It’s May here in the Languedoc where the poppies are not the only icons of spring. Many of us have started to do a bit of number crunching as we prepare for the previous year’s taxes. Taxes and health care are probably the biggest concerns for individuals weighing the pros and cons of retiring here in France, so for this entry, we turn to Peter Johnson, an accountant serving expats throughout the Languedoc and Provence. I must admit I was a bit surprised when Peter explained, “Income tax is generally very low compared to where retirees come from. For example, twenty percent in country of origin will translate to about five to ten percent here so for retirees it’s a bit of a tax haven.”
France? A tax haven? While the seventy five percent tax rate was quietly overturned shortly after implementation, many still believe that taxes in France are not only complicated, but very high, especially for those who come from countries outside of the European Union. While social charges are indeed high in France, it’s only employers and employees who are responsible for these contributions, retirees are mostly exempt.
An American retiree who has spent over a decade in the Hérault confirms Peter’s theory, explaining that she’s been pleasantly surprised by how low their taxes have been since retiring here. When asked about the challenge of navigating a foreign tax system, she said, “Hire somebody you feel comfortable with, that’s the answer!” For EU nationals, health coverage and pensions are honored here in France so making the move is simpler, although many still choose to hire a bilingual accountant to advise.
Sounds easy enough, but what are some of the catches? What should people consider before making the decision to retire in France? We’ve gathered a few tips for you from our favorite accountants and taxpayers.
• Make sure you are getting up to date information: Peter explains, “…be wary of online resources as there have been countless changes in the past few years .” For example, French inheritance laws are changing in 2015. Previously 75% of your inheritance automatically went to your children if you passed away in France but now you are able to customize your will as you see fit. Remember that much related to pensions and investments depends on your country of origin.
• Taxes aren’t the only area affected by income: Be aware of how your income impacts your health care premiums. An American expat was surprised when the yearly fees for the carte vitale (the universal health care system) went up significantly one year after the family’s income had increased the year before.
• Look into getting Assurance Vie, this can reduce your taxes on investments and provide favorable tax conditions for your beneficiary on your death.
• You are considered a tax resident only if you live in France more than six months of the year. So if you are planning to ease into your retirement here, you will not need to file a French income tax declaration if you stay fewer than 180 days.
• By the way, did you know that you will be exempt from the wealth tax for the first five years in France?
For additional information, our Administrative Assistance team can point you to resources or trusted partners. Please be in touch.
Peter Johnson is also available for calls or by Skype before you arrive in the area. You can reach Peter at firstname.lastname@example.org or +33 (0) 6 21 04 89 37. Please mention that you heard of Peter though Renestance.