Do you mean, you can live in France and pay tax on your UK state pension in the UK and expect France to let you off paying more tax in France?
Well no, because it is tax that is due to France.
France would claim from you the tax it is entitled to, and it would be up to you to reclaim the tax that you wrongly paid in the UK. There is no mechanism for France claiming an individual’s tax back direct from the UK.
Tax has to be paid to the right tax authority. You may not feel it makes much odds to you where you pay tax, but it makes a lot of difference to each tax authority whether they receive the tax money due to them or not.
If you owed £1000 to Peter, but you decided to give it to Paul instead because you like Paul better, is Peter going to say Oh well as long as you’ve paid it back to somebody that’s OK, forget about it?
No I meant that I expected there to be a mechanism for France to recoup tax unavoidably paid in the UK - that’s what dual taxation treaties are about, after all; preventing individuals from being taxed multiple times on the same income.
But I guess the mechanism is to allow the individual to be paid gross or to recoup the tax paid in the UK - so not so much “pay once” where income might be dual taxed but “pay twice and claim back”. I should have known better than to think the aim might be to make things easy for the individual
Anyway - I do know better than to stick my oar in where I clearly don’t know how things work (or worse, think I know but am utterly wrong). So I’ll keep quiet from now on
Many years ago a French Taxman explained things to me…
We will look at your worldwide income
We will assess how much Tax to charge you
We will see what you have already paid in UK (if any)
We will see if you have paid UK less than we assess
We will charge you the difference if there is one
We will not refund you if you have paid UK more than we assess
OK things might have changed over the years, but that’s surely still the basic isn’t it.
and, for what it’s worth… the discounts (freepay) applicable by France are generous and work well in my view… certainly in our favour.
That’s broadly how I thought it worked, but the suggestion is that it’s more:
We will look at your worldwide income
We will assess how much Tax to charge you
We will charge you that tax
It is your responsibility to reclaim tax paid in the UK for UK income that we taxed here.
If it transferred over automatically to the Schengen visa, how would the start date be calculated ? The whole point of having your passport stamped when you enter the Schengen area as a TCN is that it indicates the date of entry for calculation purposes of the 90/180 day rule. If there is no date stamp, how are border authorities to know at a glance when you came into the area ? More likely though, is how would you prove that you are within the 90/180 day rule if asked by a border guard to justify ?
Tax should not be “unavoidably” paid in the UK if it’s not due there. It would only be wrongly paid in the UK if the individual has not informed HMRC they are no longer UK resident, and arranged for pensions, bank interest etc to be paid gross. But yes, it is the individual’s responsibility to ensure that tax authorities have full information about any changes in circumstances. You cannot reasonably expect HMRC to know that billybutcher has moved to France and adjust his tax record accordingly, if billybutcher has not told them.
There are lots of interesting wrinkles in the French tax system that keep our overall tax (including social charges) to about 14% of our income, instead of the 30% you would have us pay! Lots of things give you tax reductions, and it’s up to the individual to work these out and claim them.
The french tax calculation is based on parts in a household so can be different for different households even with the same income.
As an example, for a household with an income of 30,000 and two parts the total income is divided by the number of parts, so 15,000, and the tax calculated on the bands for 15,000 not 30,000. That tax figure based on 15,000 is then multiplied by the number of parts. So the tax to be paid would be less than a household with only one part, as that would include income taxed in higher bands.
I’ve always thought this much fairer, if you have one income as a family you still get two (or multiple) personal allowances, I bet it makes a huge difference at the low end of the scale compared to the UK (where, basically, if you don’t have two incomes as a family you are sunk).
What I am trying to explain is that because French tax has more individual variations and exemptions if one looked at the chart Stella pasted we would in theory pay 30%. But we pay about 14%, due to credit impôt, exonerations, and abatements, etc and most of that is due to social charges. French people are adept at using the opportunities in the tax system that don’t exist in the UK. The systems have totally different underpinning policies.
As an example, Gift Aid in the UK allows the organisation you give money to to claim the tax paid. Here if you give money to a humanitarian cause you can claim 75% of the sum against your tax (with some qualifications and limits). Both approaches encourage people to make donations, but in a totally different way.
But the tax office starts by calculating your RFR, or revenu fiscal de référence. The RFR is what is left when all your abattements etc. have been calculated and it can be quite a bit lower than the actual income you have declared. Your tax is based on your RFR. So depending on your circumstances it is possible (well I think it would be, though it might be stretching it a bit) that the adjustments to your 30k income would result in an RFR of less than 26k in which case you would have no 30% tax to pay.
As I said tax is never simple (well, OK if you have one source of income and no complications).
Which is my problem really - without sitting down with all the different bits of income and a good understanding of the two tax systems I can’t, at the moment, say for certain whether I’ll be better off in the UK or France. I doubt that it will be a massive difference, but it might be enough to impact our decision as to whether to retire to France or just make maximal use of the 90 days per 180.
