I am emerging from a fortnight wading – or maybe floundering – in financial affairs. It is that time of year for completing the income tax returns – la déclaration des revenus – but also a good moment to reflect on how I can better manage my money, which is getting a bit tight.
I was perhaps one of the first round here to adopt the online income tax returns when they were introduced some years ago; now doing the returns online is compulsory for all who have the internet. The software was initially very flaky, exacerbated by our almost non-existent internet connection. It has become better, though the language is still horrifically bureaucratic. Why on earth, for example, am I asked to enter on foreign bank account details the ‘désignation de l’organisme gestionnaire du compte’? It took me some time before I decided they meant simply the IBAN number.
There are some irritating features. Twice I was interrupted by phone calls or visits and returned to the computer to find I had been logged off. It had saved what I had entered so far, but I then had to plod through endless pages to reach where I had left off.
The income tax return is still for the income received in the previous year, but since the French finally got round to a PAYE (pay as you earn) system a couple of years ago, I imagine completing their return is a relatively simple affair – just a question of checking that the system has entered the right information about your household and income.
For foreigners it continues to be more stressful, not least because the language is often phrased on the assumption that you are receiving your money from a French source. In addition to the main income tax form (still called form 2042), foreign pensioners like me have to complete another form (2047) detailing revenue from foreign sources, and a form (3916) about bank accounts elsewhere in the world.
There are all sorts of complications, like calculating all revenu in Euros, even if some money remains in an overseas bank. I remember 20 years ago the unhelpful tax official told me that I should use the £/€ conversion rate on the day I received each pension. I ignored him and have since used a formula based on the annual average rate given by the European Central Bank. Luckily I have a rudimentary knowledge of spreadsheets … … I suppose luckily also I have no shares, insurance policies or other lovely ways of storing money. Otherwise I would no doubt have to employ an accountant, like many of the foreigners round here.
Well, it’s all done now. I’m feeling slightly smug because I don’t know anyone else who has finished yet. The electronic system also gives you the calculation for how much you will have to pay this year (on last year’s income). I will have to pay one euro more than last year, which either reflects the fall in the value of the pound, or the lack of significant increases in my pensions – or both.
By French standards I am regarded as a comfortably off tax payer, so perhaps I should not complain about how much I pay, or moan about the over 50% of inhabitants who pay no income tax at all. (I do find that all my French friends are very au fait with the various allowances and other ways to reduce your tax bill.)
I am in principle totally behind the egalitarian principles of income tax. In theory I also support the French system of social charges, principally the CSG (Contribution Sociale Généralisée), but it is not clear whether these are really charges to pay for the social security system which accompany benefits, or whether they are simply another income tax – a political ploy for not apparently raising income tax rates. Certainly CSG rates have been going up in recent years.
It affects me because in this post-brexit world, it is not clear whether I will still be exempt from social charges on UK-sourced income. Also, as I am planning to take on a new tenant for the gite, this time with a properly declared rent, I needed to know what social charges I might have to pay. So I made an appointment to see one of the local tax official officials.
The le Vigan tax office is under permanent threat of closure, as the banners outside confirm. Thank goodness it is still there, as it would be very wrong for people to have to travel to Alès, 75km away, along windy roads.
The official I saw was friendly and correct. She confirmed I had filled in all my forms correctly, that the problem with the automatic monthly payments had been resolved and entered my revised address (I am now 4 chemin du Pied Méjean) .
More important, I had been worried that now that the transition period was over I might be liable to pay CSG on my pensions. She confirmed that this would not happen. It was still the case that income coming from an external source would not be liable to CSG so long as the country of origin continued to pay my social costs (ie that the UK continues to reimburse France for my healthcare). Phew!
The rent I plan to charge my tenant, however, will incur social charges (even though I will still not be entitled to social care under the French system). Effectively the combination of income tax and CSG will account for about a quarter of the rent I charge.
I also asked the official how much CSG I (or rather my daughters, who own this property) would have to pay if for financial or health reasons I had to return to live in the UK and to rent out the two houses. Quite reasonably she did not know but undertook to research this.
I doubt if anyone will have reached the end of this post, but in a nutshell, I am now ready to turn to the next two pressing bits of administration: setting up a rental contract ( a bail) for the gite and, tomorrow, attending the Préfecture in Nîmes with my application papers for a post-brexit residence card (titre de séjour).