As a general rule of thumb, if you are resident in France and your pension originates in the UK, this will be taxed in France and will be covered under the double taxation agreement.
Under French rules, retirement pensions are taxed in a similar way to salaries. You will receive 10% deduction per household (subject to a minimum and maximum amount), then pay tax at the same rates as income tax. For this year the income tax brackets for 2024 on income received in 2023 are:
| Income brackets | Income tax bracket |
|---|---|
| Up to €11,294 | 0% |
| From €11,295 to €28,797 | 11% |
| From €28,798 to €82,341 | 30% |
| From €82,342 to €177,106 | 41% |
| More than €177,106 | 45% |
However, if your pension is a government service pension ( eg: a military pension) this will be subject to tax in the UK. Although these pensions are not taxed directly in France, the income should still be included on your French tax return. You can check here if you are in any doubt about whether your pension is a government pension.
As well as income tax, you may also be liable to pay social charges on your pension at a rate of up to 9.1%.
If you have an S1 and this is registered with CPAM, you are exempt from social charges on pension income.
The initial Tax Free Lump Sum which is available in the UK when you start claiming your pension is not recognised in France and if you take this after becoming a French resident there will potentially be tax to pay and possibly social charges too. Subject to conditions, if you decide to take your entire pension as one lump sum you may be eligible for a fixed 7.5% income tax rate in France.
If you haven’t left the UK yet, you may wish to consider whether to take a lump sum or not before you move to France along with weighing up the other fiscally advantageous options available to you in France. It can be a real minefield and it’s important to get sound advice from a reputable source before making any decisions.
This article is for informational purposes only and does not constitute investment/tax advice or research; you should seek advice from a professional adviser before embarking on any financial planning activity.
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