Cross Channel commuting - Daily Telegraph 2 August 2008

[Will]

Has anybody else read this article in today's paper?

http://www.telegraph.co.uk/property/main.jhtml?xml=/property/2008/08/02/pchannel102.xml

I shall make no comment here, other than the fact that the writer - who really ought to know better - seems to perpetuate the myth that one can work in France for a British company without getting into the niceties of French business law and the consequent taxation and social security charges. As one who has been there, done that, with many very close parallels to the author herself and the people she describes, I am right now composing my carefully worded response...

[Sunday Driver]

I'm not sure the principal focus of the article was people working in France for British companies. 

The way I read things, the Govenor of the Tower of London (presumably work based in London) spent only weekends at his French property so he'd likely remain UK tax resident.  The publisher's editor is now working freelance and receiving her fees in euros (and presumably declaring them here).  The former city moneymaker is now a consultant to a London clearing house (again, presumably freelance and declaring for tax here).  The only exception being the insurance co-ordinator working for a UK insurance company. 

That said, it would have been more balanced if she'd mentioned the potential downsides of being self employed in France...

 

[Will]

But nowhere is it mentioned that one has to pay cotisations, at a somewhat higher level than NI etc in Britain, if one works in France. No problem with those who work in Britain during the week and return to France at weekends, but Ms Ingram actually says, in two cases, both freelancers working on French soil, that people could work in France for half the time they worked in Britain.

I know of plenty of tradespeople who find the opposite - they have to work 50% more hours in France than they did in Britain in order to keep RSI etc solvent - though most feel it is worth it for the various non-financial benefits of their lifestyle. And as I mentioned, phrases like 'French lifestyle funded by a British income' tell only half of the story. 

Ms Ingram sends articles to the Telegraph as a sideline. Most of them are to do with her day job working for an estate agency in France selling houses to British people. Now I would not say there may be undeclared vested interests at play here, but...

(And yes, I freely admit that Mrs Will [Judie] earns her crust in much the same way. But I think that doubly qualifies me to comment on this most misleading article, and I know Judie makes sure that buyers know that it's not just a case of moving to France and expecting everything to work exactly the same as at home). 

[mint]

Will, please tell it as it is.

It makes me very cross when people think they can make their own rules as they go along.

The problem is that these people seem to think they can work less but have more in terms of property, time, whatever.

Plainly, much is swept under the carpet and the unwary will fall for it because they are just that... "unwary" and naive.

[Sunday Driver]

It's another typical 'expat' article that has only been written to show how delightful it is living in France.  Like most of the rest of them, it doesn't tell the full story....

As Will points out, the reality is quite different.  Hopefully anyone wishing to transer their employment in France will have enough nouse to research it properly beforehand.

Then again......[Www]

 

[Will]

[quote user="Sunday Driver"]

Hopefully anyone wishing to transer their employment in France will have enough nouse to research it properly beforehand.

Then again......[Www]

[/quote]

That's one of the things that I find rather frightening about articles like this appearing in something like the Telegraph, that should carry a degree of authority. To some, if the Telegraph, or the BBC, says so, then it is probably true - research done.

In my own case we were told first of all, at a French property show, by somebody from a very well-known financial services company dealing with those moving overseas, that if you had everything set up in Britain as self-employed you could carry on doing the same in France, for the same clients, and carry on paying UK tax and NI (only if you had to set up your business from scratch in France did you have to register there). When the time came to actually do it, we got the same advice from a French accountant working through one of the bureaux de gestion - until he researched things a bit more fully and got back to us to say that might not actually be the case. We also spent several hours in a French tax office with one of the officials going through his books - because there was not a direct French equivalent to the job I was doing he too was of the mind that I would not need to register.

To most people, that would count as pretty comprehensive 'research' - but it was still wrong. OK, we are talking about 5-8 years ago, when it was a rather less common situation than it is now, but even so...

One reason why I feel strongly, though I probably fall short of out-and-out annoyance, about these things.

Edit - yes, Sweet 17. I agree - I am sure that in most cases people are just unwary rather than intending to live illegally in France.

[martyng]

Will,

This subject has probably been done to death on this and other forums (fora?) but as a newbie on this forum, and a newcomer to French property ownership (just bought near Lalinde (24) and trying to sell in the UK – don’t mention timing!!) the situation you mention and your experience could be applicable to us.

When we eventually come over for good, the OH and myself will both be retired from fulltime work but hope to do a. freelance work as a proofreader (me) and b. continue as a maternity nurse with a UK agency (the OH) both on a small scale i.e. OH has made it very clear that the summer months are for the pool – her clients in UK will only be allowed to produce during the winter!!

How this scenario fits in with cotisations/French taxation etc is beginning to tax my brain somewhat.  Any thoughts/comments/suggestions?

[Albert the InfoGipsy]

Martyng,

Can you clarify how the two of you will be working? It sounds like you'll be doing stuff at home and your OH going back to the UK  as and when there is need. It also appears that you are talking about next year at the earliest.

If I've guessed right then you could register as an autoentrepreneur (a new status created by a law passed 2 days ago) which is intended to make self employment much simpler and less financially onerous in the first few years. All the tax & cotisations are taken as a flat percentage of your turnover and, unlike the existing situation, you don't pay anything if you don't do any work. You can earn up to €32,000 pa under this regime. There may be reasons for using a different structure, but this one could be the easiest for you.

If she will be working in the UK then she carries on paying UK tax & NI and the double taxation treaty avoids her paying tax in France as well.

If anybody is interested in the new law the text is here:

http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000019283050&dateTexte=

And this is an explanation of the significant bit:

http://www.modernisation-economie.fr/mesures/lme_ex01.html

 

[Will]

Yes, the new regime that Albert mentions could be very useful for people like you, as the previous (existing) system is not at all friendly to people working on a small scale. I'm not personally holdimg my breath, because the micro entreprise was supposed to address much the same issues and that has only worked really satisfactorily for some. It's too early to know how it's going to work, but worth looking at. Do take good professional advice, it pays off to get the set-up right at the outset if you are forming a business - it can be difficult to change afterwards.

Your wife, if providing nursing care in France, may be able to take advantage of the cheque emploi system, which is aimed at providing services in customers' homes, though it may not be applicable to that sort of nursing.

 

[Keni]

Thank you for that bit of information about the new self-employed status, that might just be the niche I have been looking for.

Will be researching that one in the next few months, all I need now is a translation of some of the technical stuff - my french is ok, but we never seemed to be taught the technical stuff. I would rather have been taught to ask questions in the lumberyard than the pen of my aunt, oh well that's another thread.

[Danny]

[quote user="Will"]

Yes, the new regime that Albert mentions could be very useful for people like you, as the previous (existing) system is not at all friendly to people working on a small scale. I'm not personally holdimg my breath, because the micro entreprise was supposed to address much the same issues and that has only worked really satisfactorily for some. It's too early to know how it's going to work, but worth looking at. Do take good professional advice, it pays off to get the set-up right at the outset if you are forming a business - it can be difficult to change afterwards

[/quote]

Any one have an idea of how access to health cover exists under this new regime? Would one's dependents be covered as well? Is there going to be a rush of currently inactifs becoming actif using this regime to gain access to health cover?

Danny

[lmc]

I think there is an issue here in that the OP is talking about a BNC activity for himself (proofreading) whereas the new law, as yet, only applies to BIC activities (commercial and services).

 

[lmc]

oops!  sorry!  posted that on the wrong thread!

[lmc]

no I didn't!  that was for martyng.

sorry - seem to have temporarily mislaid my brain!

lisa

[Will]

[quote user="Jane and Danny"]

Any one have an idea of how access to health cover exists under this new regime? Would one's dependents be covered as well? Is there going to be a rush of currently inactifs becoming actif using this regime to gain access to health cover?

[/quote]

That is certainly something that has been discussed in certain circles - I would think that if it looks like this option is getting too popular the loophole will be quickly closed.

I wasn't aware of the latest version of the micro regime being restricted to BICs and don't see any logic behind not including BNCs, but since when has logic been part of governmental decisions? But for those hoping to do something like proof reading, then it appears it is not suitable.

[lmc]

Brain definitely missing this morning.

I won't even try to explain what made me write that but anyway, I completely withdraw it.

BNCs perfectly eligible.

Apologies.

[Will]

Well Lisa, I believed you. I thought the Autoentrepreneur status seemed a bit too good to be true.

If there are still doubts, here is a Google translation of a paragraph on the subject from Les Echos (the French FT equivalent):

"The autoentrepreneur is a person wishing to conduct an independent professional activity, limited income (80,000 euros for commercial activity, 32,000 euros for a service activity), as principal or parallel to its status as an employee or retiree. The new scheme encourages both students, the unemployed, the artisan or merchant to get started. It allows to operate on a simple declaration, made to pay charges solely on the basis of turnover it realizes (13% of sales for commercial activity, 23% for a service activity) and protects its entire property. Finally, it helps contribute to its social security and retirement."

I still remain very slightly sceptical, because it does sound too good. There must be some snags - the article refers to business start-ups, and growing into proper small businesses, so although it doesn't mention a specific time limit I can't help wondering if the autoentrepreneur status might only last for a couple of years, after which the business has to transfer to the standard (réel or micro) regimes.

And I wonder what the self-styled 'Siret police' who operate on this and other foums looking for black-market British workers will make of the 'simple declaration' part?

[Clair]

La loi de modernisation de l'économie (LME)

[P-D de Rouffignac]

The French government press release describing the new auto-entrepreneur regime specifically includes two categories of special interest, I imagine, to many ex-pats seeking to earn that bit of extra cash legally and without too many hassles - they are 'retired' and 'liberal professions' - in addition to students, job seekers entrepreneurs etc mentioned elsewhere. (So in passing, it seems proof reading would be included, that has been mentioned as possibly not eligible).

There seems to be little question about what you can or can not do, as inter alia you are only obliged to declare your new status (apparently even doing this on-line!) before the last day of the first three months of operation - hopefully after you have earned some money and you can pay over your 13 or 23 per cent contributions.

On whether it is regarded as something temporary, there is also provision for avoding 'taxe professionnelles' for the first three years - reasonable time to get something up and running - or not, as the case may be.

I am seriously interested in this option, as it could avoid convoluted alternatives such as a liaison or branch office of a UK limited company which is one of the potential mechanisms of my property side, and a French charity for my counseling activities (which are subsidised by the former). It will be interesting to see if a 'gérant' of a French branch office could operate under this regime? Also as I am retired and still working, absolutely anything I pay out in French 'cotisations' is money out of the window, so I am ready to give this one a go. I will keep forum members posted when I see how it works - or not - in practice.

P-D de Rouffignac

[Will]

Thanks P-D.

Having been self-employed in France, my feelings were 'never again'. But if this new option is as hassle-free as it sounds, it could solve many problems about what to do after official retirement age. Please let us now what you find.

 

[P-D de Rouffignac]

New auto-entrepreneur regime

Further to my last note, a further French government release has confirmed a few more details, including a start date of 1 January 2009. They have also announced that further information will be issued including:

- a 'kit' proposing a simplified form of registration with the chamber of commerce CFA

- what types of activities are covered, the formalities required, the tax regime and scope and coverage of the social protection.

No date as yet for availability of the 'kit' which has been presented in draft form to the government. I will keep members posted.

P-D de Rouffignac www.francemediterraneanproperty.com

[martyng]

Thanks to Will, P-D et al in answering my query some posts back.  Albert - yes I am intending to work from France (freelance proofreading) and the OH will work in UK on an agency basis.  The new auto-entrepreneur regime as outlined by P-D sounds, at last, as something that can work to our benefit. 

[artybob]

regarding the new tax regime (micro), it would seem on reading the kit, that all micros, irrespective of registration date will be able to benefit from the simplified regime depending they opt for it by dec 31st of the preceeding year, it also seems that the tax threshold for a micro has already increased from 27000 to 32000 a year and I am hearing stories of micros already being asked for monthly figures.

[Speedy]

For those interested in being self employed in the UK and 'residing' in France ....some background info....

Here is a copy of actual current (this week!) text from the EU and the UK tax man (yes I am communicating with them on this subject!)

EU position :

Thank you for consulting the European Commission.

We inform you that the taxation of the income of the individuals is

not a harmonised field at the European level. The EU Member States can

impose salaries and/or other incomes under their domestic tax law.

According to the concise elements that you described in your

e-mail, it is possible that both the French and the British tax

authorities may consider you as a tax resident under their respective

tax laws and, consequently, both could, in principle, tax you on your

worldwide income.

However, the domestic and international tax laws of the EU Member

States must respect basic European Community principles such as "free

circulation", and avoiding any discrimination or double taxation, in

particular, in case of cross border workers.

France and the United Kingdom have signed a "Convention for the

avoidance of double taxation to taxes on income" in 1968 which is still

in force. Cases of tax residence in both States under the domestic laws

are resolved at article 3 of that bilateral treaty. You can find a

consolidated version of the Convention on the HM Revenue & Customs

website, following this hyperlink: http://www.hmrc.gov.uk/international/france2.htm

For more information about the tax rules of the country of your

future independent activity we strongly suggest that you consult the HM

Revenue website (http://www.hmrc.gov.uk).

In case you may require more details about the application of the

bilateral tax convention between the United Kingdom and France, you may

contact Mr. xxxxx,

Senior Policy Advisor at the "Frontiers & International" Service of

the HMRC and/or your regional tax department in France: Direction des

Services Fiscaux, Relations Publiques,........

Please accept our best wishes for your new activity,

Many regards,

UK TAX Man :

Both France and the UK have taxation systems which are based on taxing

residents in their states. In the case of the UK, residents are taxed

on their world -wide income. In the case of France some forms of income

arising to French residents outside France are exempted from French

tax, although that income may be taken into account when computing

rates of tax.

I cannot comment on the detail of French tax law; for that you will have to engage with your local French tax office.

From the brief facts below you may well become a resident of both

the UK and France. To be UK resident the general rule is that you spend

183+ days in the UK. You may also be resident in France because of your

family connection and/or home there. That means you could be a dual

-resident of the UK and France. That does not mean you pay tax twice.

A provision in the UK/France double taxation agreement awards, in

the case of dual residents, tax residence to one state. Again from the

brief facts below it appears France would be your state of residence

for the purposes of the treaty. The UK would not tax your world wide

income.

But the UK would tax your income which arises in the UK if your

presence in the UK is substantial. France would then give credit

against French tax for the UK tax paid or possibly exempt the UK source

income from French tax; again your local French tax office should

advise on this.

If circumstances lead to you being a resident of France then that

means you are subject to French tax and the rates of French tax and

social contributions apply. To state the obvious, choosing to become a

resident of France means you bring yourself within the French tax

regime. As to how exactly the regime applies is something you should

take up with your French tax office.

I hope this assists.

Its a minefield in my opinion!

[Will]

Thank you Speedy, that confirms what many of us say about taxation in France and Britain, i.e. that both systems operate differently, meaning that you can meet residence qualifications in both countries, and where you pay any particular tax is governed by the double taxation agreements.

This particular topic, however, is more about the social security charges - NI in Britain, 'cotisations' in France - where the minefield is even larger and even more densely populated with nasty things. The EU response covers only personal taxation and does not mention these, although your British tax man has recognised the potential problems.