Wondering if anyone that has already been through this could offer some advice please. To cut a long story short. We have lived here almost 11 years, during this time hubby has continued to work in England and travel home weekends. He is in the construction indiustry which is suffering greatly at the moment. Was made redundant 2 yrs ago after 21 years with same company and since has had short term contracts. Hubby is 62 and is now fed up and tired of all the travelling and missing out on family stuff, understandably. He obviously can't touch his state pension untill 65. We have, or he has got a private pension he has been paying into and can take this now if he wishes. It won't be a lot, approx between 15-17,000 euros per year. So the plan is to give up work in England, come home to France, take the pension monthly and to then set up an activity as Auto Entrepreneur to top up the pension each month.So, my questions are... Obviously we have to declare this pension on our French Tax return but will it be taxed in England or France ?
Do we have a choice where it will be taxed?
What will the percentage of tax be ?
What is the best way to have it payed in order to save money? A currency exchange company?
I am covered for health care here by the Auto Entrepreneur scheme so I know that if hubby sets himself up he will be covered for health care too. I read somewhere that retirees are covered from England by an E106 for the first 2 years, will that be the case for him or does that only count for the official retirement age (65) ie those going to receive state pension?
It will be tight but if we can make it untill his 65th birthday then we will be ok as we'll then have his state pension on top of things. We don't have a mortgage or any loans so we're lucky that way, we do have a big house with lots of bills, same as everyone else, which we just can't sell at the moment because of the financial climate.
I hope all that makes sense and would so appreciate it if someone could offer some advice please.
Thankyou Terry and Manny, it's not the setting up that's the problem. I believe because it is a private pension, by law it will be taxed in France. Whereas a state pension can be taxed in England but transferred to France. I need to know how much it will be taxed in France. Yes terry we already declare our revenus encaisses a l'etranger as hubby works in England and is taxed in England. I think I will just go to our local Tax Office and have a word with them. I thought there would be many more retirees going through this or having gone through it.
My brother-in-law's sister (they're British) retired, set up residence in Luxembourg where he lives, and transferred her UK pension (into euros). It was a simple procedure. Although she lost a bit like 100€/month of the normal monthly pay but that is due more to the global decrease in pension/retirement, she's happier. Check with someone who knows labor laws, and EU retirement/pension agreements.
My private pension is paid directly into my French bank account in Euros but it's a company scheme with a company that has Paris offices so I don't know if this would work for you. In fact the payment is made by the Paris office on instructions from London. The way it worked was I told the pensions department I wanted to be paid in local currency and the pension was converted once for all at the rate that pertained on the day I retired. Any increases are calculated on the basis of the sum I get in Euros, not sterling. The one year the pensions people in the UK got this wrong and converted my euro pension into sterling, applied the increase and then converted it back into Euros I finished up with less money than previously. It took a year of arguing and eventually going to the very top to get it sorted.
The advantage of having the pension fixed in Euros is that we always know what we'll be paid each month, no worries about the exchange rate collapsing. So if it's possible I feel this is the way to go. Our state pensions on the other hand are paid into our UK account to cover whatever expenses we have over there and to pay for trips home.
Everything is declared in France because we are non-resident in the UK for tax purposes. You have to get a special form from your local tax office -- form 2047 K, déclaration des revenus encaissés à l'étranger -- to declare your UK income and you then include the total on the main form. There is an official exchange rate fixed every 31st of December which you use to make the conversions. Your local tax office will give you this. It's in a book they call the Lefebvre, I think, after the name of the editor, in the section Cours des Monnaies Etrangeres.
15-17,000 a year not a lot... that's more than what a third of french people earn working full time - go for it, especially once you deduct all the travelling costs and hassle, sorry can't answer the specific taxation questions but I'm sure Finn, amongst others, will! Bonne chance ;-)