Sorry if this is a dumb question, but I am confused how the Social Charges are applied. Have just completed the first tax return and on entering the figures into the Impots tax calulator, (http://www3.finances.gouv.fr/calcul_impot/2008 ), it seems that a major percentage is also added to the total bill for Social Charges.
Am I right in saying that if you are both over retirement age and you receive health care via a 121 declaration that you do not pay social charges on top of your tax bill or do you still have to pay charges based on an annuity income. The Tax FAQ's seem to say that OAP and company pensions are exempt from Social charges but are other types of income also exempt?
BobD
As per the FAQ, OAP and company pensions are exempt from social charges where you hold an E-form, but annuity based pensions and other investment income is not.
SD , Many thanks for that, Just a supplementary, does this mean that on savings account and annuity income, one can expect the 14% rate plus an additional 16% rate to be levied?
No, just the straight 11% social charge (the sum of CSG, CRDS and PS).
Edit:
PS: the social charge on the annutity income is based on the amount after the tax relief.
Quick example though the on-line calculator:
Two persons in tax foyer.
Annuity income declared 10,000€
Base for calculation of tax 7,000€ (revenu fiscale de reference)
Base for calculation of CSG/CRDS/PS is also 7,000€
CSG = 574€ CRDS = 35€ PS = 61€
Total = 770€ which equates to 11% of the 7,000€.....
So the result from the calculator shows the tax payable (A) plus the Social Charges (B) payable, the sum of which (A+B) is your liability?
Viz:
Compte tenu des éléments que vous avez saisis, le montant de votre impôt net à payer s'élève à A (auquel il faudra ajouter B de contributions sociales supplémentaires)
If this is so, the overall tax payable amount seems quite a bit more than the UK figure.
Nobody has said French income tax is always less than UK tax Bob, it depends on your circumstances amd the make up of your income.
If you have a lot of unearned income you pay tax on it and 11% social charges, so you might end up paying more tax than in the UK. The income tax and sociale charges are billed separately by the way. Look upon sociale charges as NI and your contribution to the welfare of your new adopted country
Why not post a sensible answer, people will appreciate it more
Thanks Ron for the clarification.
Have to say that the way the French Tax system treats savings interest has come as a bit of a shock. Working through the calculator the following results seem appropriate,
Situation: Married couple, both above normal retiremant age (65)
1) Having a joint pension of €20,000 Pay €136 Tax and no Social Charge.
2) Having a joint pension of €20,000 and an annuity of €5000 Pay €482 Tax plus €220 Social Charge
3) Having a joint pension of €20,000 and an Annuity of €5000 and bank savings interest of €10,000 pay €1968 Tax plus €1320 Social Charge.
Moral is, it seems, dont rely on that savings nest egg as an income source if you want to keep your tax bill low.
"Have to say that the way the French Tax system treats savings interest has come as a bit of a shock."
I think that statement is true for an awful lot of us coming from a culture of being enticed to and rewarded for saving. Its this penalisation of savings that tempts a few to all intents and purposes, honest and upright citizens, to conveniently forget their UK savings accounts and/or pay tax on them in the UK, hoping that they will never come to the notice of the French tax authorities, thereby avoiding paying sociale charges.
There have been many on here over the years who have said they been advised to do likewise by well meaning "friends", but in this age of information sharing I think the chances of avoiding detection reduce by the day and the longer the evasion, the stiffer the penalty.
BobDee wrote: Moral is, it seems, dont rely on that savings nest egg as an income source if you want to keep your tax bill low.
Which is why many French invest in Assurance Vie (s) as early as they can afford to.
Sue
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