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CSG Changes for Expats in France

Details of the changes to the charges were made by President Emmanuel Macron during a television address that was designed to pacify the anger of protesters in the country. Macron said that proposed increases to the contribution sociale généralisée (CSG) rate would be shelved for any person living on less than €22,850 a year.

As result only 30% of retirees will now have to pay the increased rate of CSG.

Expats and pensions exemptions

Furthermore, any expat living in France who carries an ‘E’ form, S1 health certificate, or who receives a government service pension will be exempt from additional charges as they qualify for 100% relief against the social charges on their pension income – any additional pension income will be subject to the charge unless additional exemptions apply.

Calculating liability

The amount of charges applicable to an expat will depend on their total taxable income – i.e. pension income, investment income and salary income.

Spouses are subject to a common rate. This is true regardless of whether one spouse could have claimed an exemption or different rate.

However, expats who are hoping to enjoy the more preferential rates will have to wait until the summer, following the submission of their 2018 tax return, at which point they may receive a rebate for any money they have overpaid in social charges since January 2019 (the date at which the new CSG charges took effect).

Prélèvement de Solidarité – different dates for different income

If an expat does not receive French state healthcare and instead receives it from another EU or EEA country, they will be subject to a flat rate 7.5% tax under the Prélèvement de Solidarité system.

Prélèvement de Solidarité does not apply to all types of income from the same date. Investment and passive income are only eligible for the tax from 1st January 2019; in contrast most capital gains and rental income from unfurnished properties are eligible from 1st January 2018.

Expat wealth management in France

Blacktower Financial Management can help you with your expat wealth management, including expat tax planning in France, to help you ensure that your investment, pensions and rental income is optimised to your best possible benefit.

Contact us today for information and advice.

Other News

Final salary pensions – why now is a good time to cash in

Juicy lottery-sized sums are being offered to savers to tempt them out of gold-plated workplace pension schemes and into personal plans. We’ve explored whether you should consider taking a final salary pension, as well as the benefits and drawbacks of withdrawing.

What is a final salary pension?

A final salary pension, sometimes referred to as a gold-plated pension, is a special style of retirement fund that is based on your final or average salary.

The main difference between this and a defined contribution pension is that a final salary scheme gives you a guaranteed sum annually for the rest of your life when you retire.

To work out the value of your final salary scheme, consider a few factors: 

  1. Your final or average salary at your place of employment (confirm this with your employer)
  2. Your length of service
  3. The final salary scheme’s accrual rate (this is often 1/80th)

Your final salary pension will take each factor into account, and the resulting figure will be the guaranteed annual sum you are entitled to.

For instance, if you worked somewhere for ten years, and leave on a salary of £100,000, with an accrual rate of 1/80th, you will have a guaranteed retired annual income of £12,500.

It is possible to undertake a final salary pension transfer. Depending upon how long you expect to enjoy retirement, this could be a favourable choice. However, it’s important to consult a financial advisor to make your final salary pension transfer values work harder.

What are the benefits of transferring a final salary pension?

Assessing your final salary pension transfer value, you might consider it worthwhile to withdraw. We’ve outlined the main benefits of taking your final salary pension:

Receive the cash value of your final salary pension

Withdrawing from a final salary scheme allows you to receive a cash lump sum in return for forfeiting your guaranteed income in retirement. This final salary pension transfer value is the main reason to withdraw from a scheme, as it offers you financial freedom.

Remove ties with your employer

This is an especially important point if you’re concerned that your employer may not exist throughout your full retirement. For most, the pension protection fund (PPF) will cover your pension, but, for especially high earners, there is a PPF ceiling of £41,461 (as of April 2020).

Enjoy a flexible income in your retirement

A final salary scheme entitles you to a guaranteed annual income when you retire, but if you go down the route of transferring your final salary pension you will be able to enjoy a little more flexibility in how you receive your income. Usefully, by withdrawing from your final salary scheme, you can choose to take more out in your younger years.

Choose how you want to invest your pension

A final salary scheme is controlled tightly to accommodate all employees and their interests. When withdrawing from the scheme, however, you can take complete control over how your pension fund is invested.

The considerations you should make before transferring your final salary pension

While there are certainly benefits of going down the route of transferring final salary pension funds into various other pots, it’s important to consider what you’ll be giving up:

  • Entitlement to a fixed annual income for the rest of your life
  • A safe income that doesn’t fluctuate with volatile markets and share prices
  • Spousal and family benefits that come with a final salary scheme

 Example: Should I cash in my final salary pension?

An example is Mrs Dee (not her real name), 4 years ago she asked for her final salary transfer values, which came in at £250,000 – a nice sum, you may think. After reviewing all the facts and figures available, however, I advised Mrs Dee to leave her final salary pension where it was, which she duly did.

Towards the end of last year, because of favourable market conditions, I applied again to see the value of transferring her final salary . This one came in at just under £600,000.

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Need a bigger pond? We’re looking for a Senior Compliance Officer

VACANCY – Senior Compliance Officer

Blacktower Financial Management (International) Limited is one of Europe’s leading providers of Financial Advice and Wealth Management. We continue to increase our footprint across Europe and further afield.

As a result of this we have created an additional role within our Head Office in Gibraltar. We are looking for an individual who is seeking to work in an interactive environment, both within the organisation and when interacting with key stakeholders around the business.

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