Aussies in France


(Graham Roberts) #23

Hi Lesley

Simple truth is that we have continued to disclose the amount of pension income that we draw from our pension in OZ and we are taxed on that under the terms of the Bi-lateral Tax Agreement.

The french have nothing quite like our superannuation concept and the wording of the Agreement is very loose. To the french pension income is treated much the same as a french pension is…that is, it is regarded as income and therefore taxable, regardless of the tax exempt status in OZ. The Agreement simply states that all pensions (unless a government service type of pension) are assessible in the country of tax residency (in our case France) and under their normal rules.

To date it has not been too bad as we have not drawn any larger amounts of pension.

I would love to hear of any other views on the treatment of these account based pensions in France


(LESLEY MATHIESON-SMITH) #24

Hi Graham
So your pension is taxed at the same rate as income - on the same tax scale?
It’s quite high, for pension funds, I think
Lesley


(Graham Roberts) #25

The actual tax rates are not too bad here…if you are not aware, it is based on the number of units in the household, so if there is simply one pension coming into the house, it is split between the number of adults in the household and assessed on that basis, but finally multiplied by the number of units in the household. The first €9711 is tax free per unit and then assessed @14% from 9,711 to 26,818. This probably averages out at around 10%. What you need to be careful of are the social cotisation charges, which can be quite high. If you are not in the french social security system (including carte vitale) your cotisations are reduced significantly but once you start using the system the charges will increase (as to be expected). Obviously the more pension you draw, the higher the taxation.

Naturally, I would prefer to be taxed the same as in OZ (nil for pension income) but we chose to live in France and take the benefits, therefore we have to accept the system. Simply in my opinion it is the result of poorly drafted bilateral Tax Agreements and the understanding of the Australian Superannuation system and treatment of private pensions.


(LESLEY MATHIESON-SMITH) #26

That’s very helpful, thanks Graham.
Do you have a number I could contact you on for a chat, or a private message on messenger?
I would like to discuss things more specific to us, rather than in an open forum.
Many thanks
Lesley


(Graham Roberts) #27

Lesley

I did send you my contact details in a private message to you via this
forum site

Cheers

Graham


(LESLEY MATHIESON-SMITH) #28

Hi Graham
I didn’t receive that message!
Can you try again? - Lesley Mathieson-Smith on messenger
Cheers
Lesley


(Graham Roberts) #29

try me on my email at

grobby99@gmail.com

Graham


(Anna Louise Augustin) #30

@Rachel, it is a good word isn’t it!
Hope I might have a little SUPA coming to me eventually.
For those who don’t know , in France along with the regular pension, there’s the “retraite complémentaire” usually ARRCO and that brings in a little extra. Apparently most employers have to pay into it. You always need to apply for it though. There’s an online thingy for it.
Best wishes,
Anna


(Phil Scanlan) #31

Hi Graham,

We are looking to retire to France and I notice that you do not use the Social Security System.

With the rate at Social security tax rate 17.2%, we were thinking to use full private health insurance instead. I was just wondering, do you use private health insurance or do you choose to pay for medical out of your own pocket. I was just interested to find out how much full private health cover costs in France so we could weigh up which option to choose?

Many thanks

Phil


(Phil Scanlan) #32

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/ )


(Graham Roberts) #33

Hi Phil.

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.


(Phil Scanlan) #34

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?

Rgds

Phil


(Graham Roberts) #35

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


(Chris Elliott) #36

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.


(Phil Scanlan) #37

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

Rgds

Phil


(Phil Scanlan) #38

Thanks Chris.

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.

Cheers

Phil


(stella wood) #39

@phil1974

Hello Phil and welcome to the Forum

Please will you amend your Registration as per our Terms and Conditions… you need to give your full name.

If you are unsure how to do that… simply put your full name on this thread and I will amend the Registration for you.

cheers


(Phil Scanlan) #40

Hi Stella,

All done

Rgds

Phil


(Graham Roberts) #41

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.

Graham


(Joanne Taylor) #42

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 :smile: