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Why did declaring UK pension in France cause new 0.4% tax levy?

French tax authorities cannot apply a ‘withholding tax’ on pensions but can take money from your bank account each month as an on-account payment

French tax authorities cannot apply a ‘withholding tax’ on pensions Pic: Dragana Gordic / Shutterstock

Reader question: I live in France and receive a company pension from a UK company. Since declaring this income in France, I have been charged withholding tax at 0.4%, which increased to 0.9% the following year. The tax office said this was correct but do you know whether this is right?  S.A.

The French tax authorities cannot apply a ‘withholding tax’, as such, on foreign pensions but it is possible that they are taking money from your bank account monthly as an on-account payment for the expected income tax due for the current tax year. 

If this is the case, then yes, it is correct in principle and everything may be in order.

One means of checking this is to see if the payments are taken from your bank account at around the 15th of the month – if so, it would confirm this to be the case.

As to whether the amount being taken is correct, that would depend on the tax liability of the previous tax year and whether the income of that year and the current year are similar. 

If the amount is too much or too little compared to actual pension income this year, there will be a ‘régularisation’ later (more to pay or a refund). Alternatively, you can request a modification via your personal space on the tax website if you believe the difference to be significant.

To understand fully, ask the tax office to explain to you exactly what the tax is.

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