May 2018
From Wikipedia:
The Gospel Train (Get on Board)” is a traditional African-American spiritual first published in 1872 as one of the songs of the Fisk Jubilee Singers. A standard gospel song, it is found in the hymnals of many Protestant denominations and has been recorded by numerous artists.
The original meaning of the word “gospel” is “good news.” The title may be deceiving, since this month once again I do not have much good news to offer. But I enjoyed drafting the section about the SNCF and the trains, and thought it would be nice to refer to it.
HAD TO BUY A NEW COMPUTER URGENTLY IN EARLY APRIL
In early April, my computer was stolen. This disorganized my work a lot more than I would have thought.
After trying for a week to use my son’s computer and my backup, I found that several programs were not compatible. After a week I gave up and bought a new one with a French keyboard, which I was not used to.
Now I am starting to catch up with the work that accumulated during the two weeks where I could not be efficient on the computer. I tried my best and prioritized as much as I could. If I missed anything, just send an email again and I will get to it.
Sorry for any inconvenience.
FRENCH INCOME TAX: TIME TO DECLARE IS NOW
Regarding the more mundane topic of income tax, I would like to remind everybody that the paper version of the 2017 income declaration must be filed in France by Wednesday, May 17th and the second partial income tax payment (deuxième tiers) is to be paid by May 15th (midnight, in both cases). The forms are already available at www.impots.gouv.fr. It is possible to file your declaration on this website, provided it is not your first time. To do so, you need your tax ID number and some access codes
- .Note that if you file online, the deadline is later. The schedule depends on your postal code:
- départements 01 to 19 must file by midnight on May 22nd
- départements 20 to 49 by May 29 th
- départements 50 or higher by June 5th
An important reminder: if you are a French fiscal resident (i.e. if you hold a carte de séjour or an immigration visa validated with an OFII stamp, and comply with the requirements), you must declare your worldwide income to the French authorities even if you have no income in France and do not have the right to work in France. There is no penalty for neglecting to file, but not meeting this obligation is illegal and can have consequences.
You are a French fiscal resident if you:
- 1. Staying in France for 183 days in a calendar year, whether you have legal immigration status or not.
- 2. Having immediate family members who reside in France (a spouse and/or children).
- 3. Having a French employer.
- 4. Running a French business, even something like tutoring schoolchildren in English.
Current government-sponsored advertising campaigns call the paper form a thing of the past and say filing on paper is obsolete. For now, declaring electronically gives you an extension of a few weeks.
RETENUE À LA SOURCE – INCOME TAX WITHHOLDING STARTS ON JANUARY 1st 2019
I first mentioned that this would happen in my July-August 2015 column. Now the tax office is communicating by email and letters in the mail informing everybody that this enormous reform to the taxation method is in place and people need to get ready for it.
France is one of the last Western countries where income tax is paid by the individual directly and not withheld by the employer. There are many cultural and historical reasons why the French people have been reluctant to change this set-up, but all of them combined are not enough to explain why it has not yet been done.
Under the new system, everybody, even the self-employed, will make monthly payments.
There is only one technical reason that withholding tax would be very difficult to set up. It is called the quotient familial. I believe France is the only country that taxes the family as a group rather than individuals. This means the amount of tax you owe changes if:
- – You get married,
- – You get divorced,
- – You have a child,
- – The child leaves the home,
- – A family member dies, and/or
- – A family member becomes disabled.
Such events occur frequently enough in the course of a lifetime that they could significantly change the amount withheld. A withholding system works best if there is just a small discrepancy at the end of the year. This is why the French system prefers to have taxes paid in three installments. The first two, in February and in May, are calculated on the amount owed the year before, and the last one on the amount of taxes owed for the year.
Neither employers nor employees are very happy with the coming reform. Employers do not want an extra task to complicate the French pay slip even more. Employees dislike the fact that employers will know much more about their private lives: Employees will have to tell employers right away if any of the above-mentioned changes takes place, and employers will have to inform the tax office to calculate the new amount owed. Given the level of distrust French employees have toward employers, this could create major difficulties.
For self-employed people, the tax office relies on the previous year’s income and the amount of taxes owed to determine how much money will be taken out monthly. The same reasons for a radical change in the amount of taxes owed also apply here. Presumably the person in this situation can tell the tax office directly to modify the calculation accordingly. Knowing how such withholding is done today – it is set in stone for the entire calendar year – I am really not sure this has been changed to accommodate the above situations.
PACS DISSOLUTION: THE LACK OF A COURT DECISION CAN COMPLICATE MATTERS
A faithful reader who is a marriage counselor has sent me a comment worth reflecting on.
“Thanks for your latest column which, as usual, is full of useful information and interesting reflections. On the subject of the PACS, it might be useful to point out that a PACS can be unilaterally abrogated at the request of one of the partners. This happened recently to one of the women in my support group. A few days later the man showed up at the couple’s flat late at night with the police and literally threw the woman out in the street with her belongings!”
My reaction: There must be a lot more to the story, given how primary domicile is protected in France. But this illustrates one of the downsides of the PACS. Since there is no judge or notaire involved in the dissolution, the partners are left to determine the split of assets and debts on their own, as well as finding a way to agree on practical matters so each partner can leave the relationship with what is theirs.
It is rarely the case that the agreement is amicable, given how often relationships end in acrimony. This is a good opportunity to remind you once again that a PACS can indeed be unilaterally abrogated, and the consequences can be terrible. In such cases, filing in court is often the best thing to do, particularly if one partner is being bullied as described above and may have trouble securing their rights.
AN AMERICAN GOT FINED LEAVING FRANCE FOR OVERSTAYING THE 90-DAY PERIOD
It is clear that the French police at airports are getting stricter about overstaying. I learned from one of my clients that an American citizen was fined about 100€ for overstaying the 90-day Schengen limit. As far as I know, this person has actually been living in France without any immigration status for a very long time and has regularly overstayed in the past, always by a few days or a few weeks.
Therefore, to me this is a signal that the French police are now looking at what is inside the passport and not just the first page. While other feedback I am getting indicates there are still many going through without any consequences, the trend is clear. There will come a day when overstaying will mean paying a fine.
FRANCE IS FACING MORE AND MORE STRIKES
At the time of writing, the national train company SNCF, university students and Air France are on strike. I do not intend to discuss or even review the new government policies against which people are striking.
Foreigners are generally amazed at how and why French people go on strike. In many countries, labor and management negotiate, with a deadline. If an agreement is not found by then, the confrontation leaves the negotiating table and goes into the streets, with demonstrations, picketing and so on. It becomes an arm-twisting match.
In France, on the other hand, strikes and street demonstrations occur before negotiations really start, since France has never had a culture that promotes negotiation and compromise as a way to obtain negotiated agreements. The public and private sectors both are then crippled, and for the same reason. It is almost as if each party is presenting its position as definitive, with no room for negotiation. Strikes then become a way to determine who wins. In the end, there is little negotiation. Either the unions are unable to mobilize enough people and there is a lack of popular support, so the reform goes into effect pretty much as is. Or the strike is strong, picking up momentum and public support, in which case the government is left with little option but damage control. The reform is stopped, and the status quo – which is not good most of the time – is maintained.
Given the nature and extent of President Macron’s reforms, it was clear that no matter how much of a wizard he is in public relation and negotiations, there would be strikes and strong opposition. Personally, I was surprised the strikes did not start much sooner, and they are a lot less severe than I expected. The credit goes to President Macron, who has done quite well so far.
Clearly the SNCF needs to be drastically reorganized, as the overall quality of service is poor, the trains are often not on time, the comfort in the trains (aside from the TGV) is not great, and the suburban trains and infrastructure are in bad shape; by the way the Parisian suburban train system has already started its makeover. There is a need to shift the focus away from the TGV so the rest of the system can deliver decent service.
There is fierce debate about the special status the SNCF employees have, especially the ones operating the trains. The cheminots – the name today refers by extension to all the people working at the SNCF – have an honored history:
From Wikipedia:
The Battle of the Rails (French: La Bataille du rail) is a 1946 war movie directed by René Clément which depicts the efforts by French railway workers to sabotage German troop transport trains.
During the war, members of the CGT union, many of them also members of the Communist party, launched their own battle against the Germans, making it more and more difficult for the Wehrmacht to move troops, artillery and other weapons. This, among many other things, had a measurable impact on the success of D-Day, for example. At the end of the war, the surviving leaders were decorated as exceptional warriors. It is interesting that even today this has an echo in the general population, much more than one would expect some 75 years later.
This overly emotional discussion of whether rail workers deserve their so-called perks distracts from a more interesting issue, which I believe should be the main one. Trains today are powered by electricity and there are railroad tracks everywhere in France. Is it time to favor rail over road, to fight global warming? It could be a good idea to promote and heavily invest in train transport both for shipping and travel as a way to fight fossil fuel usage. Then the government could emphasize the fact that the men and women of the SNCF take extra pride in the work they do for historical reasons. At first there should be no discussion about their contracts. Developing and improving the quality of the services the SNCF offer will reassure these workers about the future of their jobs. Then modifications in their status, perhaps offering less job security and discontinuing benefits inherited from the past, would not alarm them when there is a plan lasting a decade or more designed to make the SNCF become more competitive in transporting both goods and people.
For those who think this is pure utopia, check out how much the Paris metro is being renovated, as well as the Parisian suburban trains and infrastructure. There is a huge amount of work to be done before people see a measurable result. Just the number of stations fully closed for months for a complete makeover the last ten years, gives a pretty accurate indication of the work’s scope.
You may think I am comfortable and not affected by this, but I recently waited over an hour in the cold for a train at a station in Versailles. This is sometime inconvenient to me, as it is to so many others almost everyday.
Best regards,
ANSWER
You might not realize it, but accusing the French administration of anti-Semitism brings to mind one of the worst periods in French history. By French standards, this is recent, and memories of it are still vivid. During WWII, France was occupied by the German authorities and implemented anti-Semitic laws and regulations in accordance with the German regime. After this situation ended in 1945, there was a major cleanup of the French administration in an effort to prevent any possible continuation of such policies.
Over 70 years later, the administration takes pride in being as neutral as possible regarding, race, religion, sexual orientation and so on. Some recent laws have stirred controversy, but it is members of the Muslim community who feel discriminated against.
Going to CPAM and claiming anti-Semitic discrimination would just be wrong, and you would be involved in a disastrous lawsuit. What is happening has nothing to do with you being born in Israel. Someone born in India or Japan who had had three first names would face the same request.
There is absolutely nothing personal about the request. I have explained (most recently in my March 2018 column, the third Q/A) how controlled the name change process is in France. Whether or not you understand why this is the case is irrelevant; that is the way it is in France, and this is where you live. You changed your name twice, which is very confusing for them. Until 40-some years ago, any given name that was not found among the saints’ names on the P.T.T. calendar was refused.
There is a division of INSEE, the national statistics office, that deals with issuing the French social security number. They think there may be enough uncertainty about your first name to ask for confirmation. This is all they are asking for. The attestation de concordance simply requires that your consulate or embassy state that the existing documents show that today your first name is David, according to the laws governing such matters. They just do not want to make a mistake, and in their mind they are doing this to protect your best interest. Their motivation is exactly the opposite of how you perceived it.
You had already seen that the prefecture had issues with the situation, so this should not come as a surprise. I understand and respect your feelings that this extra request seems punitive. Maybe one reason INSEE (through CPAM) is stricter than the prefecture is that the prefecture issues a French ID that states exactly the same thing as your passport. The prefecture did try to understand what happened, then checked that everything had been done legally, by French standards. But, in the end, all they needed was to understand how you came to have your current first name.
INSEE issues a definitive French social security number, which is mostly based on your date and place of birth and is exclusively for you. So they are extra cautious, making sure it is issued to the right person. To do this, they must verify the exact name, first and last name alike. One thing that might also explain the extra scrutiny is that the original documents are written in Hebrew, rather than in the Roman alphabet. If the civil servants could have read for themselves your first and last name, it would have been different. As it is, they must rely on an official translation, done by a certified translator. What if this professional made a mistake? They went the extra step just to make sure.
I truly hope that you are no longer taking this matter personally and you can now see that there is nothing resembling discrimination.
QUESTION
NATURALIZATION AND NON-COMPLIANCE WITH FRENCH INCOME TAX FOR STARTING A BUSINESS IN FRANCE?
I came to France as an American holding a long stay visa. After a few years I managed by myself to become self-employed and got the related carte de séjour and I was very proud of myself. This year I got the carte de résident, which lasts ten years. So I decided that I would ask for French nationality and went to see a lawyer, who told me that I did not qualify because I was cheating on my taxes. I left the firm outraged at such an unfair accusation.
Every year I fill out the form sent by RSI, and I pay on time all the tax bills I receive from URSSAF, RAM, and CIPAV. I have a perfect record for that. Once a year I send my #1040 to the IRS. The lawyer mentioned the French income tax I was not paying. What was he talking about? As you can see, I have always paid my taxes on time!
ANSWER
My first reaction is total amazement that you have lived in France for so long and have run a business but were never told about the French income tax requirements. This just proves what I always say about North American citizens often getting very preferential treatment. It also shows how such favors can end up being detrimental to the foreigner.
Before I explain what you need to do, I would like to describe how often the French administration has been lax with you, and what you got away with.
Once you spend more than 183 days in France per calendar year, you owe the French fiscal administration a declaration of your worldwide income, even if thanks to the treaty you do not owe French taxes. Normally once this happens the prefecture asks for the avis d’imposition on the revenue of the previous year, which proves that you live in France. I am sure that you showed them your #1040 and they took it as proof that you declared income while you were holding the visiteur immigration status.
When you submitted your request for immigration and fiscal status as a self-employed person, the prefecture should have asked for the avis d’imposition, and did not. Even more astonishing, you renewed your self-employed status by showing an American income declaration. You owed French income tax by then, as you were earning French income that is taxed aside from the social charges you have paid all along. How the prefecture let you go despite this blatant tax cheating is beyond my comprehension.
You can argue that you paid taxes in full on this income, and you would be absolutely right to a certain extent – but you paid them to the wrong country, the USA!
Next, to obtain the carte de résident, your file had to contain ideally five French avis d’imposition showing that your income exceeded the minimum wage, the SMIC, for five consecutive years. The prefecture accepted all your #1040s as proof of sufficient income, and you passed.
That is just the prefecture. On the tax office side, it is even more incredible. When you registered as a self-employed professional, your information was given to your local office, the professional division. I am sure that every year you paid the contribution foncière des entreprises (CFE). So, clearly, one division of the tax office never sent your information to the other side, which is completely incomprehensible, as they should share the same database.
Now, without disputing your good faith about this, I would like you see how you look from the outside. You have lived in France for, say, six or seven years and you have never declared your income in France, which means you have not been in compliance concerning your French income tax for at least a couple of years. That alone disqualifies you from asking for French naturalization. You will not overcome this, even if you have an excellent track record otherwise, until you set matters right with the tax office.
It is tax season right now in France, so you can declare your income for 2017, 2016 and 2015. This should enable you to clear your record with the tax authorities. There will be some penalties to pay, but because you volunteer the declarations the fines should be very small. This way you get rid of the biggest obstacle against naturalization.
France has a three-year statute of limitations regarding taxes, which is why you can only declare the past three years. The same statute of limitations means that in three years from today your record will be cleared and this tax cheating then cannot be hold against you. I agree this delay is not good news. I would not be surprised if you are mad at all the people who did not apply the law strictly. If they had asked you to provide your French income declaration earlier, you would be ready to submit your naturalization request now.
DISCLAIMER
Please forward this message to all those who would be interested in its contents. The information contained in this newsletter is intended only as general information. I strongly urge readers to seek professional guidance concerning the legal and tax matters mentioned. This newsletter is intended as a general guide and is not to be taken as professional advice.