I'm retired. What taxes do I pay?

Worried about your tax liability here in France? Our finance expert Hugh MacDonald answers your questions

21 April 2010
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Q: I am hoping some of the simple life that I had dreamed of here in France will eventually appear but I am worried about tax and what I should be paying.
As a single woman of 66 I have been living in France with my two dogs for over a year and have just about managed to cope with the minefield of paperwork, letters and phone calls – plus hard work in the garden and in the house.
My state pension and a pension from British Airways give me just over €800 per month and this is paid to my French bank. I lose about €200 per month because of the exchange rate.
The house, garden and vet bills have left little in the bank and I send what I can to my daughter and granddaughter in the UK.
My big worry is tax. I pay UK tax on my BA pension and I pay the taxe foncière and taxe d’habitation but I can’t think of others I should pay. Can you help? K.B.

A: YOUR situation is typical for many people retired here in France and who have suffered from the drop in the exchange rate. On the basis that you are the house owner, yes, you should be paying both the taxe foncière and the taxe d’habitation. If you feel these are high, then talk to your neighbours to see if they have the same level of taxes as you (for a similar house), but note features like a swimming pool can increase the taxes by as much as 30%.

If there is a notable difference, talk to your mairie to see if they can help cut the assessable value of the house to something more in line with your neighbours.

As for income tax, you should not be taxed in the UK on your BA pension – both this, and the state pension, should be taxed in France.

Your age and income levels mean you should be entitled to the age allowance, meaning you would pay very little tax.

If you have joined the health system in France using the E121, then you will have no social charges to pay on your pension income.

As to the exchange rate “losses”, do not forget that exchange rates are designed to change and the uncertain economic conditions were all the more prevalent when you moved here a year ago.

You may be eligible for Aspa - the Allocation de Solidarité aux Personnes Agées - a type of pension supplement that comes from the French government and is open to foreigners.

If you are a British or Irish expat in France the charity Elizabeth Finn Care can provide financial assistance. Contact Mary Hughes on 04 68 23 43 79 or see www.elizabethfinncare.org.uk

While there is some relief from the taxe d’habitation, this is for single people with taxable incomes under €9,437 and, as your net income is already e9,600, it is unlikely you will qualify.

You could ask your mairie for your nearest Collectivité Locale (it might even be the mairie) to request an abatement against the taxe d’habitation, although they do not usually do anything for those hit by low exchange rates.

As for what taxes you should be paying, I would list them as follows:

Taxe foncière
Yes, you pay this as you are the owner of the house.

Taxe d'habitation
Yes, you pay this as you live in the house (subject to low income exemptions).

French Income Tax
Yes, you should pay this on all of your combined world income, ie. both the BA pension and the state pension

UK Income Tax
No, you should not be paying this as you are not a UK fiscal resident and are assessable in France as a French fiscal resident

French social charges
No, you should not be paying these on your pension, if you have joined the French health service using your UK E121 certificate.

But yes, you should be paying this on investment income from non-exempt accounts (exempt accounts being the Livret A and the LDD - Livret de développement durable.)

French Wealth Tax
No, you should not pay this if the value of your world assets is below €790,000. There are allowances in the first five years of fiscal residency, and on your home.

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