UK probes French charges on government pensions

The British Embassy and the UK’s HMRC tax authority are looking into possible  miscalculations of French social charges on UK ‘government pensions’ after The Connexion wrote about several affected readers.

HMRC emailed to ask about our article and reader Andy Pickwick, from Tarn-et-Garonne, has passed on a letter from the British Embassy. 

We continue to hear from readers querying amounts they have been asked to pay in social charges (often thousands of euros) this year. Some people have also been asked for back payments for previous years.

Mr Pickwick has set up a ‘Government Pension Double Taxation’ Facebook group and reports ongoing exchanges with his departmental tax conciliatrice (mediator) over high charges on his police pension. 

His tax office treated it as a ‘pre-retirement benefit’, possibly because he is below state pension age, however this interpretation is unusual.

Double Taxation Convention sets clear rules

From reader feedback, several tax offices have raised different arguments to justify social charges.

However, tax lawyers we have spoken to say none appears legitimately to cancel out the usual interpretation of UK government service pensions (police, state teachers, armed forces etc), as not liable for French social charges. 

This relates to provisions in the UK/France Double Taxation Convention (DTC) that say this income is taxable only in the UK (an exception exists for recipients who are French, and only French). 

According to information received by The Connexion from central tax authorities the DGFiP, a service of the Finance Ministry, there is no change to these rules.

One tax office claimed the DTC to date from 2019, later than legislation about the social charges from 2014. 

In fact, the DTC dates from 2008 (in force since 2010) and there were only minor, unrelated, amendments more recently.

What to do if you are affected

An HMRC spokesman said: "Individuals should try to resolve this directly with the French authorities in the first instance. 

If this proves unsuccessful, they can request assistance via MAP (see below) from either HMRC or the French competent authority."

That is to say, those affected should undertake the usual complaints procedure via their local tax office; then could look at a ‘mutual agreement procedure’ (MAP), as defined in the DTC article 26 (procédure amiable). 

A ‘MAP’, which Mr Pickwick has requested, involves applying to HMRC or the French Finance Ministry. 

It should liaise with its counterpart to check if correct rules have been followed.

The British Embassy told Mr Pickwick it has been in touch with HMRC over the matter. 

It confirmed the advice as told to us by HMRC, directing him to information here and here, and information on English-speaking tax lawyers.

The Embassy said: “Your situation, and that of those mentioned in the Connexion article, have been flagged to the relevant teams in HMRC. 

"Any follow up action to come from this would be discussed with the relevant authorities in France. 

"We would not, unfortunately, be in a position to share feedback on these discussions which will remain confidential.”

As a reminder, ordinary UK state or private pensions of residents of France are assessable in France and social charges may be levied on them unless the person has an S1 form, which means the UK pays for their French healthcare. 

This is unrelated to the ‘government pension’ DTC rules. 

Social charges may also be levied on investment income, but S1 holders are entitled to a reduced rate of 7.5%.