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Social charges on pension income

You should not be paying social charges on pension income if you receive an old age state pension. Here is what to do

By Connexion’s Hugh MacDonald
The recent issue of the assessments to French Social Charges for 2008 income seems to be causing enormous grief to many who are failing to have the local tax office allow them relief from these charges on their pension incomes.

Firstly, though, let us remind ourselves of the rule : relief from social charges is only applicable to pension income, and, furthermore, it is only available if at least you, your spouse or pacsed partner are in receipt of the State Old Age pension.

Why ?

Because the receipt of the UK State Old Age pension in the UK exempts the UK taxpayer from paying UK National Insurance during retirement and, therefore, effectively, gives the UK taxpayer the right to free health cover.

Under EU rules, this UK free right to healthcare in the original home country is extended to those moving abroad within the EU. Accordingly, those receiving a UK State Old Age pension can request the exemption form - the E121 - to ensure that they suffer no cost for belonging to the French health system as, in effect, the cost of belonging to the French system is paid for by the British under Franco-British reciprocal arrangements.

However, while the E121 is only a right of exemption from paying to belong to the French state health system, it is not a right of membership.

Also, while belonging to the French health system is an immigration requirement, belonging to the French health system does not imply that one has to necessarily pay for it personally.
Indeed, the E106 form also gives free access to the French health system, but this certificate does not provide any exemption from the social charges.

So, on the basis that you have inserted your pension income - including the State Old Age pension - in section VIII of the pink 2047 tax form, and then transferred this total to the blue 2042 form, section 8 on page 4, box TL, your pension income should not be assessed to any of the social charges - including the CRDS.

But, some zealous tax offices are still assessing people to the CRDS. Is this correct? Not necessarily.

The confusion arises because of the section heading on the pink 2047 form itself on the one hand, and the law and the actual contents of the notes referring to this section on the other – since they differ. But the critical issue is - are you receiving free benefits from the social security system?

• If the answer is yes, for example, through some form of aid, then yes, the CRDS is due on
your pension income.

• However, if you receive no aid from the French social security system (which you don’t if the healthcare membership costs are paid for by the UK through your E121 entitlement), then no, you are notliable to the CRDS on your pension income.

Apart from the law itself, the proof of non-liability is mentioned in the Fisc’s own Notice pack to the 2047 form itself, and specifically in Note 17 on page 8.

While it is difficult to translate the phrase succinctly and retaining all the nuances, this note states, quite clearly, at the end of the first paragraph, that the CRDS is levied on those who are a liability to the French social security system - but a liability in the sense of receiving “something for nothing”.

Clearly, if you have an E121 to fund the cost of state healthcare membership, this is not the case: therefore, there is no liability to the CRDS if you have the E121 (and thus the State Old Age pension) and are not benefitting in another manner from the French Social Security system.

So what do you do if the tax office does nevertheless charge you to the CRDS ?
The best thing to do is to write to the tax office, confirming that you are in receipt of the UK Old Age State Pension, and are entitled to free access to the French healthcare system through benefitting from the E121 certificate.

The first time you do this, it is also wise to enclose a copy of the State Old Age pension entitlement letter (the one that is issued early each year confirming how much state pension you will receive) for the tax year being assessed, and also a copy of the E121 Certificate itself.

While you should compose your own letter, the following text, in French, is part of what you might wish to include in such a letter with regards to explaining the situation to the tax office, and obtaining a revised assessment:

Nous vous écrivons concernant l’avis d’imposition aux contributions sociales, et plus spécifiquement le CRDS sur les revenus de pensions en provenance de l’étranger pour l’année 2008.
Nos revenus de pensions de retraite de source étrangère sont exonérés de toutes les charges sociales car nous ne sommes aucunement dépendants de la sécurité sociale française, étant en possession du certificat européen E121. Notre cotisation à l’assurance maladie est payée sous un régime forfaitaire par le gouvernement britannique. Ceci est du au fait que nous avons des pensions de retraite d’état (preuve ci-jointe).
J’attire ainsi votre attention sur votre note n° 17 de la Notice associée au formulaire 2047. Vous trouverez ci-joint une copie du certificat européen E121 qui exonère le contribuable de payer les frais de l’assurance maladie en France, puisque comme mentionné ci-dessus, ceux-ci sont payés par dérogation européenne.
Ainsi, et comme il est précisé dans votre note n° 17, nous ne sommes pas “à la charge, à quelque titre que ce soit, d’un régime obligatoire de sécurité sociale français”.
Etant donné la clarté de cet article, nous vous saurions gré de bien vouloir revoir votre avis d’imposition aux contributions sociales, et vous en remercie par avance.

From experience this has always resulted in the situation being corrected satisfactorily without further ado, but, if not, then your best recourse would be to seek professional advice. In subsequent years, it is worthwhile providing a little reminder to the tax office when submitting your tax declaration, by inserting after the relevant section heading on both the blue 2042 and the pink 2047 of pension income – “Pas de CRDS - E121 ”. If however, you are assessed to this social charge on your pension income, then you should write along the lines as outlined above.

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