# Tax in France for Australian Pensions



## mtn (Nov 8, 2011)

I searched forums and could not find anything specific on this topic. Could anyone help? TIA


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## Bevdeforges (Nov 16, 2007)

It's a broad topic, and subject to lots of conditions I suspect. If there is a tax treaty between France and Australia, it's often the case that a government pension would be taxed by the source country - but a private pension by your country of residence. 

France seems to then slap an 8% tax on most sources of income that are not subject to "cotisations" (i.e. French social insurances).

If you could give us a few more details regarding your question, we may be able to find someone who can help.
Cheers,
Bev


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## mtn (Nov 8, 2011)

Bevdeforges said:


> It's a broad topic, and subject to lots of conditions I suspect. If there is a tax treaty between France and Australia, it's often the case that a government pension would be taxed by the source country - but a private pension by your country of residence.
> 
> France seems to then slap an 8% tax on most sources of income that are not subject to "cotisations" (i.e. French social insurances).
> 
> ...


Thanks. I am familiar with the treatment of Australian government pensions just not clear about industry non-for-profit pension funds. They are setup as trusts in Australia and it is possible to take out a pension from these and also lump sums free of tax over the age of 60. They are tax-free because the contributions were taxed. Are such pensions taxed in France at marginal rate and the lump sums at 7.5%?


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## Bevdeforges (Nov 16, 2007)

I've looked long and hard through the French tax rules, and while there is no "general" case for the type of pensions you're describing, I have found that if the funds meet the requirements for classification as "assurance vie" rather than pensions, it may be possible to exclude them altogether - or at least partially before applying the preferential rates. 

I know I've been declaring my deferred tax retirement funds from the US as "foreign assurance vie" contracts for several years now in order to be able to claim the preferential treatment.
Cheers,
Bev


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## mtn (Nov 8, 2011)

What about PERPs and PERCOs? I thought these are similar to Australian pensions. 

If it was classified as "assurance vie" how is it declared on 2042 and 2047?


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## Bevdeforges (Nov 16, 2007)

If you declare it as an assurance vie, you tick the box on the last page of the 2042 and send them a list of what you have. (Kind of like declaring your foreign bank accounts.)

Assurance vie has a special taxation set-up - which amounts to being taxed only on the earnings that you are withdrawing, not the principle you contributed. (I.e. you don't report it as a pension at all - but rather as a withdrawal from an insurance contract.)

Easiest thing might be to check with the tax office in your area (assuming you're in France). They tend to be very helpful with this sort of thing.
Cheers,
Bev


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## mtn (Nov 8, 2011)

The problem with assurance vie is that my accumulation account/pension started in 1989 with a considerable gain over time. That would mean a very high percentage of tax on partial withdrawals. I am also eligible for S1 (my husband has a full UK state pension) which means no social charges payable on pensions but would be payable on assurance vie withdrawals. So I find it no clear cut whether to keep money in the accumulation account (which may qualify as a foreign assurance vie) or convert it to pension and pay income tax at marginal rate minus 10% abatement without social charges. And if I withdraw all the money and start a new assurance vie to avoid taxes on previous gains I would be paying about 1% more in management fees on the entire capital (Australian non-for-profit fund total management costs are ~0.8%) so the costs of assurance vie would be about the same as tax reductions on withdrawals. 

I am planning to go to the local tax office but I don't think they will advice me on the above choices. I spoke to a financial adviser but they are primarily interested in selling assurance vie in Ireland or Luxembourg so that they get their commissions. So I am trying to work it out myself and find it very frustrating. I know enough French to get by but this area even in English (!) is very muddy.


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