Viewing posts from: November 2000

Financial update in France

By Katriona Murray-Platon
This article is published on: 6th December 2022

06.12.22

The fuel allowance, tax returns & retirement planning

So here it is, Merry Christmas! I hope that you are having fun or planning to do so. There is much to organise before the end of the year, so before you get too wrapped up (excuse the pun) in Christmas preparations, I wanted to fill you in on some bits of news/financial points for the end of the year.

Given the increase in energy bills, the French government shall grant two one-off fuel allowances to help people pay their energy bills. Around 12 million homes will receive a one-off energy cheque. If you are eligible for the fuel allowance you should receive this €200 cheque automatically,. If your taxable income (revenu fiscal de référence par unité de consommation (RFR/UC)) is greater or equal to €10 800 € and less than €17 400, you will receive a cheque for €100. This cheque will be sent automatically from the end of December, you do not have to do anything to get it.

For the homes using “fioul domestique” : If you have already received the energy cheque for 2022 and you have used it to pay for your heating from a “fioul domestique” supplier you will automatically receive another cheque for €200 from November 2022

If you haven’t received this yet or you want to check whether you are available there is a website here https://chequefioul.asp-public.fr/ and through this you could receive a cheque for between €100 and €200 depending on your situation. If you haven’t received any cheques and you can’t make a request on this website you can contact them via this website: https://chequeenergie.gouv.fr

For those of you thinking of replacing your heating system with something more energy efficient, since the 29th October, the lower income households could receive €5000 of state aids (instead of €4000) and other households could get up to €4000 instead of €2500.

The annual social security ceiling (plafond annual de la Securité social) which is used to calculate various retirement contributions and the maximum allowed amount of benefits and French pensions has increased to €43,992. A monthly maximum of €3,666 will apply from 2023. This is the first time that this has increased in three years!

Please note that you have until 14th December to correct your 2021 tax return on your personal account on the impots.gouv.fr website. After this date you will have to correct it using a paper return.

The 15th December is the last day to pay the taxe d’habitation for second home owners in France. You have 5 extra days if you pay online or by direct debit.

If you are self-employed in France and earn over €5000 per annum, you will have to pay CFE. This is a local tax and is based on the rental value of the space you use for your business. If you don’t rent premises for your business, you have to pay the minimum CFE and this will be calculated on your annual turnover. It all depends on the rate applied by your local authority. The CFE must be paid by 15th December. You can also spread the payments out over the year.

Finally, if you are still actively working in France and are likely to do so for the next 10 or 15 years or more, and you pay tax at least in the 30% tax bracket, it may be worth opening a PER. If you already have a PER, and you have some money to invest in it, make sure you do this by the end of the tax year, ie 31st December 2022. If you are in the 30% tax bracket, 30% of the amount you invest in the PER can be deducted from your tax (41% if you are in this tax bracket) up to a maximum amount of 10% of your net taxable income from the previous year and up to a maximum amount of €32,419 in 2022.

2022 has been a brilliant year for me, my best so far, and I have been so happy to welcome lots of new clients.

I want to thank all of you for your time and attention to these newsletters and your kind comments. I especially want to thank all my clients for entrusting me to set up their investments. As always if you have any questions on the above or any other matters please do get in touch.

I shall be away from 18th to 28th December, first to Disneyland Paris and then to the UK for a good ol’ British Christmas with my family. I will be checking emails and can do phone calls if necessary.

I wish you all a very Happy Holiday season and look forwards to speaking to you next year!

Regards
Katey Murray
Partner
The Spectrum IFA Group
Mob: 06 81 61 78 44
Tel: 09 53 28 88 22

Children and taxes in France

By Katriona Murray-Platon
This article is published on: 4th November 2022

04.11.22

I am the proud mother of two wonderful boys. I love my children very much, but in addition to the joy they bring to my life, they also bring tax advantages. Admittedly the tax benefit is probably less than the overall expense of having children, but one must count one’s blessings!

Let’s take a couple earning €60,000 per annum.

The current tax brackets for 2022 are as follows:

Income	Tax rate
Up to €10,225	0%
From €10,226 to €26,070	11%
From €26,071 to €74,545	30%
From €74,56 to €160,336	41%
Over €160,336	45%

*These tranches are likely to increase by 5.4% in 2023.

If they have one child? their tax is reduced by half a tax part. Whereas alone they were in the 30% tax bracket, with one child their income is divided by 2.5 to €24,000 per person, which puts them into the 11% tax bracket. Their tax bill would be €3,788 instead of €5,844. The child has saved them €2,056 of tax. If they had a second child, and on the same income, their tax would be €3,226. The second child has therefore saved them €562 euros.

In addition to lowering your taxes, if your child is under six and goes to a child minder or nursery, 50% of these costs, up to a maximum of €2,300 per child may be deducted, so a maximum tax credit of €1,150 per child. This is a tax credit, so in our example above, the couple would pay only €926 in taxes.

After six years old and until they go to high school, as delightful as they are during this time, there are no tax advantages. From high school onwards there is a small tax reduction of €62 per child in high school, €153 per child in sixth form college and €183 per child in higher eduction (provided it is non-remunerated studies).

Download out French Tax Guide here

However when they are in their 20s and pursuing further education, this is the time to look at whether you are better to keep them in your tax household or take them out of your tax household and deduct the money you give them to pay for their studies, accommodation and food etc. I remember, when I was a tax lawyer, suggesting to a lady who had four sons, that she should remove her youngest son from her household – she looked a bit shocked! I meant of course that she should take her son out of her tax household, not kick him out of her actual household. It is quite common for children in France to remain at home during their university studies. The money given to an older child is deducted from the household income before it is subject to tax.

For an adult child to be considered part of your tax household, they must be under 21 on 1st January of the tax year (so 1st January 2022 for the tax return done in 2023), or be under 25 years old on 1st January 2022 and in higher/further eduction as at 1st January 2022 or 31st December 2022. There are also various conditions for children living with an adult relative.

So if we look at the couple above and both their children are at university. In 2021 they could have deducted up to €6,042 per child from their income which would have reduced their tax to €3,021 for the two of them without the children instead of €3,226 had the children been included on their tax return. For 2022, according to the Draft Finances Bill, this deduction is increased to €6,368 per child. For the full reduction to apply, you must be able to prove that the child needs this money, that they are unable to work or, if they have a student job, that they earn less than the minimum wage. You can deduct up to this amount but you have to be able to prove the expenses if so requested. If the child still lives with you, you can deduct their accommodation and food bills, up to €3,592, without need to justify these expenses.

Once your child is removed from your tax household, this will mean that they have to do their own tax return and declare the financial help that you are giving them. However, if they are earning less than the first tax bracket (€10,225 in 2021, €10,777 in 2022) then they won’t have any tax to pay.

For any questions on Children and taxes in France or on your general financial planning in France, please do get in touch via the form below:

Have you completed your tax returns in France?

By Katriona Murray-Platon
This article is published on: 3rd June 2022

03.06.22

The tax season is almost over! Those of you living in departments numbered 55 to 976 still have until 8th June at 11.59 pm to submit your tax return online or if you have engaged an accountancy firm to do your tax return they also have another week or so to submit any returns. I would not advise trying to contact an accountancy firm at the moment because they are very busy and they won’t be able to start working on your tax return until the deadline has passed. The best thing is to have a go at it yourself and then correct it later in the year. Your initial return, submitted by the deadline, will result in a tax statement. If you decide to amend the return, you will get an initial tax statement and then later an amended tax statement.

Once you have done your tax return you can expect to receive your tax statement as follows:

If you submitted it online and you have paid too much tax or exactly what is owed you will receive your statement between 25th July and 5th August.
If you submitted by post and you have paid too much tax you will get your statement between 29th July and 31st August;
If you submitted your tax return by post but you have paid exactly the right amount of tax you will get your statement between 2nd August and 31st August;
If you submitted online but there is still tax to pay you will get your statement between 29th July and 5th August,
If you submitted on paper and there is tax for you to pay you will get your statement between 5th August and 26th August.

If you have paid too much tax you should get the reimbursement around these periods. If you have tax to pay it should be taken from your bank account automatically. If not you have until 20th September to pay online. The money won’t be taken out of your account until 26th September. If you owe more than €300 tax, this amount will be taken in four payments between 26th September and 27th December 2022. If the amount due is less than or equal to €300 then this amount will be taken out in one payment on 26th September. Please remember that during September the 9th instalment of your monthly payment of income tax will be taken on 15th September, so you may have two tax payments in September (and in the following months if you owe more than €300).

A situation was brought to my attention about Capital Gains Tax on the main residence when you leave France. There was a court case in 2017 which reached the French Constitutional Court regarding the exemption from capital gains tax for the main residence. Whereas a French resident may vacate his/her main residence and has 12 months to sell it for it still to benefit from the main residence exemption, according to this decision if you are no longer French tax resident at the time of sale you lose this exemption on the capital gains.

Furthermore under Article 150 U, paragraph 2, line 2, of the French Tax Code the capital gains from the sale of a property are exempt from tax “for the sale of a property situated in France where the seller is an individual, not French resident, a national of a Member State of the European Union or another State which is part of the EEA having agreed with France an administrative assistance agreement to fight against fraud and tax evasion and provided that the person was tax resident in France continuously for at least two years at any period before the sale. The exemption mentioned in the first line of this second line applies only to one property per tax payer and up to €150,000 of net taxable capital gain, to sales carried out:
a) no later than 31st December of the fifth year following the year in which the seller ceased to be tax resident in France,
b) with no time restrictions, when the property is freely available to the seller at least since 1st January of the year before the sale”.

It is this section of the French Tax Code which could, according to some Notaires, no longer apply to British citizens selling their French properties and returning to the UK since Britain is no longer part of the EU. I have spoken to two Notaires about this and neither seemed to be bothered about it. But Notaires can take different views on things. So if you (or someone you know) are planning to sell what is currently your main residence in France and move back to the UK make sure you clarify exactly what you have to do with your local Notaire and do not move back to the UK and establish UK tax residency before the sale is complete.

After a busy month of May with many people contacting me with tax questions, I am looking forward to a more normal month of June and getting out in the sunny weather to see clients. So if you would like to arrange an appointment or need to speak to me about any matters please do get in touch!

Download the 2022 French Tax Guide here

Inheritance issues in France

By Katriona Murray-Platon
This article is published on: 11th October 2021

11.10.21

As many of you know, in 2015 the European Succession Regulation came into force. Sometimes known as ‘Brussels 1V’, this allowed you, if you deemed it suitable, to elect for the law of your nationality to apply to your Will in France. The principal benefit of this election would be to allow you to leave your property to your spouse for example, and then pass it on to your children after the second death. Another useful application would be when relationships have broken down and you have decided that one or more of your children should be excluded from benefitting from your estate. In effect, you claim the right to leave your assets to whomever you wish.
Now, in a quite frankly bizarre move, the French government has decided to move against European law. At the end of July this year a bill was passed making changes to article 913 of the Civil Code. Here is the relevant wording, with a translation ‘a la Google’.

Lorsque le défunt ou au moins l’un de ses enfants est, au moment de son décès, ressortissant d’un État membre de l’Union européenne ou y réside habituellement et que le droit étranger applicable à la succession ne permet aucun mécanisme réservé à la protection des enfants, chaque enfant ou ses héritiers ou successeurs amoureux peut bénéficier d’un prélèvement compensatoire sur les biens existants situés en France le jour de la sa mort, afin d’être rétablie dans les droits réservés qui leur sont accordés par Français loi, dans les limites de celui-ci.

Where the deceased or at least one of his children is, at the time of death, a national of a Member State of the European Union or is ordinarily resident there and where the foreign law applicable to the succession does not allow any reserved mechanism to protect children, each child or his heirs or successors may make a claim on existing property situated in France on the day of death, so as to be restored in the reserved rights granted to them by French law, within the limits thereof.

There is little scope for doubt that this directly contravenes European law. It has already been challenged once but was passed unchanged. It is likely that there will be a stream of legal challenges that could take several years to conclude. This is France after all. One silver lining is that the new decree will only come into force on the 1st November this year, and will only relate to deaths that occur after that date. For those of us who were contemplating this move, or have already employed it, this will mean that there could be years of uncertainty, and many people are not going to be able to leave their assets on death as they would wish to.

One key aspect of this change is that it can only be applied to assets situated in France which, in some cases, may affect succession plans for the principal residence and possibly French rental properties if no other planning has been put in place. There are tried and tested legal mechanisms in France for establishing property ownership that can better protect the survivor such as the ‘en tontine’ clause (only at the point of purchase), the marriage contract of ‘communauté universelle avec attribution au dernier survivant’, the ‘pacte de famille’ and the ‘donation entre époux’ to name a few. If you have any concerns about how this new change may impact your existing Wills and estate planning, I recommend that you speak to a Notaire to discuss your options.

French Tax declarations in June – Trusts & Wealth Tax

By Katriona Murray-Platon
This article is published on: 1st June 2021

01.06.21

Oh what a month of May! So despite the old adage of being able to do as we please, the weather clearly didn’t get the memo! May has been a whirlwind of enquiries and questions on taxes with lots of people requesting the Spectrum Tax Guide. Hopefully, by now most of you have filed your tax returns, but those living in department numbers 55 to 976 as at 1st January, still have a few more days, until 8th June to file theirs. Also, if you have appointed an accountant to do your tax return, they have a special extended deadline until the end of June to file all remaining returns.

If you had a go at your own tax return, but would prefer to hand it over to a professional either for future returns or to check that what you filed this year was correct, it would be best to try to contact them after the end of June. If you think you made a mistake on your tax return, you have until the end of the year to correct it. You will soon know if there is something not quite right with what you have declared when you receive your statement at the end of August/beginning of September. At that point, if you are quick you can submit an amended return before the payment deadline; otherwise you may have to pay the tax payable on the original statement whilst awaiting the amended return to be processed and a new tax statement to be issued, with any tax reductions if applicable.

This month, my family and I set off for our first mini-break since the lockdown in March last year. I have to say we were a bit nervous venturing out of our house, preparing the suitcases and worrying that we hadn’t forgotten anything. We stayed in the lovely village of Coux-et-Bigaroque, about 45 minutes east of Bergerac. In spite of the weather we were able to take the children to the Perigord Aquarium, the Caves of Grand Roc and the Chateau of Milande, formerly owned by the singer and entertainer Josephine Baker. Whilst I love visiting this chateau and the birds of prey show in the grounds, it always makes me feel a bit sad. It is an example of how someone with such talent and a kind heart didn’t have the right advisers to help her make the best financial decisions.

In June there is another tax deadline that still needs to be considered:

Which is that all Trust declarations need to be declared by 15th June. I wrote an article many years ago which you can find HERE

There have been no significant changes to the treatment of trusts since the law of wealth tax was amended to include only immovable property. A trust can be recognised in France and perfectly valid in France provided that it doesn’t go against public policy (ordre public) and in particular the rights of heirs under French law. Income from a trust is subject to income tax depending on the nature of the income (rent from an apartment or capital income) and can be subject to tax credits under a double tax convention. Trusts (excluding charity trusts and pension trusts) must be declared in France if any of the settlor, trustee or beneficiary are French residents or if the trust contains an asset situated in France on 1st January. According to a press release by the Ministry of Finance on 5 July 2016, 16,000 entities had been identified and notified as trusts to the French administration.

Another change this year is that the Wealth Tax declaration which normally had to be submitted by middle of June if you have assets over a value of €1,3million, this year has to be submitted at the same time as your tax returns by way of a tax form called 2042-IFI. Those of you resident in departments numbered 55 and above still have until 8th June to submit. If you French tax residents who came to live in France, after having spent 5 years abroad, you are not taxable on your non-French assets until 5 years after you became resident. Non-residents also have to declare if their French assets are over €1.3million.

Finally, 30th June 2021 is the deadline for Brits who were resident in France before 31st December 2020 to apply for their residency permit under the Withdrawal Agreement. If you haven’t already done so or know of someone who hasn’t, and they were resident before 31st December 2020, please do try and encourage them to go to the following website:

https://brexit.gouv.fr/sites/brexit/accueil/vous-etes-britannique-en.html

Tax in France – what needs to be declared

By Katriona Murray-Platon
This article is published on: 6th May 2021

06.05.21

No-one needs reminding that 2020 was a year like no other. Our lives were changed in many ways and this had an effect on our finances. Luckily there were many government schemes and initiatives to help people overcome the financial difficulties suffered in lockdown and because of the health restrictions. However now that 2021 tax season is upon us, what now needs to be declared?

Salaried workers bonus is tax exempt
Last year some salaried workers may have received a consumer bonus which is exempt from tax up to €1000 (or €2000 if there is an interest agreement/“accord d’intéressement”) Public workers and health workers also received a bonus which is exempt up to €1500.

Overtime hours are usually exempt up to €5000 per year, however the exemption threshold has been increased to €7500 for those hours carried out between the beginning of lockdown (16th March 2020) and the last day of the emergency health state set at 10th July 2020. This applies to salaried workers in the public and private sector as well as those under special regimes. All exempt overtime must still be declared on the tax form and will be included in the tax income reference rate for the tax household.

The Ministry for Economy and Public Accounts has announced that the payments paid by companies to their employees to cover the costs of working from home are exempt from tax up to €2.50 per day worked at home and up to €50 per month for 20 days and €550 per year.

Salaried workers who choose to deduct their actual costs rather than applying the flat 10% abatement on their salaries, can still choose this options without supplying supporting documents however these deductions may not be so beneficial depending on your level of salary. As always it is best looking at both options and seeing which works best for you.

Charitable gifts in 2020
Although things were hard for many people last year, it was also a year, more than ever to help those less fortunate. Gifts given in 2020 to humanitarian organisations and victims of domestic violence result

in a tax credit of 75% of the amounts donated up to a maximum threshold of donations of €1000. Over this threshold and for donations given to other organisations (including political parties), the rules haven’t changed, the tax reduction is 66% for such donations and he maximum threshold is 20% of the taxable income. The excess can be carried over over the next 5 years and results in a tax reduction under the same conditions.

Independent workers
Companies and individual tradespeople benefitted a lot from the government help last year. Fortunately the financial help granted by the solidarity fund to companies most affected by the health crisis, the exceptional financial help to independents (CPSTI RCI COVID 19) and those paid by the additional pension schemes of independent professionals and lawyers (CNAVPL and CNBF) are all exempt from income tax. The other help from public or private entities are taxable if there is no specific legal provision that exempting them otherwise.

Auto-entrepreneurs and micro-entrepreneurs who were exempt from paying part of their social charges must include in their tax declaration the turnover figure that was not declared to URSSAF because of this exemption.

Home help tax credit – changes to the conditions
The home help services normally give rise to a tax credit of 50% of the amount paid out. These expenses are deductible up to €12,000 (plus €1500 per dependent and person over 65 years, up to a maximum of €15,000). However in 2020, during lockdown some of these services had to be temporarily suspended or even cancelled, or in certain circumstances could be carried out online.

If you employed someone carry out a service in your home, you may have benefitted from the partial compensation for the hours that your employee was unable to carry out during lockdown. These compensated hours cannot benefit from the normal tax credit and if you nonetheless paid your employee their salary even though they couldn’t actually work, this cannot be used for the tax credit (it is classified as a solidarity donation).

Exceptionally, some services, which in principle took place in the home, but were in fact carried out remotely because of the health crisis, still give rise to the tax credit under the same conditions as other home help services. These include online additional schooling support lessons and individual lessons (gym, music etc) given to adults or children. The Ministry of Economy and Finance has specified that these services “must have involved a minimum amount of effective interaction, implying a physical presence of the person supplying the service at one end of the screen/telephone line and the be specifically given to the person paying for the service at home”. This therefore does not include online group lessons or watching pre-recorded videos online. This derogation applies throughout the time that people were not allowed to go out either because of lockdown or curfew.

Professional landlords who waived rent
If you are a professional landlord and you waived the rent of your tenants for a commercial or professional premises rented to a company that was difficulty because of the Covid crisis, you can still deduct your expenses (ownership expenses and mortgage interest). You also can carry forward your rental loss, up to €10,700, on your overall income. The additional loss – and the part of the deficit arising from the mortgage interest – will be carried forward and deducted from your income over the following 10 years.

There is also a specific tax credit if you definitively waived rent for November 2020 only (not any of the other months in 2020). The tenant company must have employed at least 5000 employees and have been closed to the public (even if they were able to do click and collect) or to have carried out its business in one of the sectors of business that were eligible for the solidarity fund as listed in Decree no 202-371 of 30.03.2020 (hotels, travel industry for example).

Furthermore the tenant company must not have been in financial difficulty on 31st December 2019 or have been under court ordered administration proceedings as at 1st March 2020. The tax credit is equal to half of the unpaid rent if the company employed less than 250 employees. If the number of employees was between 250 and 5000, the 50% is calculated on the two thirds of the rent. If the tenant company is managed by an ascendent, descendant or member of your tax household, you must justify the cash flow problems in order to deduct your expenses and get the tax credit.

Voluntary retirement contributions
You can deduct from your total income the sums paid into a retirement scheme such as PER, PERP or Préfon up to the normal deduction limits. If you have opened a PER for your child (whether a minor or of age but still within your tax household) you can deduct the payments even if they payments were paid by your own parents (the child’s grandparents) Children have their own deduction amounts even though it is not necessarily stated on the tax return.

Download your French tax guide here

French Tax Returns 2021

By Katriona Murray-Platon
This article is published on: 3rd May 2021

03.05.21

The right to make mistakes

There is an expression in France which goes “In May, do what pleases you” (en mai fait ce qui te plait). This refers to the fact that any frosty weather will have gone by the end of April and you can go out and enjoy the warm weather. However, there is something very important that needs to be done before we can go out and enjoy ourselves and that’s the tax return. Although the tax return is available online in early April, personally I’m not psychologically ready to deal with my tax return until May and then not even that much! As a former tax adviser I used to do around 200-300 returns for clients between March and June, but I have to admit that doing my own tax return is quite a task and requires preparation. It’s a bit like deciding to do a full Sunday roast; you need to make sure you have all the ingredients because you don’t want to get the meat in the oven and discover that you’ve not bought the gravy!

If you think French tax is daunting, you’re not alone. The French themselves find their tax returns difficult and the French authorities know that it isn’t easy. Moves have been made in recent years to simplify the system with information being automatically declared by employers and banks so that it appears in the tax return, but there is still information that needs to be checked and other information (like expenses or tax credits) that must be included to calculate the tax correctly.

The preferred method of declaration is online, or even through an app on your smartphone or tablet. However, whilst the French authorities would prefer an online declaration, if this is your first year declaring or you really can’t do it online, you can submit a paper return.

The deadline for a paper French Tax Returns 2021 declaration is 20th May this year whereas the online deadlines are:

26th May for departments 1 to 19 and for non-residents
1st June for department 20 to 54
8th June for departments 55 to 976

These dates relate to the place where you were resident on 1st January 2021.

Even though the French tax authorities are trying to make the system simpler, even introducing an “automatic declaration” this year for those 12 million French tax payers with income and expenses already known to the authorities, the Finance Minister knows that people still make mistakes. The most common of which is failing to declare a child who is in college, lycee or university. Another is that if you opted for the marginal rate on your interest and dividends before, the option is carried over and the box 2OP already ticked on the declaration but an alert message will appear if this regime is not the most favourable. The ten most common errors can be found on the website oups.gouv.fr. Costs for childcare for children under 6 years old, confusion over who includes the child when the parents are separated or divorced and tax deductions for charitable gifts are among the most frequent mistakes.

Since a law introduced in 2018 to help improve the relationship between the administration and the general public, you now have official permission to make mistakes in your declaration. You are presumed to be declaring in good faith and you have the right to make a mistake when making your declarations without being penalised from the outset. Any individual or company can amend, either voluntarily or if requested by the authorities, their mistake if it has been committed in good faith and for the first time. This doesn’t cover fraudsters or repeat offenders and whilst it means you can avoid a fine you will still have to pay any extra taxes that are due. Tax advisers and accountants are mad busy at the moment, so if you haven’t already found one to do your tax return they will be very reluctant to take you on now. However, some tax offices may allow you to make an appointment and bring your papers and information to do your tax return with them. You have an official right to make a mistake and as long as you submit something before the deadline, you can then correct it later.

The first time I did a roast dinner as a student I had to call my grandma (a former professional cook) and I am happy to say no one got food poisoning! Like many things in life, these things can seem daunting to begin with, but if you do your best and follow the instructions, you will be proud of yourself once it is done and then you can go out and enjoy the sunshine with a large glass of wine!

Big brother is watching… or might be

By Katriona Murray-Platon
This article is published on: 2nd April 2021

02.04.21

After the fun and festivities of March (or those that could be had in current circumstances) it’s time to get down to serious tax work in April. The tax forms and dates of submission have not, at the time of writing, been released so that will have to wait until next month’s Ezine but usually the forms are available around the second week of April. If this is your first year of declaring in France you will have to go to the tax office to get the paper forms to complete. After submitting your first paper return you should then be given details to allow you to log on to your online account and do future returns online. The paper returns you will need are usually the 2042, sometimes the 2042 pro if you have professional income, the 2047 for all foreign source income and the 3916 for bank accounts and assurance vies (section 7 of the form).

The 3916 has recently been amended to take into account the new information that needs to be declared. Make sure you tick box 8UU for bank accounts and 8TT on the 2042 form to flag the fact that you have foreign assurance vies.

Under Article 1649 AA of the French Tax Code, those tax payers who have foreign assurance vies must declare the policy number, the amount of the investment, the start date of the policy and the duration of the contract or investment, any top ups or payments or reimbursements of premiums made during the tax year and, if relevant, the amount of any withdrawals or the surrender value,

Article 344 C of the Tax Code has now added new requirements concerning the information for foreign assurance vie policies which are:

The identification of the policy holder: name, forename, address, date and place of birth,
the address of the head offices of the insurance company or similar institution and, if relevant, the subsidiary which grants the cover,
the person covered by the policy, its reference numbers, the nature of the risks covered,
the amount covered by the policy and the duration of this cover,
the dates of any amendments to the contract, total or partial withdrawals, which have taken place during the calendar year.

Our policy providers are aware of this new law and will send out the relevant information for you to add into your tax returns or attach as a document online.

Those who have regular at home services and pay via CESU usually receive a tax credit for these expenses, 60% of which is paid in January. From June 2021 the tax office will be trialling a new system of immediately paying the tax credit for home help for those employers in Paris and the Northern departments who use the CESU system, before progressively rolling out this system across the whole country in 2022.

According to a study from the US bureau of Labor Statistics in 2015 which looked at the number of jobs a person held between the ages of 18 and 50, the average person will have had 12 jobs. This is during a span of 32 years, so therefore the the number is likely to be higher for a person’s entire lifetime. This means that you are likely to have several pensions with several pension providers without knowing the value, investment strategy, performance or fees on these investments.

France has clearly realised this situation as well. Retirement plans for French companies are held by insurance companies, so when you leave the company you may not continue to receive information on what rights you have accrued. Now, thanks to new legislation, insurers must send the information on file to a centralised body. If you are or have been an employee in France you can go to the website info-retraite.fr to be informed of what rights you may have. The new law also requires employers to communicate a statement of the retirement products to those leaving the company. When I left my job in Paris I had a PEE (Plan d’Epargne Entreprise or company savings policy) which I had done nothing with. I was advised that as I was no longer an employee of the company this was just being eaten up by fees. I closed it down and reinvested the money into two assurance vies for my sons which are now growing nicely.

The Spectrum IFA group offer a free review of your pensions. We will help you obtain the relevant information from your pension providers and prepare a free report on your current pension plans and their benefits and whether they can or should be combined into one self investment pension plan or qualified overseas pension scheme. As I often say to clients, I agree with the many eggs in baskets principle but it is better having your baskets on a shelf where you can see them rather than eggs hidden around the farm!

If you have an SCI remember to put the 4th May in your diary (may the fourth be with you!) as this is the deadline for the income tax return for SCI companies that are not subject to corporation tax. This is also the deadline for accountants to file the income statements for those with industrial and commercial businesses (BIC), non commercial businesses (BNC) and agricultural businesses (BA). The deadline is extended to 19th May for online declarations. As yet the other tax filing deadlines are not known.

In the finance law for 2020 (article 154) a new law allowed the tax and customs authorities to use certain data published on the internet (Law no 2019-1479 of 28.12.19). The decree implementing this data mining provision was published in the Official Law Journal on 13 February 2021 (no 2021-148 of 11.02.21). This means that the tax authorities are allowed, experimentally and for only three years, to use information published by tax payers on social media (Facebook, Instrgam etc), sales sites (Ebay, Leboncoin etc) and other networking sites such as Airbnb and Blablacar. After researching, analysing and modelling fraudulent behaviour, the tax authorities can then use this data. They do not however have unlimited power, they are subject to the CNIL (National Commission for Freedom and Information Technology) and Parliament, to whom a report must be submitted in August 2022 and August 2023. The data mining can only be used to track non disclosed business activities and false declarations of off shore domiciles. Only “deliberately divulged” information can be collected and used, access to which does not require a password or subscribing to the website. Private posts or comments from third parties cannot be used. The data must be erased after 30 days if it isn’t going to result in an investigation. Data on sensitive subjects such as political views, religious beliefs and health information must be erased after 5 days on the same grounds. Whether this experiment will be extended or not remains to be seen but in the meantime it is another reason to be careful what you put out on publicly accessible social media.

If you have any questions or would like to speak to me about any of the points mentioned above please do let me know. Thank you to those who have got back in touch after reading my Ezine or have let me know that you are still enjoying reading these emails.

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Is your money safe under the mattress?

By Katriona Murray-Platon
This article is published on: 5th March 2021

05.03.21

March is my favourite month of the year, not least because I celebrate my birthday during this month and this year will be the end of my 4th decade. Traditionally it has always been a busy month because it is a great time for events and starting new projects. This month my colleagues and I will be attending another virtual property fair hosted by Your Overseas Home. The event we did last year was very good and lots of people were able to see our presentations and then chat to our advisers from the comfort and safety of their own homes.

By October 2021 I will have lived in France for 18 years continuously, but I first arrived for my Erasmus year in September 2001 making it 20 years since I started living in France. As you may know I am married to a Frenchman and I have adopted much of the French culture and way of life. But my husband and I have very different views in our attitude to risk and finances. My husband came from a farming background where money was hidden under the mattress, you only bought when you had the money and you insured everything that could be insured. My husband will take a 10 year extended guarantee on a toaster! I came from a background where it was common to use credit cards to fund Christmas and holidays and I went to university with a student loan.

The idea that money is safe under the mattress or in the bank is no longer true. In France the traditional popular savings accounts such as the Livret A and LDD now only have an interest rate of 0.5%. The other misled belief that French assurance vie policy holders have is that Euro Funds are a good investment and a safe investment. Whilst it is true that Euro Funds are still one of the least risky investments after the traditional bank savings accounts, their performance continues to drop year after year. The average growth rate of the Euro Funds in 2020 is 1.2% which, once you deduct social charges (17.2%) and take into consideration inflation (0.5%), the net gain is only 0.5%. One of my own French assurance vie policies, which is 69% Euro Funds, has made an average of 1.6% over the seven years since it was created. The problem with French assurance vies is that they are not bespoke; they come with certain formulas, some that you can contribute to monthly, some that you cannot, and depending on your choice you cannot go lower than the prescribed amount in Euro Funds, no matter what your risk profile.

When I compare this with the range of product providers we can offer our clients and the choice of funds, the difference is astounding. Thank goodness that as English speakers we have access to better investment possibilities from as little as £20,000/€25,000. The average performance of my clients’ portfolios is around 3% after charges, with no social charges taken at source, and they have a lot of choice and flexibility regarding which funds they want and how much of that fund they want their investment to be in. They also have access to English speaking product providers, English speaking fund managers and their own English speaking financial adviser who is supported by the knowledge and experience of all of the Spectrum advisers.

I am fully integrated into French society and believe in adhering to many things about French society, but when it comes to finances there are differences between us that we cannot ignore so it is not in our best interest to invest in French financial products.

The outlook this March is thankfully much better than last March. There is more good news for Prudential policy holders. At the end of February Prudential announced no changes to the Expected Growth Rate and upward Unit Price Adjustments in the PruFund Growth Sterling, PruFund Growth Euro and PruFund Cautious Euro funds.

For other funds and the markets in general the outlook is equally positive. “The combination of vaccine roll-out, substantial fiscal stimulus, and elevated consumer savings should drive a sharp recovery in economic and earnings growth,” said Ryan Hammond, a Goldman Sachs strategist, in a report this week.

Whilst mask-wearing and social distancing will still be necessary for some time to come, a lot of our friends and family members have been vaccinated, therefore reducing the risk to the most vulnerable. With the coming good weather, meetings and get togethers will be able to take place out of doors. As always, if clients are happy to arrange a face to face meeting, I look forward to seeing them for outside meetings in their lovely gardens. If however you prefer video meetings or phone calls that is also possible.

Wishing you all a bright, sunny and floral month of March!

How much tax do you pay in France?

By Katriona Murray-Platon
This article is published on: 3rd November 2020

It’s strange to think that this time last year I was in Quebec with my husband and children. Whilst autumn colours in Canada were absolutely splendid, I have really been enjoying seeing the colours of the trees and vineyards in my local area.

France is now in lockdown for at least the month of November. However unlike the previous lockdown schools will remain open and people can still go to work. Although I have become a lot more comfortable working from home online I enjoy my drives to see my clients. If you would like to speak to me about any matter, even if your annual review is not due at this time, please feel free to let me know and I would be happy to arrange a face to face meeting or an online video call. I can come and see my clients because that is my work but it may also be a way of preventing clients feeling isolated when they cannot see other people.

Being flexible is very important at this time. We don’t know what will happen in the future or how Christmas may be celebrated but what we do know is that

1) We have survived lockdown before so we know what works and what needs changing
2) We know that lockdown was effective in bringing the number of cases down
3) We have made enormous progress on understanding the virus and how to treat it, we are also getting ever closer to a vaccine. We just have to keep calm and carry on!

As you know in November, the Taxe d’Habitation is due (by 16th November or 21st November if paid online). This is a tax for all residents of buildings on 1st January. In 2020, 80% of French households will be considered exempt from paying this tax. In July 2019 Macron said in 2021 the higher income households would see a 30% reduction in their taxe d’habitation increasing to 65% in 2022 and 100% in 2023. So basically this tax will cease to exist after 2023.

As regards income tax, the tax levels have increased by 0.2% for the tax on income earned in 2020 to take into account the inflation forecast for 2019-2020. The new tax barriers are:

Between 0 and €10,084	0%
From €10,084 to €25,710	11%
From €25,710 to €73,516	30%
From €73,516 to €158,122	41%
From €158,122	45%

Just how is my tax calculated in France?

If you have looked at your tax statement and wondered how the tax is calculated, you may find the following rough guide to be useful.

If a couple has a total of €30,000 of income, their taxes would be as follows. €30,000 divided by 2 = €15,000

No tax for the first €10,084 but 11% on the difference between €10,084 and €15,000 (€4916 x 11% = €541). This amount is then multiplied by the number of people (or tax parts) so the total tax for this couple would be €1082.

For a couple with €60,000, the income is again divided between them (€60,000/2 = €30,000).

There is again no tax for the first €10,084, the next amount would be €25,710-€10,084=€15 626 at 11% which is €1719.

The difference between €30,000 and €25,710, i.e. €4290 would be taxed at 30% resulting in €1287.

The final tax would be (€1719 + €1287) x 2 = €6,012 total tax.

Once the tax is calculated then the tax reductions for home help expenses or charitable donations are deducted. For more information please request our free tax guide on our website.

If you have French investments or interest earning accounts and your taxable income (as shown on your 2020 tax return for your income earned in 2019) is less than €25,000 (or €50,000 for a couple) for interest, or for dividends €50,000 (or €75,000 for a couple) you must inform your bank or financial institution before 30th November 2020 so that they don’t withhold the 12.8% income tax on your income in 2021.

Wishing you all a wonderful November. Stay home, stay safe, stay in touch!