Author Topic: France  (Read 773 times)

daverobev

  • Magnum Stache
  • ******
  • Posts: 3319
  • Location: UK
France
« on: May 04, 2019, 08:01:57 AM »
Hi all,

my family is now, after much thinking and looking for somewhere to live in the UK, probably going to end up living in France.

Any Canadians here have any clue on how France treats RRSPs, and whether it treats all ETFs equally regardless of country? The reason I ask these questions is because the UK doesn't recognise the RRSP as a true retirement account (too easy to get money out of), and only grants that dividends are really dividends and capital gains is really capital gains on ETFs/funds that are 'UK Reporting'.

In other words - if I go and buy, oh, ZPR.TO, the UK doesn't get the info it wants and treats dividends as income (ie taxed at the full rate, not 7.5%), and any capital gain on selling is also treated as income.

RichMoose

  • Pencil Stache
  • ****
  • Posts: 963
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: France
« Reply #1 on: May 09, 2019, 01:48:56 PM »
I don't know any specifics, but I'm sure you've read France's tax summary and noted their taxes are very high. This is especially true when the surtaxes and social taxes are factored in.
taxsummaries.pwc.com/ID/France-Individual-Taxes-on-personal-income

As a general rule, most countries do not recognize RRSPs as being anything special. However, this can change if the RRSP is converted to a RRIF. Have you looked into this for the U.K.?

Why France? Belgium is much more tax friendly for investment income and the southern part of Belgium is French speaking and quite reasonable for living expenses.

Good luck with your search!

daverobev

  • Magnum Stache
  • ******
  • Posts: 3319
  • Location: UK
Re: France
« Reply #2 on: May 09, 2019, 03:48:43 PM »
Family, basically. Yes, the social charges are... shocking. 17% on unearned income, from the first euro, where neither the UK nor Canada charge on unearned income.

Still, from that chart, after the social charges are done there is little actual *income* tax if you have a couple of children.

Plus, where we're going, you can get a 3-4 bedroom house possibly with a second building with another room or two which could be a gite, for 140k Euros, maybe quite a bit less depending on how much effort you're willing to put in renovating. A 'normal' 3 bed in the UK would cost us close to double that. So that's a big chunk which can stay invested to offset the bloody not-tax we're paying for nothing on investment income (literally nothing, you get no entitlement or benefit in return - no pension, no healthcare, nothing).

The UK doesn't see the RRSP as anything special, but when you convert to an RRIF you get zero withholding from the Canadian side. You pay tax on dividends and on capital gains in an RRSP, but nothing as money moves out of the RRSP (but of course Canada takes a cut then and you can't offset one against the other). I haven't quite figured out if you pay tax on divis and cap gains inside an RRIF, I'm actually waiting for HMRC to get back to me... not that it matters now.

It would be a 7+ hour drive from Belgium to visit family, and homes there are probably also in the double range. Probably not worth thinking about though I'll look at least a little, thanks.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3319
  • Location: UK
Re: France
« Reply #3 on: May 09, 2019, 04:33:42 PM »
Hmm, interestingly...

For a family of four, living in Ontario vs living in France; both adults earning $45k - total deductions aren't much different.

$9300 x 2 in Ontario (inc. CPP, EI), $20.5k total (social charges + tax) in France. *Tax* is really low in France, especially if you have children.

It's just the amount on unearned income that sucks.

Mathieu

  • 5 O'Clock Shadow
  • *
  • Posts: 6
  • Location: QC, Canada
Re: France
« Reply #4 on: June 11, 2019, 05:02:32 AM »

Plus, where we're going, you can get a 3-4 bedroom house possibly with a second building with another room or two which could be a gite, for 140k Euros, maybe quite a bit less depending on how much effort you're willing to put in renovating. A 'normal' 3 bed in the UK would cost us close to double that. So that's a big chunk which can stay invested to offset the bloody not-tax we're paying for nothing on investment income (literally nothing, you get no entitlement or benefit in return - no pension, no healthcare, nothing).


Hi,

I'm happy to see that you've looked at the big picture instead of just focusing on the usual "France is a tax hell" debate. As a French citizen I can confirm you're taxed on anything and everything (no need to thank us for VAT, you're welcome world!), but overall France is still a liveable country ;-)

Here's my example to backup the above statement: family of 4 (2 adults + 2 young kids), two new cars (I know, I know), older kid goes to school (+ day care before and after school hours), younger kid goes to day care. Older kid participates in Ballet twice a week and judo twice a week, myself is in a triathlon club, we regularly eat at nice restaurants and go to the theatre (the one with people, not the big video screen). We live in our own 250k 16th century 4 bedroom comfortable house located in a very touristic area (still under mortgage). Combined salaries are 60k/year (that's CAD 90k/year). Well, for all of this our yearly expenses (including all those "hellish" taxes!) are a little less than 24k (CAD 36k).

Taxes can be optimised, such as a registered vs non-registered account strategy. For example, in Canada your TFSA allows you to deposit about 5000$ a year tax free. Its French equivalent (PEA) is 150.000 euros tax-free deposit straight from the beginning.

A lot of expenses, including investment expenses, can also be deducted.

And so many great things are free or cheap, despite being of great quality.

I don't want to trigger a debate of "no tax but pay every service" vs "high tax and free services", I just want to reassure you on French people living conditions ;-)

Take care and keep looking at the big picture!


daverobev

  • Magnum Stache
  • ******
  • Posts: 3319
  • Location: UK
Re: France
« Reply #5 on: June 11, 2019, 06:50:45 AM »
Thanks - yes I'm going to be throwing most of everything into PEAs as soon as we're resident. Though, you still pay social charges on growth. Still, a 'wealth guy' was trying to convince me that the 0.5% + 0.5% + 0.85% cost of an Assurance Vie was better (vs 0.12% total I think in a PEA if you go with Bourse Direct and buy whatever VEUR has in Euros... might be VEUR...).

Do you know how France treats RRSPs?

meghan88

  • Pencil Stache
  • ****
  • Posts: 682
  • Location: Ontario
Re: France
« Reply #6 on: June 11, 2019, 09:55:16 AM »
Count me in for another vote for France.  I would live there in a heartbeat, but unless I buy citizenship somehow, I am SOL.

Back in 2002-2003 I lived and worked in France under a permis de long sejour.  As compared with Canada, the healthcare is fabulous.  And as Mathieu says, many things of great quality are inexpensive.

As for RRSPs and taxes, even though (for Canadian tax purposes) I actually cut all ties with Canada and paid French income tax for those years, I was still able to keep my RRSP, but not contribute to it.  The rules may have changed, and in any case I'm sure you'll have to pay taxes at some point, somewhere, on the RRSP.

If you buy a house with a gite, please let me know.  We go to France every year for a couple of months.

RichMoose

  • Pencil Stache
  • ****
  • Posts: 963
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: France
« Reply #7 on: June 11, 2019, 10:07:50 AM »
I'm happy to see that you've looked at the big picture instead of just focusing on the usual "France is a tax hell" debate. As a French citizen I can confirm you're taxed on anything and everything (no need to thank us for VAT, you're welcome world!), but overall France is still a liveable country ;-)

Here's my example to backup the above statement: family of 4 (2 adults + 2 young kids), two new cars (I know, I know), older kid goes to school (+ day care before and after school hours), younger kid goes to day care. Older kid participates in Ballet twice a week and judo twice a week, myself is in a triathlon club, we regularly eat at nice restaurants and go to the theatre (the one with people, not the big video screen). We live in our own 250k 16th century 4 bedroom comfortable house located in a very touristic area (still under mortgage). Combined salaries are 60k/year (that's CAD 90k/year). Well, for all of this our yearly expenses (including all those "hellish" taxes!) are a little less than 24k (CAD 36k).

Taxes can be optimised, such as a registered vs non-registered account strategy. For example, in Canada your TFSA allows you to deposit about 5000$ a year tax free. Its French equivalent (PEA) is 150.000 euros tax-free deposit straight from the beginning.

A lot of expenses, including investment expenses, can also be deducted.

And so many great things are free or cheap, despite being of great quality.

I don't want to trigger a debate of "no tax but pay every service" vs "high tax and free services", I just want to reassure you on French people living conditions ;-)

Take care and keep looking at the big picture!

Just clarifying, you earn family gross of 60.000 EUR and you spend 24.000 EUR including your tax bill? That means >50% savings rate on gross income? That's extremely cheap! Which region of France?

My family in the Netherlands (another higher tax country but not quite as insane as France) all seem to spend much more than 2.000 EUR a month and their lifestyle's are solidly working/middle class. Mind you, most live in the Randstad region which is the most expensive area of the Netherlands with quite pricey real estate. They also have a TFSA type account, but I don't know the exact details.

One thing no one complains about in Europe is the services. Transportation, health care and elder care especially. Surgeries are often done within weeks of diagnosis, elder care facilities are top-notch, and roads are in great condition. Rail is awesome too. Even the public servants seem to be friendlier and more appreciative of their very secure jobs (in the Netherlands anyways, can't speak for the rest of Europe).

I have a EU citizenship so Europe is a real possibility in my future. However, for tax reasons my eye has always been a little further east.

flipboard

  • Stubble
  • **
  • Posts: 201
Re: France
« Reply #8 on: June 11, 2019, 10:16:26 AM »
I have a EU citizenship so Europe is a real possibility in my future. However, for tax reasons my eye has always been a little further east.
There are countries in Europe with low taxes and good services. (And by low taxes I mean: lower than the US.)

RichMoose

  • Pencil Stache
  • ****
  • Posts: 963
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: France
« Reply #9 on: June 11, 2019, 10:32:48 AM »
I have a EU citizenship so Europe is a real possibility in my future. However, for tax reasons my eye has always been a little further east.
There are countries in Europe with low taxes and good services. (And by low taxes I mean: lower than the US.)
Definitely several countries with low tax. Not sure on their services though, although probably better than US public services.
Some countries I've been looking at are Hungary (have quite a bit of family there too), Czechia, and Montenegro. The Baltic countries could be appealing if the weather was better and Russia wasn't next door waving guns.

Belgium looks great too for investment taxes. However, cost of living can be very high in Brussels and Antwerp. I've heard the southern French Walloon region is quite a bit cheaper, but can't say for certain.

Mathieu

  • 5 O'Clock Shadow
  • *
  • Posts: 6
  • Location: QC, Canada
Re: France
« Reply #10 on: June 11, 2019, 12:58:50 PM »
Thanks - yes I'm going to be throwing most of everything into PEAs as soon as we're resident. Though, you still pay social charges on growth. Still, a 'wealth guy' was trying to convince me that the 0.5% + 0.5% + 0.85% cost of an Assurance Vie was better (vs 0.12% total I think in a PEA if you go with Bourse Direct and buy whatever VEUR has in Euros... might be VEUR...).

Do you know how France treats RRSPs?

I don't know how France treats RRSPs... by the way do you know how Canada treats PEA and Assurance-vie?? Haha, I'm moving the opposite direction :-))

Things to consider for your PEA: fees! There's usually a transaction fee levied on each buy/sell transaction, as well as yearly brokerage fee. You might want to consider an online bank to kill those fees (I use Boursorama, no yearly fee, minimal transaction fees). PEA was recently modified and it's tax incentive now starts after 5 years (vs 8 years previously).

Regarding Assurance-vie, it's actually not really a debate of fees, as both are minimal. The choice is more about succession tax strategy. Assurance-vie also offers a nice tax break with no upper limit. It can hold anything from ETF to stocks to bonds to paper real-estate. I personally use internet-based Linxea that has a 0.5% yearly fee but 0% buy/sell fees ! (if you're interested I can send you a referral).

Good luck, and don't hesitate if you have further questions!

Bon voyage.




Mathieu

  • 5 O'Clock Shadow
  • *
  • Posts: 6
  • Location: QC, Canada
Re: France
« Reply #11 on: June 11, 2019, 01:10:10 PM »

Just clarifying, you earn family gross of 60.000 EUR and you spend 24.000 EUR including your tax bill? That means >50% savings rate on gross income? That's extremely cheap! Which region of France?


Indeed we had good saving rates, hence my recent resignation to FIRE ;-)

In details: we lived away from Paris and other big expensive urban areas. Yet our region real-estate was considered "expensive" by French standard. Our spending in a nutshell: mortgage interest is extremely low (fixed 1% over 15 years), grocery shopping is made at the local market and we cook almost everything from raw products, we prefer thrift stores over high-end furniture stores, and as you said most services are free or inexpensive. But you need to beware of the tax-men! and ensure you shelter your money in registered accounts or high-deduction real-estate.


daverobev

  • Magnum Stache
  • ******
  • Posts: 3319
  • Location: UK
Re: France
« Reply #12 on: June 12, 2019, 03:24:14 AM »
For the Assurance Vie I have no idea, but the wealth guy I was talking to suggested a Luxembourg domicile was better than French.

For the PEA I'd guess it is treated as unregistered, just like a TFSA, just like an ISA. However what I'm not sure about is if you can avoid the scocial charges - if so it seems advantageous to invest in it, then in ten years move somewhere else, take the growth out (pay cap gains at a low rate somewhere).

meghan88

  • Pencil Stache
  • ****
  • Posts: 682
  • Location: Ontario
Re: France
« Reply #13 on: June 15, 2019, 04:43:48 PM »
Seeing as the discussion seems to be open to other questions:  I have about 170 shares of France Telecom from my past employment, in some sort of account with Amundi Epargne Entreprise.  Dividends over the years bought more shares, and the account has been assessed a "frais de tenue de compte" of about 30 Euros each year, which has been eating up about 1/3 to 1/2 of the value of the dividends.  If I cashed out, and put the funds straight into my French bank account that I've kept alive for purposes of vacation rentals, would this be taxed in Canada, France, or both?  Value is about 2361 Euros, or CAD$ 3555 at time of writing.  Not a whole lot of $ to be concerned about, but it would pay for about three months or so of off-season rent.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3319
  • Location: UK
Re: France
« Reply #14 on: June 15, 2019, 11:22:49 PM »
Capital gains would be taxed in Canada.

You'd need to know your adjusted cost base in CAD, of course.