RETIRING TO FRANCE
Sylvia Edwards Davis provides a rundown of the main practical issues
Moving to another country can offer many very stimulating experiences, but some aspects can prove to be a little overwhelming. French paperwork falls into the second category.
When it comes to your retirement and finances, everything you do ahead of time to organise and plan your move to France, will be a good investment in peace of mind.
Before you leave, one of the first precautions is to notify the relevant UK tax authorities of your imminent departure, and then let the French equivalents know that you intend to live permanently in France. Then give your pension providers your new address and make suitable arrangements if you wish to change where it's to be paid, such as your new bank account details. In the case of a UK State Pension this can be paid directly into your French bank account.
In the UK advise HM Revenue and Customs (HMRC) by filling out Form P85, which is available at your local tax office or downloaded from www.hmrc.gov.uk. If you submit UK tax returns fill in the 'non-residence' pages to inform HMRC of your new residence in France.
The 2015 changes to the UK pension rules changed the way that retirees can take their pension income. Eligible contributors over 55 who have a suitable pension plan, will have a greater freedom in accessing their savings. Instead of drawing a payment every month, they'll be able to take out the whole lot in one go or when needed. Although this provides more choice, it requires careful planning to identify the most suitable scenario and your decision becomes even more important when you factor in the variations in foreign currency and regulations, which brings us to the subject of taxes.
The French tax year runs from January 1 to December 31 and tax returns should be made by the end of May of the following year. When you move to France, you're technically a tax resident the day after you arrive. In practice, of course, there's no automatic 'resident detector', so you need to make yourself known to the French tax authorities with your declaration. This will include all your income worldwide, plus capital gains and a wealth declaration, if your total estate exceeds a certain amount. The latter isn't income but the value of your estate at the time of writing, above €1.3 million.
In France, your pension income is generally added to your other income for the year taxed. If you receive a UK 'government service' pension, thee are taxed in the UK, not in France. The French tax office will, however, take that amount into consideration to calculate your total income as it pertains to your French tax bill. For other UK state retirement pensions, as the amount is paid gross, they need to be declared in France, and will therefore be taxed in France. As regards personal pensions and any non-government source occupational pensions, UK pension providers will continue to deduct UK tax at source until HMRC is satisfied that you're a French tax resident.
Once this 'clicks', HMRC will notify the provider that they can pay your income gross and will reimburse any overpaid UK tax that's been deducted at source/ For this to happen, you need to fill in another HMRC form, France/Individual, which your local French tax office will stamp, to confirm that you're a French tax resident.
There are so many possible permutations that, when it comes to taxes and personal finances you need professional advice. French tax rules are complex and just when you think you understand them, they change. The most tax-efficient financial configuration varies according to your pension, country of origin, age, tolerance for risk and the size of any assets and investment. Don't
underestimate the difference that good advice can make even if you think your capital is small.
The Loi de Financement de la Sécurité Sociale, which came into effect in January of 2016, did away with the Couverture Maladie Universelle (CMU) system and replaced it with Protection Maladie Universelle system (PUMA). This means that if you're resident in France in a 'regular and stable manner' you're entitled to health care coverage. If you're a retiree who's receiving a pension from and EU country, your right to health care is 'portable' so you can register for it in France.
The way it works is that you ask the NHS for an S1 form, and in France you complete a Cerfa 60-3406: Déclaration en Vue de l'immatriculation d'un Pensionné (Statement in Support of Registration of a Pensioner) form and then take it to your local CPAM office. You'll need to take documents regarding your pension, plus the items needed for almost any contact with the French government - birth certificate, passport and proof of residence (recent utility bills in your name should suffice). It can then be around five weeks for your registration to become active plus another four weeks to get a Carte Vitale. Before then, you can use the services armed with CPAM's temporary paper 'attestation'.
Keep in mind that the French health care system doesn't cover the full cost (usually only around 70%) so you'll still need top-up insurance. When you're registered with CPAM, you're entitled to a EHIC European Health Insurance Card, for using in other EU countries, including when you visit the UK.
Look into using a currency specialist, such as moneycorp, for your overseas payments - whether receiving money in France of sending it back to the UK. The specialists' online systems are handy and enable you to log on, book a favourable exchange rate and send your currency transfer. The advantage is that you can be assured that the process will be quick, easy and reliable, and great value for money as the fees are lower and the rates more advantageous than from regular banks.
It's particularly important to think of your will and heirs when you move to France. France's Succession Tax can come as a big shock, so it's important to understand the effects of gifts and inheritance tax. Succession Tax will apply to your property even if the beneficiary in your will isn't a French resident. Tax is also payable on your worldwide assets if you're a resident in France.
A new EU rule, 'Brussels IV', introduced flexibility to the law which applies to your estate, but it doesn't affect taxation. When you make your will, you can now choose for the law of your country of origin or nationality to apply, instead of the law of your country of residence, but you can't choose which tax system applies. If you don't plan ahead carefully, you may be leaving behind a problem for your beneficiaries to remember you by, rather than a lasting gift - so get professional advice.
EMOTIONS AND DISTANCE
Retiring to France often involves leaving loved ones behind. If you've children and grandchildren, and are used to seeing them regularly, the prospect can be very difficult for everyone so make sure to address these issues. Make practical arrangements ahead of time - plan visits, assign bedroom(s) in your new home, set up regular communication via telephone, email or Skype - anything to make you feel closer.
Setting aside a 'visiting' budget and plan trips and meet-ups ahead of time, to get the bet travel deals. Consider making frequent short visits, as this can shrink the distance and they'll become a new routine, rather than a special occasion where everything has the added pressure of having to be 'just right' because they're so rare.
Learning a language takes time, and even longer when you're older. Any little steps you can take to learn French before your move will make a huge difference. If possible, try to take the stress out of learning by turning it into a game with yourself. If you're moving as a couple, expect one of you to pick up the language faster, while the other will tend to lag behind - it happens. The good news: studies show that learning a second language helps keep the brain young so it doesn't matter if you're a 'hare' or a 'tortoise', it's a win-in all around!
Having so much free time after living a full working life can be wonderful and, at first, being in France is likely to feel akin to an extended holiday. However, as time goes on, you'll find a growing need to give some shape to each day or else life starts to feel a little aimless. This doesn't just apply to retirement in a foreign country - it happens to many retirees. When you are used to a certain routine it can take some adjusting to shift gears when you retire. If one of you is dependent on the other to communicate because of the language barrier, or to drive around, this can create a lack of personal space.
As with any majore life change, being 'mindful' always helps. Anything that defines private times or a unique 'me' space also helps. In addition, developing individual interests, hobbies and friends will give you something interesting to talk about at the end of the day.
Go easy on yourself and enjoy your well-deserved retirement!
Thanks to Tracy Leonetti for advice regarding health care issues.