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What is the Tax on a UK Pension in France? SIPPs or QROPS Better?


What is the Tax on a UK Pension in France?

In this article, we will look at what is the tax on a UK pension in France. We will look into the tax on UK state pensions, final salary pensions, occupational pension schemes both public & private, how they are taxed and whether they will increase with inflation. Then, we will look at the optimal tax, currency & investment options for a retirement portfolio,

British migration to France has resulted in France being home to one of the largest British-born populations outside the United Kingdom. Migration from the UK to France has increased rapidly from the 1990s onward. Estimates of the number of British expats living in France vary from 170,000 to 400,000. According to a 2011 census, there are also over 300,000 French people living in the UK.

For these British expats & French expats, Brexit is a big deal and will affect not only their living status, but their access to medical care, visa-free travel, their pensions, their accounts as valued in a different currency and their tax plans. All of this requires financial planning. Unfortunately, because the outcome of Brexit is unknown as well as future taxation, the planning requires a lot of guess work until the dust settles on Brexit.

How is the UK State Pension Taxed in France?

Under current rules, the UK state pension get full tax relief in the UK and the state pension is protected under the “triple lock”.  This means your pension is not taxed in the UK. Your UK pension will make up part of your retirement income as a resident in France and be taxed in France.

The current government say expats will keep the state pensions ‘triple lock’ after Brexit. The triple lock ensures the state pension rises by the highest of inflation, earnings growth or 2.5% each year.

There were fears that British pensioners living in EU countries would lose the guaranteed increase after Brexit.

The UK state pension can be paid directly into your local bank account in France in EUR or into a bank account in the UK in GBP. Note, that it will be paid into your local bank in France in Sterling and you will have to pay the exchange rate conversion charges at your bank in France. The amount will also change each month due to exchange rate fluctuations. You can read more here.

Do I Qualify for a French State Pension?

You will not get a full French state pension unless you have worked in France or the EU for at least 40-43 years. Click here to claim an old age French pension.

How are Final Salary Pension Schemes Taxed in France?

First, let’s take a look at how final salary schemes, also known as Defined Benefit schemes, are taxed in France. This can be split into two groups for taxation purposes.

  1. Government pension schemes – e.g. the NHS, armed forces, civil service, teachers, police & firefighters
  2. Private sector occupational pension schemes

1 – Government pension schemes are not taxable in France. They are taxed only at source in the UK. Even though you only pay tax at source in the UK on government pensions and also declare them on the French tax return, you do not pay tax in France on those pensions. These payments are however used to push any other income you may have into higher income tax brackets. Note, these types of pensions can no longer be transferred overseas to a QROPS.

2 – Private or occupational pensions are taxable only in France. Your pension has no tax deducted at source in the UK and you just pay French tax on your pension income. ]

How is a SIPP or Personal Pension Scheme Taxed in France?

Any personal pension scheme or SIPP has full tax relief in the UK. You just pay French income tax on your pension pot instead.

How is a Pension Lump Sum (PCLS) Taxed in France?

Any lump sum paid out of a UK pension scheme has full tax relief in the UK. At retirement age, you can take a 25% tax-free cash lump sum in the UK, also known as the PCLS (Pension Commencement Lump Sum).

It is advisable to take this lump sum before you move to France, otherwise it is taxable in France.

Lump sums taken from UK pension funds whilst resident in France are taxable in France at a flat rate of 7.5%.

All pension income is additionally subject to 7.4% social charges, but if you hold EU Form S1 your pension income is exempt. You are entitled to Form S1 once you start receiving your UK state pension, and it is issued by the Department for Work and Pensions.

A second option is to move your UK pension to a European QROPS in EUR which will help to reduce the effect of exchange rates on your regular pension income.

Do I Get the Personal Allowance in the UK as an Expat in France?

If you have your pension income paid into a UK bank account and all other total UK income you receive is below your personal allowance, you won’t be taxed. The standard Personal Allowance is £11,850. So, if all your annual income you receive in the UK is below this amount, you will not be taxed on any income you receive in the UK as there is full tax relief for a resident in France. There is some debate whether this personal allowance will be allowed for expats in the future.

Tax on a QROPS in France

A SIPP has a tax on death after age 75. You may wish to transfer a UK pension scheme out of the UK tax net and into a European QROPS in EUR. You can transfer a UK pension to a QROPS in Malta as a resident in France and your pension will no longer receive any tax on death. Furthermore, you can nominate your heirs, so this might be useful if you want to add a new partner, child or other dependent for example. You can also have your investments denominated in EUR and invested into European ETFs and mutual funds.

If you take your QROPS as a one-off lump sum, it is taxed at 7.5%. If you instead, receive your QROPS as an annual income, you will pay French income taxes.

The issue with taking everything as a lump sum is that your entire pension pot is then exposed to French succession tax of up to 60% and you cannot choose your heirs, although, you can “elect” to pay UK inheritance tax instead, but the best way is to leave most of your retirement income wrapped up inside your QROPS and spend other income first until you need it. That way, your pension pot would have 0% tax on death.

Income Tax on Pensions in France

Tax on Lump Sums in France

Lump sums taken from UK pension funds whilst resident in France are taxable in France at a flat rate of 7.5%.

All pension income is additionally subject to 7.4% social charges, but if you hold EU Form S1 your pension income is exempt. You are entitled to Form S1 once you start receiving your UK state pension, and it is issued by the Department for Work and Pensions.

Tax on Pensions in France

Expats that live, work or retire in France are liable to pay French taxes on their pension in France. Under French law, a French pension earned from employment is taxable in the same way as a salary.

French state pensions, occupational pensions and private pensions are subject to a 10% tax deduction (minimum €377 to maximum €3,689 per household per year). Tax is based on household rather than individuals to benefit couples where one spouse earns more than the other.

Income Taxes in France 2018

Taxable Income (EUR)Tax Rate (%)
Up to 9,8070%
9,807 to 27,08614%
27,086 to 72,61730%
72,617 to 153,78341%
153,783+45%

Social Charges in France 2018

TaxSalaries/Business
PensionsInvestment/Rents/Capital Gains
CSG9.2%8.3%/3.8%* 9.9%
CRDS0.5%0.5%0.5%
Prélèvement Social0%0%4.5%
Contribution Additionnelle/
Cotisation l’autonomie
0%0.3%0.3%
Prélèvement de Solidarité0%0%2%
Total9.7%9.1%/3.8%*17.2%

SIPP Vs QROPS for a Resident in France

Final Salary Pension Scheme

  • A pension from a defined benefit pot can usually only be paid to a dependant of the person who died, for example a husband, wife, civil partner or child under 23. It can sometimes be paid to someone else if the pension scheme’s rules allow it – but it will be taxed at up to 55% as an unauthorised payment; usually, the partner receives around half of the retirement income paid out after death
  • Sterling denominated only (£)
  • Usually invested in GBP denominated funds
  • No flexi-access drawdown
  • Guaranteed income for life, usually linked to the inflation rate
  • Normal retirement age is 65
  • You cannot choose the beneficiaries

SIPP or Personal Pension Scheme

  • tax on death after age 75; this is either a lump sum tax of 45% or it is taxed at the beneficiaries’ highest rate of income tax
  • Sterling denominated only (£)
  • Usually invested in GBP denominated funds
  • Flexi-access drawdown from age 55
  • Lower fees; self-dealing permitted; unregulated investments permitted

Please note, it is possible to set up a EUR denominated SIPP, please contact us for details.

Malta QROPS

  • 0% tax on growth and death
  • 100% of funds paid as a lump sum to nominated beneficiaries upon death
  • Can choose beneficiaries and the lump sums they would receive upon death, e.g. partner 50%, child one 25%, child two 25%
  • Keep in Sterling or transfer to EUR
  • Wide investment choice; higher fees; self-dealing not permitted, but self-directed is OK, as both a financial adviser and the trustee needs to sign off on any dealing instructions
  • Unregulated investments no longer not permitted by most trustees
  • Discretionary Fund Managers available

How to Transfer a Pension to France in 2018

What is the Tax on a UK Pension in France? SIPPs or QROPS Better? by