British tax dodgers in France – You have your say!

The 2006 tax year draws to a close in the UK on April 5th - yet another difference that separates us from the French, whose tax year coincides with the calendar. At Crème de Languedoc, we felt now was a good time to publish the results of our latest poll about ex-pat tax evasion.

Following are the results of an opinion poll carried out from July - December 2006 on our sister website, LanguedocLiving.com. Over 500 expatriates living in France con-tributed their thoughts about expat tax evasion and those who do not pay their obligatory social contributions towards the French national healthcare, social security and pension funds. All contributions were anonymous.

We started by asking respondents to consider the recent clamp down in the Dordogne region on benefit scams, and the resulting investigation of 60 Britons who had allegedly been fraudulently claiming the French long-term unemployment benefit known as Revenu Minimum d’Insertion (RMI). We then asked them how they felt about expat tax dodgers.

Vast majority think tax evasion is wrong – but whose fault is it?
Two thirds of us (68%) think that tax evasion by expats in France is a big problem. And in-terestingly, 60% of us say it’s ‘always wrong’ to evade tax in France. Two-thirds of us (67%) are annoyed that many expats do evade French tax, and half of us think that the reason people do evade taxes in France is because they’re ‘greedy and selfish’ - rather than because taxes are too high or the system too complicated to follow.

We’re divided on who should take responsibility for the situation. Half of us think it’s for the French government to make it easier for us to follow the rules, and the other half believe it’s up to us to make the effort to understand them.

59% of us claim to have always paid all our taxes in France, which, of course, leaves 41% who say they have ‘earned small sums in France and not declared it’.

The written comments sent in shed more light on the issue. It seems that many us believe that the French tax system is deliberately set up to tax only about half of what people earn. “Under-declaring a self-employed income is undoubtedly the norm. Tax, and more so, so-cial security charges, are set with this in mind. As a result, to declare 100% of your self-employed income is to be left with nothing once taxes, URSSAF, medical and pension bills are taken off. It’s an unwritten rule that you declare 50% of what you earn if you can. That’s just the way it is.”

So the French declare only half of what they earn because taxes are too high, so the gov-ernment keeps tax rates high to cover the shortfall - a vicious cycle of sorts. “Whatever tax evasion is occurring among expats pales in comparison to what the French are doing with their own system.”

The cultural divide and the British dilemma
Our findings show a considerable cultural divide between Britain and France. Brits seem to follow rules more strictly, assuming that the rules will never get too oppressive. “If the UK public perceive taxes as being fair, most of the time they will subscribe to it…” Which is probably why English cheese makers are falling over themselves to conform to new EU ‘safety standards’, while their French counterparts just ignore the new rules.

Which creates a dilemma for those Brits living in France. Our instincts are to pay our dues, and to feel nervous and panicky if we don’t. “Nobody likes taxation, but I would be scared to death to be part of the evasion.” But they know that most of the French don’t do the same. So they end up feeling resentful of those other Brits who play the game like the locals. “I find it annoying when others brag about not paying… There should be a free phone number like in the UK where you can ‘shop’ people who cheat.” “I think this is despicable. I’m sure the people who do this are the very same bigots who rant about foreigners living in the UK abusing the system and claiming ‘undeserved’ benefits. So here’s what I would do. Anyone caught cheating should be deported back to the UK immediately with no com-pensation and their property requisitioned for more deserving French families.”

Ethics-creep: is it only a matter of time?
Perhaps it’s simply a matter of time - of ‘ethics-creep’. Those fresh off the boat, ignorant of the French regime and keen to pay their dues to their new hosts, find the idea of cheating the system abhorrent (we’ve already seen from a previous poll that many expats feel guilty about living on foreign soil). The revulsion is especially keen amongst those who come here to retire, and don’t have to start declaring income earned in France. After a while, they start to hear about the ‘tax cheats’ and start fuming.

But over time, those bushy-tailed idealists who actually have to work for a living start to get ground down by the sheer weight of the tax regime. The bills come flooding in, the bank balance starts to shrink, and eventually many are tempted to fall in line by playing the system in the same way, they are assured, that the French play themselves.

So are they wrong? Or is the French tax system the real culprit? Is it really a system that penalises the honest, and encourages people to cheat?

For more information, visit languedocliving.com.