You did everything by the book. You moved to France after Brexit, registered with the French tax office, and when the time came you drew the 25 per cent tax-free lump sum from your SIPP (self-invested personal pension) or your former employer’s workplace pension, exactly as your British adviser suggested. The money arrived in full, with no British tax deducted. Then, a year later, the French tax office sent you an income tax assessment (avis d’impôt) that treats the whole lump sum as taxable income, and the bill runs into tens of thousands of euros.

This shock is one of the most common and most expensive misunderstandings among British residents in France: what His Majesty’s Revenue and Customs (HMRC) allows you to take tax-free in the United Kingdom is not tax-free in France. Once you are resident in France for tax purposes, France taxes you on your worldwide income, and the double tax treaty signed by France and the United Kingdom on 19 June 2008 gives France, as your state of residence, the exclusive right to tax your private pensions, including a lump sum paid in place of a pension. The good news is that French domestic law provides two specific relief valves for a one-off pension capital payment: a flat-rate levy of 7.5 per cent after a 10 per cent reduction, under strict conditions, and the averaging mechanism known as the quotient system (système du quotient). The difficulty is that both are easy to lose through misclassification of the payment, a split withdrawal or missing proof, and the French administrative courts decide cases on exactly these points every year.

This article sets out, with the exact statutory wording and recent court decisions, how your regular British pension income is taxed in France, why the lump sum is caught, how to declare both correctly, and how to challenge an excessive assessment. It is written for a British reader living in France; every French legal term is explained when it first appears. The figures and thresholds given are those in force at the date of writing, October 2026.

I. How France taxes your British pension once you live in France

A. Regular pension payments: worldwide taxation, the treaty and the 10 per cent reduction

The starting point is residence. Article 4 A of the French General Tax Code (code général des impôts) provides: “Les personnes qui ont en France leur domicile fiscal sont passibles de l’impôt sur le revenu en raison de l’ensemble de leurs revenus.” (Article 4 A, code général des impôts, on Légifrance), which means that a person whose tax home (domicile fiscal) is in France is liable for French income tax on all of their income, while “Celles dont le domicile fiscal est situé hors de France sont passibles de cet impôt en raison de leurs seuls revenus de source française.”. You are treated as having your tax home in France if, among other tests, you have your household there or your principal place of stay there: “1. Sont considérées comme ayant leur domicile fiscal en France au sens de l’article 4 A : a. Les personnes qui ont en France leur foyer ou le lieu de leur séjour principal ;” (Article 4 B, code général des impôts, on Légifrance). If you moved your family home to the Dordogne or your flat in Paris is where you spend most of the year, this test is met, and the detailed tie-breaker analysis for people torn between the two countries is set out in our guide on how France decides where you are resident for tax.

Once you are resident, the source of the income does not matter. Article 158 of the same code states the rule for the composition of worldwide taxable income: “1. Les revenus nets des diverses catégories entrant dans la composition du revenu net global sont évalués d’après les règles fixées aux articles 12 et 13 et dans les conditions prévues aux 2 à 6 ter ci-après, sans qu’il y ait lieu de distinguer suivant que ces revenus ont leur source en France ou hors de France” (Article 158, code général des impôts, on Légifrance). Your British State Pension, your workplace pension and your SIPP drawdown are therefore all, in principle, within the French tax base.

The treaty then decides which country actually taxes what, so that the same pension is not taxed twice. For private pensions, the answer is straightforward. Article 18 of the France–United Kingdom treaty, on pensions, reserves pensions and similar payments for past employment received by a resident of one of the two states to taxation only in that state, subject only to the government-service exception. In plain terms, a private pension received by a French resident is taxable only in France (France–United Kingdom treaty of 19 June 2008, consolidated text, on impots.gouv.fr; see also the official commentary confirming that private pensions fall under Article 18 of the treaty (BOFiP INT-CVB-GBR)). If you live in France and receive a British private pension, France alone has the right to tax it, and the United Kingdom should not. The mirror image applies to pensions paid for British government service: Article 19, paragraph 2 of the treaty reserves pensions paid by the United Kingdom for public duties to United Kingdom taxation, so a former local-authority employee or civil servant needs to check which article covers each of their pensions before declaring anything.

French domestic law then computes the tax in three steps. First, pensions and retirement income benefit from a standard reduction (abattement): “Les pensions et retraites font l’objet d’un abattement de 10 % qui ne peut excéder 4 439 €. Ce plafond s’applique au montant total des pensions et retraites perçues par l’ensemble des membres du foyer fiscal”, with a minimum reduction of 454 euros per pensioner (Article 158, 5, a, code général des impôts, on Légifrance). Second, the resulting net income goes through the progressive scale (barème), which for the calculation in force runs at 11 per cent above 11,600 euros per share, 30 per cent above 29,579 euros, 41 per cent above 84,577 euros and 45 per cent above 181,917 euros (Article 197, code général des impôts, on Légifrance). Third, social charges (prélèvements sociaux) may apply on top of income tax. The base for the contribution on investment and replacement income is defined by Article L. 136-6 of the Social Security Code (code de la sécurité sociale), on Légifrance, and which country’s social legislation covers you follows the single-legislation principle: as the Conseil d’État (the supreme administrative court) recalled, “les personnes qui relèvent du champ du règlement ne sont soumises qu’à la législation d’un seul Etat membre, déterminée selon les règles définies aux articles 11 à 16 de ce règlement, ce qui exclut dès lors toute possibilité de cumul de plusieurs législations nationales pour une même période et, de manière corollaire, qu’un même revenu soit exposé au paiement de doubles cotisations” (Conseil d’État, 25 October 2024, no. 473997, on Légifrance). In that same decision, the court dealt with generalised social contribution (CSG), reimbursement-of-debt contribution (CRDS) and autonomy solidarity contribution (CASA) assessed on a survivor’s pension paid as a single capital sum, which confirms that a lump-sum pension payment does not escape the social-charges analysis simply because it is paid in one go. Whether you owe French social charges on your British pensions in practice depends on your health-cover status, in particular any S1 certificate of cover under the Withdrawal Agreement, so this point should be checked against your CPAM (caisse primaire d’assurance maladie) position before you accept the assessment.

B. The lump sum: why the 25 per cent tax-free amount becomes fully taxable in France

On the British side, the rule is the one most readers know. GOV.UK explains that you can generally take up to a quarter of each pension pot as a lump sum free of British tax, up to a ceiling of £268,275, that tax is taken off the remainder before payment, and that the tax-free slice does not affect the Personal Allowance (GOV.UK guidance on pension tax relief). This is the pension commencement lump sum (PCLS): free of British income tax at source, within the allowance. Nothing in that British rule binds the French tax authority, because once you are resident in France it is French law, read with the treaty, that decides how the payment is taxed.

French law starts from a deliberately broad definition. Article 79 of the General Tax Code provides: “Les traitements, indemnités, émoluments, salaires, pensions et rentes viagères concourent à la formation du revenu global servant de base à l’impôt sur le revenu. Il en est de même des prestations de retraite servies sous forme de capital.” A retirement benefit paid as capital is therefore part of your overall taxable income in the year you receive it (Article 79, code général des impôts, on Légifrance). Article 158 confirms the mechanism. In the wording applicable to the decided cases, as recalled by the Bordeaux court: “b quinquies. Sous réserve de l’application du 6° bis de l’article 120, le a est applicable aux prestations de retraite versées sous forme de capital (…). Le bénéficiaire peut toutefois demander le bénéfice des dispositions du II de l’article 163 bis (…)” (CAA Bordeaux, 3 December 2025, no. 23BX02970, paragraph 2, on Légifrance). In other words, the default treatment of your SIPP lump sum is taxation as pension income at the progressive scale, and the 7.5 per cent option is an express request you must make, not an automatic reduction.

That option is Article 163 bis, II of the code, and its wording matters because every word is a condition the tax office will check: “Les prestations de retraite versées sous forme de capital imposables conformément au b quinquies du 5 de l’article 158 peuvent, sur demande expresse et irrévocable du bénéficiaire, être soumises à un prélèvement au taux de 7,5 % qui libère les revenus auxquels il s’applique de l’impôt sur le revenu. Ce prélèvement est assis sur le montant du capital diminué d’un abattement de 10 %.” The same paragraph continues: “Ce prélèvement est applicable lorsque le versement n’est pas fractionné et que le bénéficiaire justifie que les cotisations versées durant la phase de constitution des droits, y compris le cas échéant par l’employeur, étaient déductibles de son revenu imposable ou étaient afférentes à un revenu exonéré dans l’Etat auquel était attribué le droit d’imposer celui-ci.” (Article 163 bis, II, code général des impôts, on Légifrance). Three practical consequences follow. First, the request is express and irrevocable: if you do not claim the levy on your return, the progressive scale applies. Second, the payment must not be split: taking your lump sum in two or three instalments across tax years to stay under a threshold destroys the flat-rate option for the whole operation. Third, you must be able to prove the history of the contributions, including employer contributions, with payslips, scheme statements or employer certificates showing they were deductible from taxable income or attached to exempt income in the state that had the right to tax that income at the time.

A concrete example shows what is at stake. Take a lump sum of 200,000 euros received in a single payment, with the contribution history properly documented. Under the flat-rate levy, the base is reduced by 10 per cent to 180,000 euros and the levy is 7.5 per cent of that base, or 13,500 euros, which discharges income tax on the payment. At the progressive scale, the same 200,000 euros, added to your other income for the year, would be taxed at your marginal rate of 30, 41 or 45 per cent, with only the standard 10 per cent pension reduction capped at 4,439 euros to soften the blow. The difference between the two routes can easily exceed 30,000 euros on a payment of this size, which is why the classification of the payment and the validity of the option are the two points the tax office attacks most often.

The classification point deserves emphasis because a recent court decision shows how brutally it can go wrong. In a December 2025 judgment, the Bordeaux administrative court of appeal examined a former expatriate employee who had received 411,091 euros in capital from an international employer plan and claimed the 7.5 per cent levy. The court distinguished the employer’s genuine retirement plan from a profit-sharing vehicle (plan de participation), holding that the disputed sum “ne présente pas le caractère d’une pension de retraite versée en capital mais relève de la catégorie des revenus de capitaux mobiliers”, that is, it was investment income rather than a pension paid in capital (CAA Bordeaux, 3 December 2025, no. 23BX02970, on Légifrance). The administration was allowed to substitute a new legal basis for the assessment, taxing the payment under Article 120, 6° of the code, which covers “les produits attachés aux bons ou contrats de capitalisation ainsi qu’aux placements de même nature souscrits auprès d’entreprises d’assurance établies hors de France, lors du dénouement du contrat, et les gains de cessions de ces mêmes placements” (Article 120, 6°, code général des impôts, quoted in the same judgment). But the story did not end there: because only the growth on the contributions is taxable in that category, the court limited the taxable increase to 257,135 euros instead of 411,091 euros, ordered that “Les bases des cotisations supplémentaires d’impôt sur le revenu mises à la charge de M. et Mme C… au titre de l’année 2015 sont réduites de 411 091 euros dans la catégorie des traitements et salaires et majorées de 257 135 euros dans la catégorie des valeurs mobilières étrangères”, and discharged the surplus tax and penalties. The lesson for a British reader is direct: a SIPP lump sum that genuinely represents pension rights is a pension for French purposes, but any payment whose plan documents look like a savings pot, a bonus account or a profit share will attract the same searching analysis, and even a losing classification argument can substantially reduce the bill when only the gains are taxable.

Two further warnings complete the picture. A transfer of pension rights between schemes, for example moving a SIPP to a QROPS (qualifying recognised overseas pension scheme), is not by itself the receipt of a pension payment, but any cash you personally receive in the course of the operation is judged on its nature at the date you receive it, and the British overseas transfer charge is a separate British matter that does not reduce your French base. And where the 7.5 per cent levy is unavailable, for example because the payment was split or the contribution proof is missing, the quotient system described below is the fallback, not an additional discount to be combined with the levy.

II. Declaring correctly, paying the right amount and challenging the bill

A. Declaring the pension and the lump sum without creating double tax

Declare everything, even what the treaty reserves to the other country. France computes your overall ability to pay on your worldwide income and then eliminates double taxation by the method the applicable treaty prescribes, rather than by leaving foreign income off the return. The Bordeaux court put the principle plainly in a pension case: where the treaty reserves the right to tax to the source state, the pension must still be included in the French computation and double taxation is eliminated by a French tax credit equal to the French tax on that income, so that the taxpayer’s capacity is assessed on everything they receive (CAA Bordeaux, 3 October 2023, no. 21BX02149, on Légifrance). For a British private pension covered by Article 18 of the France–United Kingdom treaty, the position is simpler in one respect: since France alone may tax it, there is normally no British tax to credit, and any British withholding suffered in error must be reclaimed from HMRC while the gross pension is declared in France. Our walkthrough of your first French tax return after the move shows which forms carry foreign pension income and the foreign-account reporting that sits alongside it.

Where the 7.5 per cent levy is unavailable, the quotient system (système du quotient) prevents a one-off receipt from being punished by the progressive scale as if you earned that amount every year. Article 163-0 A, I of the code provides: “Lorsqu’au cours d’une année un contribuable a réalisé un revenu qui par sa nature n’est pas susceptible d’être recueilli annuellement et que le montant de ce revenu exceptionnel dépasse la moyenne des revenus nets d’après lesquels ce contribuable a été soumis à l’impôt sur le revenu au titre des trois dernières années, l’intéressé peut demander que l’impôt correspondant soit calculé en ajoutant le quart du revenu exceptionnel net à son revenu net global imposable et en multipliant par quatre la cotisation supplémentaire ainsi obtenue.” (Article 163-0 A, code général des impôts, on Légifrance). A deferred-income variant in paragraph II spreads arrears over the years they should have covered. In practice, a 120,000-euro exceptional pension capital payment received by a taxpayer whose average net income over the previous three years was 40,000 euros is taxed by adding one quarter of it to ordinary income and multiplying the resulting extra tax by four, which keeps the payment out of the top slices of the scale. The request is made on the return, it applies only to income taxed at the progressive scale, and it must not be confused with the 7.5 per cent levy: you claim one route or the other for the same payment, after comparing the two computations.

Readers who are not yet French residents need the mirror rule. Pensions of French source paid to persons who are not domiciled in France for tax purposes are subject to a withholding at source (retenue à la source): “A l’exception des salaires entrant dans le champ d’application de l’article 182 A bis et de la fraction du gain net imposée dans les conditions prévues au IV de l’article 163 bis H, les traitements, salaires, pensions et rentes viagères, de source française, servis à des personnes qui ne sont pas fiscalement domiciliées en France donnent lieu à l’application d’une retenue à la source.” The withholding is computed on an annual scale at 12 per cent on the part of the net sums above 17,275 euros up to 50,112 euros, and 20 per cent above that, with the thresholds adjusted each year, and it is credited against the final income tax computed under Article 197 A (Article 182 A, code général des impôts, on Légifrance). If you receive a French-source pension while still living in the United Kingdom, for example a French supplementary pension from a career in France, this withholding is the mechanism to watch, and the treaty may limit or remove it depending on the nature of the pension.

B. Challenging an excessive assessment: deadlines, proof and the courts that actually reduce bills

Start by reading the assessment the way the tax office wrote it, not the way you expected it. Identify whether the lump sum was taxed as pension income at the scale, whether the 7.5 per cent option was applied or refused and on what ground, whether the quotient was considered, whether social charges were added, and whether any British tax was credited. Each of these lines corresponds to a distinct legal argument, and a challenge that mixes them up is weaker than five precise ones.

The first step is the administrative complaint (réclamation contentieuse) to the tax office that issued the assessment. The admissibility deadline is strict: “Pour être recevables, les réclamations relatives aux impôts autres que les impôts directs locaux et les taxes annexes à ces impôts, doivent être présentées à l’administration au plus tard le 31 décembre de la deuxième année suivant celle, selon le cas : a) De la mise en recouvrement du rôle ou de la notification d’un avis de mise en recouvrement” (Article R*196-1, Book of Fiscal Procedures (livre des procédures fiscales), on Légifrance). File within that period even if discussions with the inspector are ongoing, because an out-of-time complaint fails whatever its merits. Attach the contribution history for the 7.5 per cent levy, the scheme rules showing the payment is a pension benefit, the payment statements showing a single transfer, the HMRC correspondence on British treatment, and your computation under both the levy and the quotient so the office can grant the better route without a second exchange.

Complaints do succeed. In the Bordeaux case discussed above, the tax office had already granted partial relief before the court stage, “un dégrèvement à concurrence des sommes de 25 178 euros en droits et 4 935 euros en pénalités” (CAA Bordeaux, no. 23BX02970, paragraph 1, on Légifrance), a tax rebate (dégrèvement) of over 30,000 euros on the disputed assessment, before the court reduced the base further and discharged the remaining surplus. Expect the office to defend itself by changing legal ground: the administration “peut, à tout moment de la procédure, invoquer un nouveau motif de droit propre à justifier l’imposition, dès lors que cette substitution peut être faite sans priver le contribuable des garanties qui lui sont reconnues en matière de procédure d’imposition” (CAA Bordeaux, no. 23BX02970, paragraph 9, on Légifrance), which means a successful attack on the first basis can be met with a substitution of legal basis (substitution de base légale), as happened when the Bordeaux court allowed reclassification of the payment as investment income. Your reply should therefore always include a fallback position, typically the quotient or the limitation of the base to the gains, so that defeating the levy does not leave you with the full-scale assessment by default.

If the complaint is rejected, expressly or by silence, the dispute moves to the administrative tribunal (tribunal administratif) of your home area, with appeal to the administrative court of appeal (cour administrative d’appel) and, on points of law, to the Conseil d’État. For residents of Paris and the Île-de-France, the competent first-instance court is the tribunal for your département of residence, and the cases cited in this article show that these courts engage with the substance: reclassification of the payment, verification of each condition of the 7.5 per cent levy, limitation of the base to the taxable gains, and review of the social charges. Where the dispute turns on the treaty’s interpretation rather than domestic computation, the mutual agreement procedure (procédure amiable) is the parallel route: the official commentary explains that a request to open the mutual agreement procedure must be sent by ordinary letter by the person concerned to the tax authorities of their state of residence, where the case falls under the treaty’s mutual agreement article (BOFiP INT-CVB-GBR, mutual agreement procedure). This route suspends neither the French complaint deadline nor the payment obligation by itself, so it complements but never replaces the domestic complaint filed in time.

Conclusion

The British 25 per cent tax-free lump sum does not cross the Channel as a tax exemption. Once you are resident in France, your SIPP or workplace pension lump sum is, by default, pension income taxable at the progressive scale under Articles 79 and 158, with France holding the exclusive taxing right under Article 18 of the treaty. The two mechanisms that keep the bill proportionate are the express, irrevocable 7.5 per cent levy on 90 per cent of a single, documented payment under Article 163 bis, and the quotient averaging of Article 163-0 A where the levy is unavailable. Around them sit the 10 per cent pension reduction, the progressive scale, the social-charges analysis confirmed by the Conseil d’État, and the withholding rules for non-residents. When the assessment is wrong, the path is a precise complaint within the statutory deadline, a fallback computation, and, if needed, the administrative courts, which have shown in recent pension-capital cases that they reduce bases and discharge surplus tax rather than rubber-stamping the assessment. Gather the scheme documents, prove the contribution history, compute both routes, and challenge each line of the assessment on its own legal ground.