Sorry, further to my previous post, I should have mentioned that we are planning to retire in France from Australia before we are 60 and will not be eligible to access Super, hence our only income will be investment income. I found that the social charges for investment income are higher at 17.2% (found on the table on this link: https://www.french-property.com/guides/france/finance-taxation/taxation/social-security/social-welfare-levy/ )
Indeed we are indeed using the french Social Security system and paying the Social Contributions for that right. When we first moved to France we took out full private health insurance thru a group called Mondassur - ASFE. Their cover was excellent and covered 90-100% of our costs. They were not cheap, but certainly far from the most expensive. The benefit to us was that we were covered for our pre-existing conditions (other companies would not cover). After our first 18 months, the laws changed in France to allow “anyone” who can prove that they have lived in France for a minimum of 3 months could apply for the Carte Vitale (Medicare). We received our cards in 2015 and it was only this year that they have started to charge us for the Social Contributions on our pension income. The social charge on pension income is only 6.90% but it is 17.2% on investment income. We find that currently we are paying about half of the cost of private health cover and about the same as we were paying for “Hospital Only” private cover in Australia. With the french system, we are covered for all medical costs (radiology and pathology included) as well as proportionate amount for dental and optometrist. Of course you can (we do) also top up with a “Mutuelle” so that you are covered for almost 100%, with some exceptions. It is indeed a good system.
To self insure is not regarded as possible by the french as under your visa application you will need to have health cover and if you renew your Carte de Sejour they will want to see evidence of your cover each time.
Hope this helps…probably best to get into the french system once you have been here for at least 3 months…it can take 3 months or so to get the carte vitale these days, so you would still need cover for the first year.
Thanks for your detailed reply Graham. Yes, I think we will just join the French social security system after 3 months. I think my partner & I need to consider the relaxed lifestyle in France and be less concerned about taxes, social charges etc, although it is good to do your research beforehand.
My partner and I are 44 (no kids) and looking to retire at 50 and make the move. At first our thoughts were to reside in France & travel around Europe for 10 years, then return to Australia when we’re eligible to get Super as it isn’t taxed in Australia. But then we’re thinking, if we come back to Sydney we have to buy back into the property market again which will be a huge setback financially. Now we’re thinking to just live the rest of our lives in France, enjoy the lifestyle and forget about taxes etc. As long as we’re comfortable financially and living the dream, then we’re on a winner!
Judging by your earlier posts, I can see that you’ve been in France for 3 years now. Can I ask, how are you enjoying it? I gather it must take a few years to settle in. Are you planning on staying there forever?
Phil, looking at your post you have around 6 years before you make the move so an awful lot of things can change in that time.
We have been here for 5 years and are eligible now to apply for a 10 year residency card (normally a 1 year carte sejour that needs to be renewed each year). We have had no problems settling in and we are based on the border of the Gironde and Dordogne departments. 1 hour to the east of Bordeaux and 30 mins to the west of Bergerac. We have English & French friends here and now there are about 5 other Australian couples in the neighbourhood, so no trouble settling i.
The lifestyle and pace of life is so different to Sydney and we have no intentions of returning there…we are happy here. There are advantages & disadvantages, but we truly find the advantages are greater. Taxes are not too bad and although you currently get taxed on the super pension here, it is actually not that much ( it is the Social Contributions that push it up…but you need to think of those as a contribution for your health services etc). In Aust you could be paying Medicare levy and also require Private Health cover, which provides bugger all.
We find it very relaxing and comfortable here and we can get to Paris in 2 hours from Bordeaux by train.
My advice is to just do it…but do research where you want to live and do it in both summer & winter to make sure. Life in Rural France can be quiet especially in winter months so raging lifestyles are not so easy (leave those to Sydney). It is important though to have a reasonable grasp of the french language and I would recommend that you work on that over the next few years before you make the move. No need to be absolutely fluent, but the better your skills the easier it is.
Keep in touch if you want any info or assistance
I’m not an Aussie but have spent half my life there for the last 15 years - separate out investment income and Super in your head. You’re Super is simply a pension by any other name as far as I’m aware - “Investment” income not in a Pension is taxed as “Unearned” income and you pay social charges from the first penny. You can look at things like Assurance Vie policies as something to move investment money into - not your Super- it means life assurance but its really a tax efficient holding account. I’m not sure on the position of opening them whilst in Australia - but like many things here - its a simple idea with complications added. The main advantages are the “funds” do not get taxed in the Assurance Vie - only what you take out and then only the “growth”. Its too complicated to explain fully - but it is much more tax efficient here than general investments - the longer they are “open” the more tax efficient they become.
Thanks Graham. Yes still six years to go unfortunately, but a few weeks ago it was 16 years to go to retirement in Sydney, until my partner’s friend came back from a European holiday and told her we have it all wrong here - all work no play - a rat race.
My partner is also English so the move will allow her to be closer to family.
Re the language, we are already starting to label everything in the house with the French equivalent and will look to get some lessons. Thankfully the better half can speak a little French, but yes, I’ve read on a lot of forums that the language barrier can be the difference between coming or going.
Funnily enough, ever since we’ve made the decision to retire earlier, we both feel a lot less stressed and a lot happier.
Now to research areas to live…research is half the fun!
Thanks again for your help
Yes I have been doing quite a bit of reading about Assurance Vie since your email and it does look promising, tax wise. Thankfully there is an accountant in Sydney who specialises in Australian and French tax law, so we’ll be able to plan and structure our finances now so we are in a good position when it comes time to retire.
Hello Phil and welcome to the Forum
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Good luck with the research.
And yes there is a lot to benefit from by moving (as long as it is financially viable)…but rural France can still be a little quiet for some, especially in winter.
Hello, I’m Jo, Phil Scanlan’s partner.
Approximately 2 weeks ago we decided to look into an early retirement to the south of France. We’re in the initial stages of research on tax, superannuation, stocks, shares, Assurance Vie, Visas, learning the French language, index funds. . . the list goes on. A month ago I’d never even looked at my superannuation balance!
This is a very exciting time for us but it’s also daunting.
I am English and moved to Australia when I was 24. I took French for a couple of years at school but chose the German language as my GCSE subject instead. I lived in Germany for a year when I was in Uni and the easier option would be to retire there, as I’m already familiar with the language. . . but the south of France draws me in due to the temperate climate and housing affordability. (Phil and I have built 2 houses in Sydney and have a lot of experience with DIY, so we’re looking at a renovator).
We’re very much looking forward to quitting work and spending our time doing things we love.
One thing I keep reading of people who retire early to Europe is that they “wish they’d done it earlier”. We’re hoping to live this dream.
Right now our biggest conundrum is whether to pump “after tax” cash into superannuation or just to leave it in the offset account for the mortgage (or even invest it. . . gulp!). Does anyone have any experience with the rates charged by the French government with drawing down their super or taking it out as a lump sum? I’ve read that if you draw it down you’re taxed the normal banded rate, and that if you take it as a lump sum you’re taxed 6.75% (7.5% minus 10% of the 7.5%). . . but what about the social charges?
Thanks in advance. . . looking forward to reading more and contributing more
Hello again, I wonder if anyone could help us please. . . ?
Phil and I are in the middle of discussions over whether to pay ‘after tax dollars’ into Super, or just pay down the mortgage instead. . . can anyone add their opinions/experiences?
It seems that, unless they change the laws by then, Australia will tax us on earnings before we put them into Super, then France will tax us when we withdraw it in our retirement.
I’m creating a spreadsheet so we can compare apples with apples. We’re working on the assumption that cash in Super or an Assurance Vie will give interest of 5% per annum.
Can anyone please tell me if my assumptions below are correct or not? Thanks again!
If we take Super as a lump sum at preservation age, France will tax us 6.75% flat rate (7.5% - 10%) and 6.9% social charges.
If we draw down on super at preservation age, France will tax us income tax as per bands, plus 6.9% social charges.
If we pay the money off the mortgage and transfer the proceeds from the sale of our house over to France, they won’t tax us anything on the lump sum?
If we then put this money into an Assurance Vie, after retirement age France will tax us income tax as per bands, plus 6.9% social charges. . . ONLY on the ‘gain’ portion of what we draw down.
Hi Graham, Phil and I are working through things on our quest to retire to the South of France. . . we’ve seen some lovely properties online around the Dordogne region, and they’re all so reasonable compared to Sydney prices. We’re looking to come over for a visit in a couple of years and are wanting to check out some different areas before we make the plunge.
We’re far past the stage of “raging” back in Sydney, and find most enjoyment pottering around the house doing DIY, gardening and watching movies so I don’t think the quietness will be a deal breaker for us. . . If it’s too cold we might just pop across to Spain for a month or so! Do they still have hotel rooms for a pound a night?
We do hope to be able to travel quite a bit when we come over too. . . I’d love a small caravan, but we’ve read that they’re not very popular over there? That some of the streets are just too narrow?
I suppose what we would like is to live within 30 minutes of a few different towns with restaurants, cafes, markets, shops etc. . . and within an hour and a half or so of one or two cities if possible too.
You mentioned that social charges on Australian pension are currently 6.9% and that on Investments they are 17.2%. If you are past retirement age, do you know if an Assurance Vie be considered an “Investment” or a “Pension”?
Anyway, thanks in advance. hope you’re doing well.
oh . . and we saw our normal tax agent last week. . . she informed us that we’d get hit bigtime for tax on our investment property if we leave Australia. . . awesome!!!
They’re sneaky, these governments. . . if we keep it and become “non-residents for tax purposes” we’ll get charged a flat rate of 37.5% tax + medicare levy on any income (which we can then use as an offset for any taxes paid in France). . . and if we sell it after we’ve gone, we won’t get any relief on CGT.
Great! Should’ve just bought a racehorse.
What are your plans in light of this Tax news…
Why, buy a racehorse of course!
Haha, well, maybe not. Stuffs up our plans though, as it was meant to be a long term investment, one that would provide an income through retirement and a lump sum later on when we’re close to death
We have no kids, so we don’t need to leave an inheritance. Well, maybe just a little something to the dog’s home
I suppose now we’ll just have to sell it at some point before we leave and hope we don’t lose any money.
We were advised to sell up in UK to simplify our tax affairs.
At least you won’t be blindsided by Brexit, that is a real blow.
It means that, although we moved here with the intention of staying to the end, we feel that we would not now be happy going back to live in that type of UK.
Our area of southern Burgundy, the Clunysois, is popular with Aussies, although mainly as second homes.
Aha Jane, Brexit affects me too, as I’m English. I moved to Australia in 1999.
I’m interested to see what the outcome is next March. Oh, and after living the good life in Aus for close to 20 years, I don’t think I could go back to the UK to live.
I suppose there’s not much we can do about the investment property now, apart from sell before we leave, but maybe by documenting it here someone else can learn from our mistakes?
Oooh Burgundy. Now there’s somewhere we haven’t considered yet. How do you find living there?
Hi Joanne…sorry that it has been a few days for the response, but I have been away from home.
Seriously the Dordogne has its good points, but not unlike anywhere it also has negatives. It is supposedly one of the poorest departments in France and if it were not for the Ex pats, the department would struggle. A lot of english and some dutch in the department, but also a growing number from Aust. The northern part is quite agricultural and a lot of english enclaves (Riberac; Nontron & Brantome) Quite picturesque in parts, but we prefer the south (still lot’s of Poms) around Bergerac, Perigeuex, Duras (Lot & Garonne). The weather can be cool in winter (especially North) but we have just had an extended summer with about 8-10 weeks of 35+ degree temps.
We live in Port Sainte Foy (across the river from Sainte Foy la Grande and we are 25 mins from Bergerac (28,000 pop) and an hour from Bordeaux (500,000+). Good flights from Bergerac to UK and from Bordeaux to many places. TGV from Bordeaux to Paris now takes only 2 hours so you can go to Paris for a week-end easily.
Cost of property is very cheap by comparison to OZ, but just be aware that it can take up to 5 years to sell a property if you need to. There is not a great opportunity for capital gain unless you buy the right house in the right location. Food & wine is cheaper than OZ mostly, but if you want to sit back & watch movies, you will need more than french TV and perhaps a SKY box for UK TV (although it is pretty poor also). We us iptv thru the internet, but you need good internet speed and it is not always considered truly legal (no problems for us over 3 years)
Spain is about a 3.5 hour drive from our place (to the border) and the Mediterranean can be reached in about the same. Lots of picturesque villages and countryside and we are in the middle of Bordeaux wine area so lots of vines and good cheap wine.
The pace of life is very agreeable in rural France and few problems. Health system id fabulous once you can get in (eligible after 3 months residency) but it does cost that 6.9%.
An assurance Vie is regarded as an investment, but they are generally tax effective, because you generally do not draw funds from them in the first 8 years. If you do you will pay full tax on the funds drawn. We retain our private pension in Australia and repatriate funds to France once or twice a year (hoping for good exchange rates). When we first came over, the exchange rate was $1AUD= 80 eurocents, but today it is more around 61-62 eurocents, so a significant fall in value.
To settle here, you would need to apply for a Visa longue durée (12 months) and which is usually readily renewable each year. Effectively in the second year you apply for a Carte de Sejour for temporary residence for 12 months. This in effect is an extension of your initial visa.After 5 years you can apply for a 10 year Carte du Residence. French admin drives many people bonkers, but you just have to learn to relax and not be rushed. Drivers Licence needs to be exchange for a french one within the first 12 months and can sometimes takes 6 months to process.
Hope this info helps, but feel free to contact me anytime with questions.
I’ve read somewhere about the time it can take to sell a house. So. . no use thinking we can make some fast cash flipping houses then eh! We will have to be very careful when deciding on where to live, as it looks like it may become our “forever home”. The lack of opportunity for capital gain might actually benefit us. . . especially if the Australian housing market continues its epic climb.
We don’t really want to be stuck in the middle of nowhere, so we’ll have to do some due diligence. If we could be half an hour away from various different towns with a few cafes, restaurants, markets, shops and within an hour and a half of Bordeaux or Toulouse then we’ll be content I think.
Actually, good point about the internet. We’ll really need to make sure we can get good internet wherever we end up, as I imagine we’ll stream most of the TV through something like your iptv. . . but maybe in 10 years everything will be totally different?
We’re really excited about being so close to so many different places. Before I moved to Sydney, I never truly appreciated how close everywhere in Europe really is. We really just love going for drives and exploring, so I’m sure we’ll be in our element. . . do you get to travel about much Graham?
The health system sounds great, and well worth it. We Aussies know how much healthcare can cost . . . I’ve heard that even the vet bills over there are a fraction of what we pay here. . . that will be an immense relief!
From what I’ve read, it’s only the interest in the assurance vie that attracts tax and social security charges, and only when you withdraw from the account. . . so withdrawing within the first few years doesn’t seem like it will attract much income tax anyway (if any at all), and only minimal social charges. We really need to have a good look into these as I think it will be where we transfer everything when we come over. . .
Here’s hoping for a better exchange rate in the coming years. It really does make a massive difference.
I’m ready for the bureaucracy. . . pitchfork in hand (hahaha). . . we’ll be retired so we’ll have lots of spare time on our hands! . . . gulp. We are both already learning the French language. . . Phil likes to recite bad French to me whenever he can (ARGHHH). We’ll keep it up as I know we’ll appreciate it when we get there.
I’m writing notes on EVERYTHING. . . I have a file. . . Definitely need to keep on top of the documentation side of things and make sure we get things done in time … . thanks for the info on the driving license. . . noted!