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Discussion Starter · #1 ·
Hello,

I have a few tax questions that I'm having trouble getting definitive answers to.....even from my accountant.

If we are residing in France we will be considered Tax Residents. A large portion of our income will be from investments in Australia so will attract tax in Australia. I understand that in France I pay tax on my world wide income but will the tax charged take into account what tax I have already paid in Australia, or will I be paying tax twice on the same income?

When we are paying tax in France are we then able to access the French healthcare system?

I keep hearing that retirees are taxed at a lower rate in France but can't I find anything official to support this?

Thanks in advance...
 

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If you have your primary residence in France, then yes, you will be subject to French taxation on your worldwide income.

For your investment income from Australia, you must declare the income - but there are varying ways of handling the taxation part, depending on the source of the income (i.e. interest, dividends or capital gains). For those types of income that are already taxed at the source (i.e. in Australia), the French fisc takes into account the fact that you have already paid tax elsewhere - either at a flat rate (which is indicated on the forms) or you report the income net of the taxes paid already.

For an overview in English of the French tax system, take a look at this: http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_1006/fichedescriptive_1006.pdf It's a little bit out of date and due for a new edition any time now, but it will give you the overview.

Paying income tax, however, does not entitle you to access the healthcare system. For that you need to be paying in "cotisations" - which are the social insurance charges taken from a regular paycheck. To get a visa to live in France, you're going to need to show that you have private health insurance (generally interpreted to mean "roughly equivalent to the local health care system" but that's not written down anywhere). And you'll have to show proof of being insured each time you renew your carte de séjour (i.e. residence permit).

There is something called the CMU, where you pay a flat percentage of your revenue for State healthcare coverage - however, at the moment that doesn't seem to be available for those living in France on long stay visas.

Don't know where you're hearing that retirees are taxed at a lower rate - it may be just that "foreign" retirees are given credit for taxes paid or taken out of their pension payments. But you do report pension income separately on the tax declarations, so apparently it's treated somewhat differently in the calculations (done by the tax office - not by the taxpayer). In any event, the publication I pointed out to you may answer your questions.
Cheers,
Bev
 

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Hello,

I have a few tax questions that I'm having trouble getting definitive answers to.....even from my accountant.

If we are residing in France we will be considered Tax Residents. A large portion of our income will be from investments in Australia so will attract tax in Australia. I understand that in France I pay tax on my world wide income but will the tax charged take into account what tax I have already paid in Australia, or will I be paying tax twice on the same income?

When we are paying tax in France are we then able to access the French healthcare system?

I keep hearing that retirees are taxed at a lower rate in France but can't I find anything official to support this?

Thanks in advance...
Hi,
I give below a link to an explanation of the france/australia treaty; but briefly australian dividends and interest are declared on french form 2047 and get a credit of 17.7% and 11.2% respectively against french tax assessed on them.

https://www.ato.gov.au/General/Inte...ies/Australia-and-France-treaty---key-points/

There is no reciprocal health agreement between australia and france , so AFAIK you will need full private health cover for at least 5 years when you may be able to apply for entry to the french system. You need to ask at the CPAM.

This may be helpful:

Moving to France: Guide to French visas and permits | Visas & Permits | Expatica France
 

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If you have your primary residence in France, then yes, you will be subject to French taxation on your worldwide income.

For your investment income from Australia, you must declare the income - but there are varying ways of handling the taxation part, depending on the source of the income (i.e. interest, dividends or capital gains). For those types of income that are already taxed at the source (i.e. in Australia), the French fisc takes into account the fact that you have already paid tax elsewhere - either at a flat rate (which is indicated on the forms) or you report the income net of the taxes paid already.

Don't know where you're hearing that retirees are taxed at a lower rate - it may be just that "foreign" retirees are given credit for taxes paid or taken out of their pension payments. But you do report pension income separately on the tax declarations, so apparently it's treated somewhat differently in the calculations (done by the tax office - not by the taxpayer). In any event, the publication I pointed out to you may answer your questions.
Cheers,
Bev
I understand that if one member of a couple is over 65, in France, income for tax purposes for both will be taxed at the over 65 rate - the tax-free income level is about 2000 euros higher than itherwise (that's the total amount, for 2 "parts" ie a couple, with at least one over 65yo).

If you want to check what the Aust. Govt requires (the simple version): https://www.ato.gov.au/General/Inte...ies/Australia-and-France-treaty---key-points/

If you want some bedtime reading, the not so simple version: Convention Between the Government of Australia and the Government of the French Republic for the Avoidance of Double Taxation with respect to Taxes on Income and the Prevention of Fiscal Evasion and Protocol (Paris, 20 June 2006) - [2009] ATS 13 :p
 

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Yes, over 65s do get a tax advantage - see Kaju's comment above.
If you have an SMSF you will need to move it into something else before leaving Australia permanently - I believe there's lots of info on this online.
If you have a normal pension super account, you will pay tax on annual account earnings, not on pension and other draw-downs, i.e. it's treated as an investment account (at, least, that's the view of my local tax office - interpretations can vary from one area to another). Like your other investment income, it does attract the additional 'temporary' tax that's not a tax to prop up the social security system (that does not give you access to the French social security health cover system).
If part of your investment incomes is from rental properties, that is taxed in Australia not France. This is declared separately in France as a tax exempt income stream, but I believe it is taken into account to determine your tax rate here.
Australian withholding tax on your investments is offset here. I would expect you would be paying 10% in Australia and it is possible to have this automatically offset at 11%, however if some of your investment or other income is taxed at a higher rate, you will need to claim offset of the actual amount paid for each account/product.
 

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I understand that if one member of a couple is over 65, in France, income for tax purposes for both will be taxed at the over 65 rate - the tax-free income level is about 2000 euros higher than itherwise (that's the total amount, for 2 "parts" ie a couple, with at least one over 65yo).
Hm, DH is over 65 - I will have to go through the tax assessment again and see how that works. (I was so excited this year that I actually understood how they did things and could follow the calculations for the first time.... back to the drawing board, I guess.)
Cheers,
Bev
 

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Hm, DH is over 65 - I will have to go through the tax assessment again and see how that works. (I was so excited this year that I actually understood how they did things and could follow the calculations for the first time.... back to the drawing board, I guess.)
Cheers,
Bev
It should be taken into account automatically without you doing anything - date of birth is on the form.
 

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Discussion Starter · #8 ·
Thanks very much everyone!! I will get stuck into all the reading provided. In the mean time.....

We've just been advised that as a new resident in France our earnings in Australia would be exempt from consideration in France for the first five years. Has anyone experienced this?

Thanks again for all the advice.
 

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Thanks very much everyone!! I will get stuck into all the reading provided. In the mean time.....

We've just been advised that as a new resident in France our earnings in Australia would be exempt from consideration in France for the first five years. Has anyone experienced this?

Thanks again for all the advice.
Your income will be taxed or not, in either or both countries, as the double taxation treaty stipulates, depending on their nature and source. I don't believe you will escape getting taxed appropriately in either country as required, right from the first year.

Here's the treaty link again: Convention Between the Government of Australia and the Government of the French Republic for the Avoidance of Double Taxation with respect to Taxes on Income and the Prevention of Fiscal Evasion and Protocol (Paris, 20 June 2006) - [2009] ATS 13

Have a think about what type of investments you have and what type of income they provide. Scroll down to Article 6 and read the title and the first line below it, and see if that investment type applies to you. If so, read further. If not go to the next article and do the same, up to Article 21.

Perhaps whoever told you about a 5 year exemption for new expats may be thinking about the 5 year exemption from the wealth tax (the impôt sur la fortune), - this is in Article 28 of the treaty linked above. It applies if you (currently) have assets with a market value over about A$1.9 million, although a few things like works of art and business assets are excluded and there's a 30% discount in value for your principal residence. Important to know, so I'm prepared when I win the lotto! :)
 

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We've just been advised that as a new resident in France our earnings in Australia would be exempt from consideration in France for the first five years. Has anyone experienced this?
Sounds like total and utter rubbish to me and I'm wondering who gave you such advice.
 

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Sounds like this is something of an expansion on the old agreement that France had with some countries such that foreigners coming to France on a company transfer could avoid paying cotisations for the first five years as long as the employer maintained them in their "home" social security system. Originally it was for "temporary" transfers but most multinational companies just kept transfers off the French sécu for the first five years they worked in France.

Looks like they have "rationalized" the treatment a bit - 'bout time, too! Thanks Parsnips for the info.
Cheers,
Bev
 

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Sounds like this is something of an expansion on the old agreement that France had with some countries such that foreigners coming to France on a company transfer could avoid paying cotisations for the first five years as long as the employer maintained them in their "home" social security system. Originally it was for "temporary" transfers but most multinational companies just kept transfers off the French sécu for the first five years they worked in France.

Looks like they have "rationalized" the treatment a bit - 'bout time, too! Thanks Parsnips for the info.
Cheers,
Bev
But you need to read it carefully to the end, because it's not all income and the businesses and positions are limited.
 

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Discussion Starter · #16 ·
Your income will be taxed or not, in either or both countries, as the double taxation treaty stipulates, depending on their nature and source. I don't believe you will escape getting taxed appropriately in either country as required, right from the first year. Here's the treaty link again: Convention Between the Government of Australia and the Government of the French Republic for the Avoidance of Double Taxation with respect to Taxes on Income and the Prevention of Fiscal Evasion and Protocol (Paris, 20 June 2006) - [2009] ATS 13 Have a think about what type of investments you have and what type of income they provide. Scroll down to Article 6 and read the title and the first line below it, and see if that investment type applies to you. If so, read further. If not go to the next article and do the same, up to Article 21. Perhaps whoever told you about a 5 year exemption for new expats may be thinking about the 5 year exemption from the wealth tax (the impôt sur la fortune), - this is in Article 28 of the treaty linked above. It applies if you (currently) have assets with a market value over about A$1.9 million, although a few things like works of art and business assets are excluded and there's a 30% discount in value for your principal residence. Important to know, so I'm prepared when I win the lotto! :)
I will check with our accountant as to whether he is referring to Wealth Tax.

Reading the document you recommended, Article 17 reads:

"PENSIONS AND ANNUITIES

1. Subject to the provisions of paragraph 2 of Article 18, pensions and annuities paid to a resident of a Contracting State shall be taxable only in that State."

In Australia we can draw down a certain percentage of our compulsory Superannuation fund as a "pension". For French tax purposes would this income be assessed a Pension?
 

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Reading the document you recommended, Article 17 reads:

"PENSIONS AND ANNUITIES

1. Subject to the provisions of paragraph 2 of Article 18, pensions and annuities paid to a resident of a Contracting State shall be taxable only in that State."

In Australia we can draw down a certain percentage of our compulsory Superannuation fund as a "pension". For French tax purposes would this income be assessed a Pension?
See my earlier comments on superannuation.

In any case, your superannuation "pension" would meet the condition sof para 2 Article 18:
"2. a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or statutory body or local authority thereof to an individual in respect of services rendered to that State, subdivision, body or authority shall be taxable only in that State.

b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national or citizen of, that State and is not also a national or citizen of the first-mentioned State."

I doubt your superannuation "pension" would meet the criteria of a) above. Certainly my tax office here didn't see it as a pension in that regard. They determined that my superannuation "pension" was neither declarable nor taxable in France as it is essentially a draw-down of existing funds from my pension account. However they deemed the earnings on my super account declarable and taxable in France, but as an investment, not as a "pension" in terms of the agreement.

BTW be a little wary of your accountant as overseas accountants have been known to misinterpret French taxation requirements and calculations. I'm not saying he/she is wrong, just that there is a reasonable possibility that they may be mistaken. Also be aware that in France different tax offices can also have different interpretations of the tax arrangements - they will apply their interpretation when they receive your declaration and, should disagree, it would be up to you to pursue it.

The other thing I forgot to mention is that you need to be particularly aware of the potential for the Aussie dollar to fall against the Euro in the long term when you are doing your financial planning.
 

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Do take a look at the link I posted from the Ministère des Affaires Etrangères. For years I had heard varying things about the "deferred tax" retirement instruments they have in the US, whether you have to declare them or not. The ministry page on the US tax treaty was the first time I had seen specific reference to our IRA and 401K plans in French from the French government. (Only wish this were someplace on the Fisc's website.)

Like I said, I haven't read through the Australian page, but there are comments about Section 17 (which relates to pensions) and they might clarify the issue a bit for you.
Cheers,
Bev
 

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Do take a look at the link I posted from the Ministère des Affaires Etrangères. For years I had heard varying things about the "deferred tax" retirement instruments they have in the US, whether you have to declare them or not. The ministry page on the US tax treaty was the first time I had seen specific reference to our IRA and 401K plans in French from the French government. (Only wish this were someplace on the Fisc's website.)

Like I said, I haven't read through the Australian page, but there are comments about Section 17 (which relates to pensions) and they might clarify the issue a bit for you.
Cheers,
Bev
The Australian tax agreement is very different and doesn't make any kind of provision for superannuation arrangements whatsoever. This is one are where it is actually an advantage to be American :)
 
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