Foreign pension income and pension types

Foreign pension income is declared in France, even if it has already incurred tax, as is the case with UK 'government' pensions paid to people living in France and US pensions generally. 

It is important to understand the type of pension, whether it is a state/'old age' pension, a private pension, an occupational pension, or a 'government' pension. 

A 'government' pension is paid to people who previously worked for the state (see chapter 5 for UK examples). This type of income is referred to in the UK–France double tax treaty under the heading 'government service' (fonctions publiques in French). It is not the same as the state pension, which is paid based on National Insurance contributions.

If you receive a pension from the UK and are unsure whether it qualifies as a 'government' pension, you can contact HMRC for advice on 0044 135 535 9022 (Monday–Friday 8:00–20:00, Saturday 8:00–16:00).

A key difference between UK state and government pensions is that, for French residents, a UK state pension is not taxed in the UK and is taxable in France, whereas a government pension is taxable in the UK. A UK state pension is taxed in France under the usual tax bands after a 10% allowance, as are UK private and occupational pensions. This is not necessarily the case for all foreign pensions, as it depends on double tax treaties.

US retirement pensions, including 401(k) and IRA plans, are generally taxable in the US and not in France.

People who receive UK government pensions generally do not need to complete a UK tax return if this is their only UK-taxed income. These pensions must, however, be declared in France, not to be taxed, but to be taken into account in the overall tax calculation. They qualify for a tax credit, cancelling out any French tax and social charges.It should, however, be noted that there is a (fairly rare) exception in the case of UK government pensioners who live in France (eg. after working for the UK state sector) and who are French without also having British nationality, in which case France can tax their pensions, not the UK.

Some other foreign pensions can be liable to social charges, but there is a general exemption for people who are not a burden on France’s health system. This means that if you have a UK state pension and access French healthcare through a UK S1 form, you are exempt from French social charges on UK pension income. This continues to apply after Brexit (see the previous sections in this chapter). The same would apply to people with an S1 from an EU state, also some foreign newcomers in France who are not yet registered in the French health system and are relying on private health insurance policies.

The notes to the 2047 foreign income form, on page 3, under the heading Revenus de source étrangère imposables aux contributions sociales, state that foreign pension income (referred to as revenus de remplacement because it replaces work income) is not subject to CSG and CRDS social charges if the recipient is not a burden on the French healthcare system. 

This also applies, where relevant, to the CASA social charge on higher pensions, the notes clarify.

If it is the first time you are making a French declaration, or the first time declaring receipt of a foreign pension such as a UK state pension, it is advisable to include a copy of your S1 certificate to prove that your healthcare costs are paid by the UK. You should copy it before giving the original to your CPAM (French state health insurance body) and keep a copy for yourself.

Alternatively, your attestation de droits document from Assurance Maladie may contain wording indicating that your rights are based on an S1.

You cannot attach additional documents to an online tax declaration, but you can send a scan via the private messaging service in your personal space.

UK pension income other than government or state pensions will, in most cases, also be accepted as pension income by France. It is declared along with the state pension on the main declaration under the heading ‘pensions, retraites et rentes’, especially if it was built up from money earned over the years and benefited from tax relief. It is taxable by France but may be exempt from the social charges in the case of the holder having an S1 form.

Certain other forms of regular lifetime income may fall under another heading in France. For example, an annuity purchased from a lump sum of capital, such as a UK “purchased life annuity”, is defined as a rente viagère à titre onéreux. It is treated as a form of investment income and is declared and taxed differently from pensions. It is not subject to the social charges relief described above.

With regard to UK SIPP pensions (self-invested personal pensions), you declare the amounts drawn as pension income. There is no need to detail what happens within the scheme, according to financial experts working with the English-speaking community.

Some people choose to have their UK pensions paid directly into their French bank accounts. This is possible for all types of pensions. You give your provider the details of your French bank account, and payments are made in pounds, with automatic currency conversion through the banking system.

Questions were raised about whether this would continue after Brexit, especially for private pensions paid by insurance groups, but most providers have arrangements in place. The Connexion has not heard of any difficulties with the continuation of UK state pension payments into French bank accounts. This is helped by the fact that UK state pensions paid abroad are issued from Ireland, within the EU.

Many French banks have an unwritten rule not to charge for receiving regular foreign pension income. However, since Brexit, some banks now levy international or “non-SEPA” fees on transfers from the UK. Although the UK remains in the SEPA payments area, a legal loophole allows this when the sender is outside the EU and EEA, according to the French Banking Federation.

Another option is to have pension payments made into a UK account and then transfer the money to France through a bank or a currency transfer company. These firms may offer the option of fixing an exchange rate for up to a year, allowing you to know in advance how much you will receive each month.