Brian Cave,
le Fourquet, 46300, Gourdon, France
Tel: (0033) (0) 5 65 41 42 69
Web page - http://www.lefourquet.net/
Blogspot contributor http://pensionersdebout.blogspot.com/
17 mars 2009
Monsieur Christian Comolet-Tirman, Sous-Directeur,
Direction Générale des Impôts,
Direction de la Législation Fiscale Sous-Direction E.
Bureau E1 Télédoc 503,
139 rue de Bercy,
75572 PARIS CEDEX 12
Monsieur Comolet-Tirman,
I apologize for writing in English. My French is not good enough to express my arguments without considerable danger of error or confusion.
My reasons for writing
I consider that an injustice in taxation is brought about because of the operation of the UK/French Double Taxation Convention [DTC] on incomes of British Government pensioners.
Article 25.1. of the Convention states …”Individuals who are nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstance, in particular with respect to residence, are or may be subjected.”
It is apparent to me that I suffer a greater burden of taxation than a French National resident in France in the same circumstances.
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Our circumstances.
I am 76 years old, my wife is 72. We have been resident in France for ten years. I was a Head of Science teacher and then Head of a Centre for the Study of the Environment. My teacher’s pension is taxed under the rules of the DTC [Article 19, paragraph 2, 1st sentence] in the UK.
We are well integrated into French society and have no intention of returning to live in the UK.
It is relevant to this matter that we support through the French Charity ‘Enfants du Mekong’, the education of a small boy in Cambodia.
Also, we have had need, because of our increasing age and my wife’s infirmities, to employ an ‘aide ménagère’. This year we have had to annul this employment because our income from Britain has declined by over 20%.
Under French tax laws the charity support, and the employment of the ‘aide ménagère’, would attract a tax rebate of 75% and 50% respectively. These rebates would for us, if we had continued to employ ‘une aide ménagère’ would amount to more than 1000 euros, which is equivalent to a tax saving of 1000 euros.
Because our tax is largely taken by the UK Government we cannot enjoy the totality of this tax rebate. We cannot obtain a tax rebate on tax paid to the UK!
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The effect on Taxation
If we renounced our British citizenship and took out French Nationality then my teachers’ pension would be ‘exportable’ to France and taxed in France [Reference DTC Article 19, paragraph 2, 2nd.sentence]. With the associated tax rebates available to taxpayers in France, our tax burden would be greatly reduced. This statement demonstrates unequivocally that our tax burden is more burdensome than a French National in exactly the same circumstances, particular with regard to residence, and therefore Article 25 of the DTC is contravened.
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Correspondence with Authorities in the UK.
Under the DTC – [Article 26 paragraph 1, specifically asks for this procedure], it is appropriate that I correspond with the correct authority in the UK. I have therefore had a protracted correspondence with the following.
Mr. Richard Thomas, International Tax Treaty Team, 100 Parliament Street, London, SW1A 2BQ.
Mr. Thomas appears not to understand the significance of my remarks and dismisses them. It is from him that I have obtained your name and address. He refuses to pursue this rightful claim of a British Citizen. His counter argument is transparently illogical [His argument is that as I have a pension taxable in the UK then I am not in the same circumstances as a French National who does not have a pension taxable in the UK. This is an absurd classic circular argument and any one with a reasonable education would perceive its fallacy. And, moreover as I demonstrate, if I changed my nationality, then the taxation of the pension is changed, without any other change to my circumstances.]
I have also had correspondence with my Member of Parliament Mr. Mark Harper. He has been sympathetic but appears to have little power. On my behalf he corresponded with Mr. Stephen Timms MP, Financial Secretary to the Treasury , 1, Horse Guards Road, London SW1A 2HQ
Mr. Timms simply reiterates the illogical reply from Mr. Thomas.
Recently I have written myself to Mr. Timms and I have also contacted a European Member of Parliament Mr. Richard Ashworth.
The latter two persons have not as yet replied to my observations.
Solutions?
I urge the French Government to intervene with the British Government to draw attention to the situation whereby Article 25 is contravened, and to agree on a solution.
1. It would be most satisfactory if Government pensions were taxed in the country where one is resident.
It would be better for the French Government and better for the individual.
2. [A much less satisfactory outcome]. Mr Thomas refers to the French position as ‘exemption with progression’. In this the French tax authorities demand that the British Government pension is declared on the tax return. If one’s British Government pension was not declared then one would be able to enjoy other benefits of the French security system. Such is the taxation system enjoyed by British retirees in Spain.
On the next page I develop some further background thoughts relevant to this matter. Particularly I draw attention to the enormous benefit to the French economy in rural areas such as the Departement du Lot by the money and trade which the retired British pensioner has brought to the area.
Yours most sincerely Brian Cave.
FURTHER BACKGROUND BEHIND THIS LETTER.
Despair amongst British residents in France at the attitude of the British Government.
The British Government’s lack of interest in the British citizen resident in Europe is so appalling that the blog-site http://pensionersdebout.blogspot.com/ has been mounted to draw attention to the situation.
A European Perspective.
Freedom of movement of peoples within the European Economic Area [EEA] is vital to the progress of Europe.
It is patently clear that there should not exist complex tax rules which inhibit the movement of individual retired people. I would prefer it if my pension were taxed only in France.
Curiously if a Frenchman were living in Britain in the reverse situation to myself in France, he would receive considerable tax benefit, in that his French income would not be required to be declared to the British tax authorities. This would mean that any other income he might earn in the UK would not be affected by his French ‘government’ income.
It would be desirable if throughout the EEA there was a uniform attitude towards people migrating in their retirement.
The advantages to the French Economy of migration of British Retired people.
I, myself, have introduced more than 500,000 euros in the last ten years into the economy of the Department of the Lot. This is on house purchase, employment of builders, local taxes, purchase of food and goods and so on. Some shops depend on the trade of people like us very considerably. I understand that 50% of the clients of Bricomarché at Gourdon are non-French.
There are about 43,000* retired British pensioners in France, mostly married couples. Each couple must bring in a minimum of 20,000 euros a year. This represents at least 43 million euros a year of income to France. Although a large sum, this is a small drop in the total fiscal revenue. However in certain departments such la Dordogne and le Lot where there are high concentrations of retired British people the local inflow is significant.
Besides supporting local trade the immigrants also support and organise local social activities. Among our British acquaintances, we have those who support Choral, Walking, Horticultural societies, Rotary Clubs and many others. In a number of instances the British are the organisers of these activities. Those with Government pensions play a disproportionately large part in these social activities.
These facts make it desirable for the French administration to have a sympathetic approach to the British retired people.
I do not know of any British people who are not welcomed here by the majority of the French people. We enjoy an excellent relationship with many neighbours and associates.
* possibly about 15-20,000 of these 43,000 are Government pensioners and therefore fall into the DTC trap. The precise statistics do not exist.
A question of Nationality.
I am descended from a thousand years of English people. My family name can be traced back, interestingly, to the Norman invasion. The family name is fairly common in Normandy in the area NE of Rouen.
However, imagine the response if it were suggested that a Frenchman should change his nationality in order to achieve a fair taxation system.. I would not lightly change my nationality to that of French to improve my situation.
Litigation.
Mr. Thomas suggests that if I am not satisfied, then I should go to litigation. This is utterly ridiculous. I, at the age of 76 with the small resources that I have could not possibly afford such a course of action.