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British expats in France face years of limbo: Brexit report

The British government’s first official report into the impact of a future Brexit has revealed that the rights of British expats in France and other parts of the EU will no longer be guaranteed.

British expats in France face years of limbo: Brexit report
Photo: Josh Hallett/Flickr

A report by the cabinet office has backed up what many British expats in France are deeply concerned about: a Brexit will mean years of uncertainty and the loss of rights.

The official report, the first by the government into how a Brexit would unfold in practice, concluded it would take the UK ten years to extricate itself from the EU and renegotiate new treaties with member states and other nations.

The study says the doubt will negatively impact on “financial markets, investment and the value of the pound”.

But more significantly, at least for the some 300,000 British expats in France and the 2.2 million thought to be living in the EU, it will plunge their lives into years of insecurity.

“A vote to leave the EU would be the start, not the end of a process. It could lead up to a decade or more of uncertainty,” the civil servants who wrote the report concluded.

If the UK public vote to leave the EU, the government would have to trigger “Article 50” of the Lisbon Treaty, which would begin the process of withdrawal and give the UK two years to renegotiate ties with Brussels.

But the government report said any renegotiation would likely take far longer as European countries try to take advantage of any new treaty with Britain.

Top of the list for issues that would need to be resolved in the case of a Brexit would be access for UK citizens to the European health insurance card.

(Photo: AFP)

British expats face 'complete limbo'

The British government’s Europe Minister David Lidlington carried similar warnings saying on Sunday that “everything we take for granted about access to the single market” would be thrown into doubt.

“Trade deals between the EU and other countries and bilateral trade deals of any type normally take six, seven, eight years and counting,” said David Lidlington.

“Everything we take for granted about access to the single market – trade taking place without customs checks or paperwork at national frontiers, the right of British citizens to go and live in Spain or France – those would all be up in the air. It is massive. It is massive what is at risk.”

The minister told the Observer newspaper that Brits in France and elsewhere would be in “complete limbo”.

In a letter to The Local France, George Peretz QC, an expert on EU law, pointed out what that “limbo” would mean in reality.

Peretz said a Brexit would inevitably see “UK citizens in France lose all the EU rights they currently enjoy”.

“It’s not just the loss of the right to use the French state health services. It goes well beyond that,” said Peretz.

“UK citizens would lose their EU law rights to work, to set up a business, to buy property, to bring family to live with them, not to be deported for trivial offences and so on. France might let them do all those things. But that would be entirely up to France.”

Those in favour of a Brexit however have dismissed all talk of uncertainty and loss of rights as pure fear mongering. They counter that any adverse impact caused by the uncertainty will be offset by the advantages of having independence from Europe. 

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Why some Brits in France are facing bigger tax bills since Brexit

Over the summer people living in France have received their tax bills, and some Brits who are residents here will have noticed that their bill is larger than usual - here's why.

Why some Brits in France are facing bigger tax bills since Brexit

Brits who live in France and make a tax declaration here, but have income from the UK, may have noticed that their tax bill has increased this year – here’s why and whether you can challenge the increase. 

Brexit

Yes, this is Brexit related and it refers to social charges on non-French income. The standard rate for these charges are 7.5 percent for income from an EU country and 17.2 percent for income from a non-EU country.

The tax bills received over the summer relate to the annual French tax declaration filed in April 2022, covering the 2021 tax year. In other words, the first year after the end of the Brexit transition period.

Social charges

Social charges are levies with a social purpose introduced in France in the 1990s to finance the country’s complex social security system.

If you have a French payslip you will already be familiar with them, and they actually make up the bulk of deductions from salaries, significantly more than income tax.

READ ALSO How to understand your French payslip

One of the big questions is whether France’s social charges are actually a ‘tax’ – the government repeatedly insists they’re not, for all that they look like a tax and are paid like a tax. 

The position on French social charges has changed several times in recent years, sometimes in response to court action all centred on whether this money that government deducts from your income can be called a ‘tax’ or not.

Katey Murray, at The Spectrum IFA Group, explained: “Article 29 of the amended Finance law of 2012 extended social charges to rental income from French properties and capital gains on properties for people who are not French tax resident.

“In 2015, a Dutch national challenged the fact that he was paying social charges in France and social security contributions in the Netherlands. The case went before the ECJ, which ruled these levies were similar to social security contributions and therefore contrary to European law.”

France’s highest administrative court, the Conseil d’Etat, confirmed the ECJ’s ruling. “French tax offices then, if a claim was made to them, reimbursed undue social charges,” Murray said.

“However, the French Government stated that these claims could only be made by someone covered for their healthcare by the system of another European country (EU, EEA or Switzerland) and not someone covered by a non-European health system. 

“This was confirmed by the ECJ for a French national living in China in a case in January 2018.”

Foreigners in France

And it’s this ‘healthcare system’ distinction that has become the key detail for Brits in France, clarified by a court ruling from March 2022 on the details of the Brexit Withdrawal Agreement. 

Social charges are currently set at 7.5 percent for income from an EU country, or 17.2 percent for income from a non-EU country. So income from the UK jumped to the higher rate at the end of the Brexit transition period.

However the ECJ ruling on healthcare cover is the key bit – essentially if you are already contributing to another European country’s social security system, you benefit from the lower rate.

This mainly affects two groups – Brits living in the UK (and therefore covered by the NHS) who have income in France, and Brits who are living in France and who have an S1, which states that their healthcare costs are covered by the NHS.

S1 holders are mainly British pensioners living in France, but the scheme can also apply to other groups including students and posted workers. 

Brits who are living in France and are covered by the French health system pay the higher rate on income from the UK. 

Technically the 7.5 percent rate is a ‘social levy’ rather than the prélèvements sociaux.

The ‘social levy’ is not charged on pensions, so if you are an S1 holder who receives a British pension, you will not have to pay any social charges at all, while certain types of property income may also be exempt from social charges.

Tax

As we stated above, social charges are not a tax (although they are deducted from your income by the tax office).

Taxes on income from the UK is covered by the bilateral dual-taxation treaty between France and the UK, which states that you don’t have to pay tax in France on income that you have already paid tax on in the UK. 

So the first thing to check on your tax bill is whether deductions relate to impôt (tax) or prélèvements sociaux (social charges).

Challenge your tax bill

So what to do if you think you have been incorrectly charged on income from the UK?

If you are an S1 holder, it’s a case of telling the tax office that you benefit from the lower 7.5 percent social levy, rather than the 17.2 percent social charge.

Murray said: “You can state that you are not subject to social charges by ticking boxes 8SH/8SI on your tax form (2042 form) or, if you have been charged at the higher rate, you can claim them back on your personal page on the impots.gouv.fr website.”

If the over-charge relates to a different issue – for example you have been charged both tax and the social charge or charged on exempt income – your first step is talking to the tax office, either in person or over the phone.

READ ALSO How to challenge your French tax bill

This article is a general overview of the tax rules and is not intended as a substitute for financial advice, if your financial affairs are complicated you are always better off getting professional help from an accountant who specialises in international taxation.

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