax twice. The HMRC employee didn't mention anything about having to be a French national and simply directed me to this form:
I haven't filled it in yet but I blame that on my allergy to forms!
Chrissy - my info was on "funded" pension schemes. Not sure about private pensions. The double taxation treaty between France and the UK means you cannot be taxed twice - but it takes time for "them" to accept. Every 2 or 3 years someone in HMRC demands tax on one of my pensions - I simply give them my code, ID and tax office and respectfully ask them to look at my file. Result ALL of my pensions are taxed in France - only property income, civil and military service pensions and most local authority pensions MUST be declared and taxed in the UK
Martin, looked through that form from Chrissie and there is your solution. Don't be daunted by 18 pages, it is half in English, half French, giving a choice of language and then several pages give you the 'school rules'. It looks simple enough to me. At worst it is part of your solution.
Not a choice of languages, Brian... the first bulleted point in the box on page 1 states that BOTH versions have to be completed. It also has to be signed by the French impots so hope my friendly French tax guy is au fait with these forms... !
Whoops, sorry, didn't read that. However, one is a repeat of the other to all intents and purposes, as is the blurb. Nonetheless, no worse than most other forms anyway.
Icompleted and signed both sets of forms, took them to my local Impots and voila....they got lost, misplaced, misunderstood so 1 year later I repeated the form filling took them again to the Impots and this time it worked but I'm not sure what has actually worked??? Had letter from HMRC saying that we had been accepted for double taxation rules but what does that mean??? We have a rented house in England and my NHS pension. We are only taxed on our state pensions here in France so what will be different???