Unfair Financial Burden for retired Britons in France

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Other 'posts' on this blog deal with the substance of this.
Consider an elderly couple who retired to France before 1998. We will call them Mr and Mrs. Briton.  He is now over 80  and was a teacher.

1. His teacher's pension is (in euros) 24,000 euros, which is entirely taxed in Britain. This tax is 2627 euros (equivalent of £2285.5).  This sum would be zero if this income (as a sole income) were taxed in France. see note a/.

2. Because they retired to France before the institution of the Winter Fuel Payment they do not receive it.  This amounts to £300 at present for the over 80s = 344 euros

3. They need to find 1500 euros minimum for top-up health insurance. EU law decreees that the UK is the Competent State to carry the costs of their health care. But it does not happen.

How much do they lose out taking on board EU law?

The total they appear miss out on and/or have to find is 2627+344+1500 = 4471 euros. But note later- we need to take in their other pension - The State Retirement Pension, which is their only other income. Although taxable in France it is too little to attract more tax.

If EU law on health costs as it appears to be written was observed  they would have no health costs. see note b/.

IF all their income were taxed in France then one has to include their joint State retirement pension (11640 euros) in the calculations of taxable income in France. The French Tax bill would be  1812 euros.  This is 815 euros less than their existing UK tax bill.  The amount they lose out on then has to be recalculated as   815+344+1500 = 2659 euros

So, if all were really fair for this elderly British couple they would have an extra 2659 euros a year to enjoy life.

When they retired the exchange rate between £ and France was very favourable and these financial matters were not particularly important. Since then the £ has collapsed and they are watching the centimes.

Notes .. a. link to posting  .  'Taxation- in-France-& -UK'  ........................
          b. see EU Regulation 883/2004 Article 24. Link 'Health Costs Legal Position'

Calculation of French Tax

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UPDATED in September 1214  for the tax returns for 2013.

The spreadsheet for the calculation of Tax in France has been updated fro the tax year 2013 payable in 2014
It is viewable here.

This is designed particularly to inform those British pensioners who are in receipt of a Government linked pension (ex- teachers, police, fire service, military and local government workers).  It demonstrates that if you were taxed in France, then your tax load could well be less.  If you need home-helps, or help with your garden or you support French based charities or organisations them you lose out because of the workings of the anglo-french double taxation convention.

Extract of a letter sent to Mr. Timms MP Financial Secretary to the Treasury

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Mr. Stephen Timms, Financial Secretary to the Treasury,
HM Treasury,
1, Horse Guards Road, London,
SW1A 2HQ
"..............
Three teachers all with identical teaching careers (except as described below) and all with the same superannuation payments to the same teachers’ superannuation scheme.
a/. A British citizen, taught in a local authority school
b/. A British citizen, taught in a private school.
c/. A French citizen, taught in a local authority school.

All three retire to France. All require home-help support (this attracts a 50% rebate of the costs against tax in France).

The pensions of b/. and c/. are taxed in France.
The pension of a/. is required to be taxed in the UK as his service is deemed to be ‘to the British Government or local government’ – These are the rules of the Double Taxation Convention between Britain and France.

The taxation burden of a/. is considerably greater than b/. or c/. largely, though not entirely, because the rebates on tax which accrue to the costs of the home help are not available to a/. since his tax is paid to the UK.

------------------
A. I taught 8 years in the private sector and 24 years in the ’state’ sector. Nevertheless all 100% of my pension is taxed in the UK.

Question. Will you agree with me that under the rules one quarter of my pension should be ‘exportable’ to France?

B. Because of the French taxation system vis-à-vis the British imposition of the Double Taxation Convention on my pension, I am at least 1000 euros a year worse off than the retired teachers who fall under category b/. or c/.
Question . Will you agree that this is an inequitable situation?

C. The above heavier tax load could be resolved if I renounced my British nationality and adopted French nationality.

Question. Would you advise me to change my national status to achieve equitability in taxation?
Since your answer to this third (rhetorical) question must surely (?) be ‘no’. Then I must ask you;-
What will you (HM Government) do to ensure that my taxation burden is equitable? ..."

The Absurdity of Government Pensions

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Pensions which are ‘deemed’ to be paid by the Government for services rendered are never allowed to be taxed abroad (i.e. exported) in France or Spain or anywhere else in Europe where a Double Taxation Convention exists between the UK and the EU country. That means, as far as I know, all of them.

Strangely NHS pensions are almost all ‘exportable’ even though they are paid by the paymaster general of the UK Government. The NHS staff are presumably not considered as having rendered service to the Government.

Police, Firemen, Military personnel. and civil servants and local Government workers – all are deemed to be paid by the Government or local Government.

If teachers were employed by the local Government then their pensions are not exportable. HOWEVER, if a teacher was employed at a private school, then their pension is exportable, even though it was acquired through exactly the same teachers’ superannuation scheme. If you had worked in both sectors the situation is confused, and quite ridiculous and impossible to disentangle. If you are French or changed your nationality and had worked in any school in Britain, then it becomes once more confused. [Gilbert and Sullivan might have invented it!]
The situation is quite stupid.
For Teachers.
If you are a State sector pensioner you are unfairly treated as things stand. If the French interpreted the Convention in the same manner as the Spanish interpret the UK/Spanish Convention, you would be much better off.
If you are a private sector pensioner, your source of income will be identical but you are (or can be) fairly treated.