Overseas Chambers of Peter Harris

Maison de la Boucterie
Rue de la Boucterie
Saint Saviour
Jersey, JE2 7ZW

31. French source pensions paid to non-resident pensioners living in Jersey

January 22nd 2020

 

French domestic tax law requires that a pension (retraite) of French source française - that is when the paying entity is domiciled in France  - is taxable in France when it is paid to a non-resident.

So, in the absence of a Tax Treaty, every pension paid by a caisse de retraite or employer is generally taxable in France. However, those paid to Jersey residents are not taxable under article 11 of the Tax Information Exchange Agreement of 2009 in force on 22nd October, 2011.

What would otherwise happen, following changes made in the Loi de finances pour 2020, pensions continue  forthe moment to be subject to a withholding tax calculated at progressive rates  of 0 %, 12% and 20% which is only partially discharges the liabilty, and need to be completed and if necessary topped up, or reimbursed,  on an annual return filed in the year following payment.

For information, that system of partial discharge will be repealed for pensions paid in  2021 and  2022. Lastly, as from  1st January 2023, the witholding taxation is to be replaced by a final French Pay As You Earn deduction, a little like ITIS. It may require an annual return to be filed as well to confirm the rate of deduction

In any event, these pensions like every other French source income paid to non-residents, will be subject to a minimum rate of taxation at 20% which increases to 30 % after 27.519 € taxable income.

Like most domestic tax rules, these are subject to modifiction under applicable tax treaties or equivalent agreements.

Whilst Jersey does not have a full tax treaty with France, the TIEA or adminstrative assistance agreement between France and Jersey agreed in 2009 stipulates an exemption for pensions from French taxation under the rules set out above, and limits tax to Jersey Income tax when the pesnion is paid to a Jersey Resident.  The rules are diffet fro those resident but not ordinarily resident in Jersey.

What is interesting is that "rentes" are exempted from French taxation. Itistherefroe possibel for certain type sof insurance polciies paying a mixture of capital and income out to benefit from the exemption, if you believe that you can get a better deal from a French insurer or broker.

 

Jersey : accord du 19 mars 2009, entré en vigueur le 11 octobre 2010 (décret n° 2010-1265 du 22 octobre 2010) dit "Décret n° 2010-1265 du 22 octobre 2010 portant publication de l'accord sous forme d'échange de lettres entre le Gouvernement de la République française et le Gouvernement de Jersey relatif à l'échange de renseignements en matière fiscale et à l'imposition des pensions (ensemble une annexe), signées à Paris le 12 mars 2009 et à Saint-Hélier le 19 mars 2009 (1).

 

Article 10 Pensions

1. Pensions, annuities and other similar remuneration arising in Jersey and paid in consideration of past employment to any person who, under the laws of France, is liable to tax therein by reason of his domicile, residence or any other criterion of a similar nature shall be taxable only in France. Notwithstanding the preceding sentence, if such pensions, annuities and other similar remuneration or part of them are not subject to tax in France under the ordinary rules of its tax law, they may also be taxed in Jersey within the limit of the amount not taxed in France.

2. Pensions, annuities and other similar remuneration arising in France and paid in consideration of past employment to any person who, under the laws of Jersey, is liable to tax therein by reason of his domicile, residence or any other criterion of a similar nature shall be taxable only in Jersey. Notwithstanding the preceding sentence, if such pensions, annuities and other similar remuneration or part of them are not subject to tax in Jersey under the ordinary rules of its tax law, they may also be taxed in France within the limit of the amount not taxed in Jersey. Article 11 Mutual

However the French contributions sociales are not affected by the TIEA  as the agreement does not apply to them.  They are not included in the list of taxes contained in article 3.