French News

French Health Care Insurance

Many of you still seem unclear about the rules governing access to health care for EU early retirees to France, notably on termination of employment or business.

Just to recap on the starting point. If you are under the age of retirement, and you have a satisfactory national insurance payment record from your home EU country, then you are entitled to up to 2.5 years of health cover, provided through a E106 health insurance certificate.

When your E106 certificate expires there are a number of possible scenarios, other than private health insurance.

i. Medical Condition

If you have a medical condition that prevents you obtaining access to private health insurance (or to private health insurance at a ‘reasonable’ cost), then you can apply to your local health authority (CPAM) to be allowed into the health system. If you are successful, the whole family living with you is then covered.

ii. Accident of Life

If you have an ‘accident of life’, such as death of spouse or divorce, you are also entitled to make application to join the state health system. From the cases that have been brought to our attention, cover seems to be given without too much difficulty, although you should anticipate the usual paperchase to process the formalities.

iii. Business

You can also start a business or enter employment. Running a business grants automatic access into the health system.

Setting up a business is not complicated or expensive. As we have stated previously, buying and selling from time to time on eBay as a registered professional seller grants you business status, and as an auto-entrepreneur, you only pay on the basis of your turnover.

The French health system provides for continuing health insurance cover for those who become ‘involuntarily unemployed’, either because of a lack of business success, or because of termination/expiry of your contract of employment.

The minimum entitlement is access the health system for at least 12 months.

For those aged at least 57.5 years of age the health insurance cover continues for an indefinite period.

This rule applies as much to those who take a short–term fixed term contract that comes to an end, as to anyone who may otherwise lose their employment due to redundancy, although you need to have completed a minimum number of hours on an employment contract.

It also applies to those who cease their business, either because it was not profitable, or simply not profitable enough. If you have any doubt as to whether your insurance fund will continue to support you if you give up the business, then you should discuss it with them.

In either circumstances, if you are at least 57.5 years of age you are exempt with the requirement to search for work, and you maintain indefinite health cover, as the French government point out on their health website:

'Vous êtes âgé de 57 ans et demi ou plus:

Vous continuez à bénéficier du remboursement des soins en cas de maladie ou de maternité sans limitation de durée et sans avoir à justifier d'être à la recherche d'un emploi.'

Indeed, even if you are below the age of 57.5, provided you continue to be registered unemployed and in search of work, you maintain your rights to health insurance cover:

'Si vous êtes toujours à la recherche d'un emploi et inscrit au Pôle emploi:

Vous pouvez continuer à bénéficier du remboursement des soins en cas de maladie
ou de maternité sans limitation de durée. Vous devrez régulièrement en fournir la
preuve à votre caisse d'Assurance Maladie (déclaration sur l'honneur attestant que
vous êtes à la recherche d'un emploi, lettre de candidature, etc.).'

As we have pointed out frequently on this site, the rule that requires early retirees to take out private health insurance cover only applies to those who arrive in France as ‘inactive’ persons, and who remain inactive.

iv. Voluntary Work

If you are unable to take up the idea of business or employment activity, you can undertake voluntary work as a volontariat associatif, under which you are given health insurance cover.

Not all voluntary organisations offer such a contract, so it might be worth making enquiries of your local mairie in the first instance.

v. Finally!

When you reach the age of retirement, you have entitlement to an E121 which grants you automatic access to the French state health insurance system.

In all cases, once you have completed five years residence in France, or you reach the age of retirement, you are automatically entitled to affiliation to the health system.

You can read more in our guide to getting Health Insurance Cover in France.

The Auto Entrepreneur System - Tightening The Rules

The rules on obtaining ‘auto-entrepreneur’ business status are to be tightened.

Regular readers will be aware that an auto-entrepreneur is a form of micro-entreprise, with easier business registration and tax formalities.

With effect from 2010 anyone wanting to start up as an artisan using this business status will be required to produce either satisfactory evidence of qualifications, or at least three years' experience in the activity, as already occurs with other forms of business registration.

Currently, registration as an auto-entrepreneur does not dispense with the need to hold the necessary qualifications or experience, but the lack of registration formalities has meant that no checking of qualifications or experience is being carried out on business start up.

Later on-site verification can be made by trading standards officials, but such checks are not widespread or systematic.

Those who wish to start up as an artisan will in future be required to register their business with the Chambre de Métiers et de l’Artisanat (CMMA), who will have responsibility for ensuring that the entry criteria are met.

While those in the building trades will be most directly affected by the change, an artisan is an umbrella term that covers around 250 manual professions - from butcher to builder.

As the proposed change will not be retrospective, those who have already registered will not be required to produce evidence of qualifications or experience.

All auto-entrepreneurs will continue to be relieved of the need to pay the €200 annual business registration fee for the first three years of the business.

The change has been introduced following pressure on the government from the trade association of artisans (Union professionnelle artisanale (UPA)), who have been concerned about the lack of controls on an auto-entrepreneur.

The UPA argued that consumer interests are being damaged by a lack of controls on entry, and that the new business status had introduced an element of unfair competition between existing artisans and those operating as an auto-entrepreneur.

In practice, the only real advantage is that an auto-entrepreneur has no minimal annual social security contributions to pay, but it is questionable whether this is a significant advantage.

It is more likely that the UPA have been concerned at the increase in competition being introduced into the market place by the sheer number of people registering as artisans!

Government estimates put the number of newly registered auto-entrepreneurs at around 200,000, of whom around one quarter are in one of the artisan professions.

In a separate but related move, the government is also proposing to introduce some form of limited liability for an auto-entrepreneur. At the moment only the main home can be safeguarded against creditors, and it is proposed to extend the protection to all other personal assets.

You can read more in our guide to Starting an Auto-entrepreneur Business.

Rural France Resists Change

A new report on land use in France shows just why many international buyers view France as an attractive place to buy a rural retreat.

The report* from the European Commission classifies only 5% of the surface area of the country as ‘urban land’.

The vast majority of the country is composed of either agricultural land (60%), or forest and other natural space (34%). The balance is made up of semi-humid or wet areas.

By contrast, the percentage area of urban land in the United Kingdom is nearly 14%, three times higher than in France, a figure that rises to nearly 20% for England alone.

It is, therefore, not very surprising that surveys of French property buyers regularly show that one of the main attractions of France is the comparative tranquility of the country.

France has 113 inhabitants per km², whilst the UK has a density of 251 inhabitants per km², the highest in Europe.

While the report shows that agricultural land is having to give way to new development, it is happening at a snail’s pace. Only 0.7% of the land area has changed use since the last survey was undertaken in 2000.

Clearly, the pre-eminent importance of French agriculture is one explanation for the dominance of the countryside, but another equally important reason is the nature of the land in France, with large mountainous areas and huge forests in different parts of the country, as well as the presence of ancient moorlands in the Landes and Sologne.

French Planning controls on development in the countryside have also been tightened in the last few years, as local councils seek to focus new development within and around existing settlement areas.

Accordingly, the vast majority of the new development has taken place on the periphery of existing conurbations, or along main transport routes.

Those areas that have seen the largest increase in population density have been the Ile de France, Nord Pas de Calais, Alsace, the Rhone Valley, and areas on the coast.

The largest percentage increase in land use has been the road and rail network, which has increased by 19% since 2000.

There has also been a significant growth in artificial lakes and reservoirs, a response by farmers and the water authorities to the increasing number of droughts that have occurred in France over the past decade. The report expresses concern about the impact of this trend, as they consider it causes the fragmentation of natural water resources and areas.

*CORINE (Coordination of information on the environment) Land Cover 2006

'Vices Cachés' - Hidden Defects in French Properties

What are your rights if you find previously unknown major defects with the property following sale completion?

It is, of course, the nightmare we all dread. Having found your perfect dream home in France, you move into it only to find that the condition of the property is significantly worse than anticipated.

George and Alexandra Mortimer in the Landes found exactly than when they discovered serious water penetration into several rooms in the house, notably the basement and living room.

'We raised the matter with the previous owners, who denied there was a serious problem; the particulars of the property provided no information on its condition, and the notaire also considered that as we had purchased the property en l’état (in condition as seen) then there was nothing he could do.'

Well possibly, but the law on this issue is not quite as clear cut as the notaire indicated.

In general, it has to be said that the principle of ‘caveat emptor’ (buyer beware) applies as much in French law as it does elsewhere.

However, in France the seller has an obligation to disclose to the buyer all important information concerning the property.

There is nothing in French law that states precisely what must be disclosed by the buyer, save that the information must be something of a profound nature, of which the seller was aware at the time of the sale, and about which, if the buyer had known, they would not have proceeded with the purchase, or would have offered a lower price.

In particular, the seller is obliged to disclose any ‘hidden defects’ (vices cachés) in the property.

If they do not do so, then it is possible for a court of law to annul the sale, or at least reduce the price paid by the purchaser.

Notaires sometimes seek to limit the use of the vice caché protection by a standard exclusion clause the in the sale contract.

In practice whether a court of law would uphold this clause would depend on the circumstances of the case. If the court considered that the buyer had been deliberately misled by the seller, then they could annul the clause.

Indeed, this is precisely what has happened in a number of important court cases, although in other legal decisions the clause has been upheld. It all depends on the circumstances, notably whether the seller acted in good or bad faith.

Our advice to all buyers is that you should press for the removal of this clause in the sale contract. The seller may well object to you doing so, but if they do, then their motives for doing so need to be questioned.

You should certainly be hesitant about accepting to buy en l’état unless you fully understand what you are buying.

Ensure also that any important clause on the condition of the property that may have been included in the sale contract is transferred over into the conveyance.

There are particular guarantees on a house constructed within the last ten years, and there is additional protection if the seller is a property professional - property dealer, property developer or builder - as their own disclosure obligations are more prescribed. Property professionals cannot use the vice caché clause.

Estate agents also have a legal obligation to provide advice to the seller, but you will find few willing to say much in writing!

You can read more about the statutory disclosure obligations of sellers in our guide to Contract Conditions in French Property Sale Contracts.

French Tax Bill of €15 Billion

The French tax authorities identified a massive €15 billion in unpaid taxes last year, but this startling figure hides a slightly more complicated reality.

Most of the unpaid taxes were found within the business sector, where the tax inspectors undertake most of their investigations.

Thus, of the €15 billion in unpaid taxes and fines last year, around €6 billion came from underpaid VAT. Approximately €4 billion was identified in unpaid stamp duty, with the remainder relating to company tax and local taxes. Less than €2 billion concerned income tax.

Tax enquiries against individuals generally take the form of a written request for verification of supporting documentation, in a process called contrôle sur pièces.

Rarely do tax inspectors call on individual households as part of a tax enquiry, and it is equally unusual for individual taxpayers to be summoned to the tax office to explain their circumstances.

Of around 50,000 visits to premises that are carried out each year by the inspectors, only around 4,000 concern private individuals.

However, do let not that figure disguise the priority the French government give to tackling tax evasion. The Budget Minister Eric Woerth often speaks about it with a zeal bordering on religious fervour.

One of the major recent steps has been improved collaboration between the various tax and social security agencies, and specialist teams have been established in the Ministry of Finance.

Individual taxpayers who earn over €220,000 a year, or with gross wealth in excess of €3 million, are now subject to an automatic tax enquiry every three years.

Of the €15 billion in underpaid taxes in 2008, around €10 billion was identified from actual visits to business premises, with the remainder found by an examination of documentation.

Not all of the €15 billion was actually underpaid tax, as the total figure includes around €2.4 billion in penalties.

If the authorities consider there has been deliberate evasion and an unwillingness to cooperate with their enquiries the level of these penalties can amount to 100% of the underpaid tax.

It may also result in a legal action for fraud, and 992 such prosecutions were brought last year.

The message is, therefore, a clear one: if you are asked to supply further information on your income, a timely and open approach is likely to result in lower penalties, if any.

The key test the inspector will make is whether you acted in good faith; if they judge you did so, then matters are normally settled quite amicably.

Collection Remains a Problem

It is one thing for the tax authority to identify underpaid taxes, but it is quite another for them to recover the money. Each year they write off around 50% of amounts due simply because of collection difficulties.

By the time the authorities get around to commencing legal proceedings for recovery, those with arrears have either made themselves very scarce, or they have become insolvent!

Achieving the policy objective is being made more difficult by the fact that, whatever the improvements in coordination and specialisation that are being made, large cutbacks are being implemented in the size of the French civil service, so that routine tax administration is being hampered.

As a result, the greater risk is not that you will be subject to a tax enquiry, but that your tax assessment may be carried out incorrectly. Check your tax assessment with care!

You can read more in our guide to Tax Inspections in France.

Hospitals in France

What are the admission and charging policies of French hospitals, and where are the best and the worst hospitals in France?

For a country that has one of the most centralised forms of government in the world, there is a surprising lack of uniformity on the provision of hospital services in France.

Public hospitals sit alongside private clinics, with patients free to choose between either of them, and with most charges picked up by the French health system.

While there is greater discretion to the private clinics to set their own charges, they are not always in excess of those you find in the public hospitals.

There is also significant competition between the hospitals to obtain a respectable position in the league table of performance, with league tables prepared and published each year.

You can read more in our updated Guide to French Hospitals.