Employee vs Self-Employed

[PaulaW]

Hi all,

You lot have been fantastic in helping in other areas, so I thought I'd return for some more help.  It's a complex one I'm afraid (isn't it always?).

Forgive the very specific nature of this enquiry but I am a lone parent and can't afford to spare much in the way of professional advice - hence my being here... in a "you never know who's looking and feeling generous" capacity.

I am a UK national moving to France early June, just my son and I.  I had planned to continue working for my existing UK employers, from home, under the UK PAYE system (naive huh?).  Anyway, much research and many sleepless nights later my naivety is slowly vanishing.

I already know that because I will be employed, and not in a seconded capacity, that I am not entitled to the E106 or the E101.

That left me with two choices - to convince my employers of the benefits of retaining me as an employee and paying all the contributions, taxes and wading through whatever red tape went along with that - or them releasing my from my existing contractual obligations and me invoicing them for my work as a self-employed person.

Since finding any benefits at all with which to convince my employers to maintain me as a salaried employee seem virtually nonexistent, it looks like the self-employed route is my only option.  Please feel free to disagree with that statement, bearing in mind that "a presence on the continent" probably won't cut me much slack.

These are the negatives for my employers, as I see them - again, please feel free to correct me:

1.  They will have to pay around 45% of my gross income again, in French social security contributions

2.  I can contractually opt to be subject to UK employment law despite being a French resident, yet some French employment laws favouring the employee (maximum working week, leave, rest time etc.) can be legally used against them during a dispute.

3.  They will have to go through the registration process and obtain a siret in order to pay their contributions (whether they are obliged to go as far as setting up a French subsidiary - and paying the costs associated with that - I remain unsure of)

4.  Taxes - this is something no one has yet mentioned to me so again, I am unsure if my employers would be subject to any on my behalf.  Possibly not since a) as a lone parent working from home, this would give me certain tax breaks and b) I am not promoting, selling, importing or exporting and UK goods or services in or to France.

The major benefit for me, by remaining an employee, is the obvious one of only having to pay around 22% in social security contributions.

The way I see it, my employers would have to be mental to agree to all that.  Feel free to disagree at any point.

So - self-employment.

Having looked at all the many classifications of self-employment in France, and being totally mystified by most of them, I considered a portage salarial to start with.  I know I will 'lose' around 50% of my gross annual income if I take that route - but I'm a bit lost as to what else to do.  I certainly do not want to spend all my time off (what little I get) filling in paperwork.  Any advice on this too would be most welcome.

I've bored myself typing all this out, so god knows what anyone else reading it is doing.  Snooze time?

[Panda]

Hi Paula

What line of work are you in?  I'm working as a self emplyed person over here for a UK company, not much paperwork just the annual tax return but that's pretty straight forward involved and far simpler for my employer, you can also get other contracts of course which is a benefit.

I can't really see a problem, just find an accountant get yourself registered get on with your life, where area are you going to live in and what age is your son, I'm here with my son too, we could meet up if you're nearby.

EDIT:  Not that naive on the PAYE element, I did this for 18 months and no one seemed to care, then the UK gov paid all my tax back and said I had to register over here, so I did.

Panda

[Will]

Contrary to what you say, I see no reason why your employer could not apply for an E101 for you. That will give a year, in which you continue to pay tax and NI in Britain, with the possibility of one renewal, before the form expires. At the end of the E101 period you and your employer can decide whether it is all so wonderful that they continue to employ you in France and cover all the charges etc, that the whole thing is a disaster and you want no more to do with France, or whether you think you can both hack it with you being self employed, either under a direct contract or through portage.

It's a route that admittedly crosses into some grey areas - and the E101 may not be granted - but is worth exploring because it gives you and your employer a chance to test the water without making an immediate commitment.

[PaulaW]

[quote user="Panda"]

Hi Paula

What line of work are you in? 

[/quote]

Hi Panda.  It's IT/admin based - one firm are a firm of commercial engineers, for whom I man the helpdesk and maintain their Lotus Notes system.  The other role is systems admin (non-financial reporting systems) for corporate responsibility departments (I am employed by the consultant rather then the firms I work with).

[quote user="Panda"]

I'm working as a self employed person over here for a UK company, not much paperwork just the annual tax return but that's pretty straight forward involved and far simpler for my employer, you can also get other contracts of course which is a benefit.

[/quote]

I hope you don't mind me asking... what classification of self-employed are you and how much of your gross income do you end up with in your pocket?

[quote user="Panda"]

I can't really see a problem, just find an accountant get yourself registered get on with your life, where area are you going to live in and what age is your son, I'm here with my son too, we could meet up if you're nearby.

[/quote]

I will be living on the Normandy Coast - if you are near, that would be great.  My son is 10 - and absolutely bricking it :)

[quote user="Panda"]

EDIT:  Not that naive on the PAYE element, I did this for 18 months and no one seemed to care, then the UK gov paid all my tax back and said I had to register over here, so I did.

[/quote]

Really?  How were you covered health wise?  Did you worry about your son needing emergency medical treatment?  That's my main concern.  Plus I am an asthmatic and I have a repeat prescription for ventolin - but it's probably less hassle to buy that in the pharmacy.

[PaulaW]

[quote user="Will"]

Contrary to what you say, I see no reason why your employer could not apply for an E101 for you. That will give a year, in which you continue to pay tax and NI in Britain, with the possibility of one renewal, before the form expires. At the end of the E101 period you and your employer can decide whether it is all so wonderful that they continue to employ you in France and cover all the charges etc, that the whole thing is a disaster and you want no more to do with France, or whether you think you can both hack it with you being self employed, either under a direct contract or through portage.

It's a route that admittedly crosses into some grey areas - and the E101 may not be granted - but is worth exploring because it gives you and your employer a chance to test the water without making an immediate commitment.

[/quote]

Hi Will, thanks.  As I understand it, the form my employers would have to complete to apply for the E101 asks them to lie - in my case (CA3821/2 ?).  They have to state that my move is temporary and estimate the date of my return, as well as stating it is their wish that I go abroad.  Both my employers are sticklers for the legal side of things and that is a document that, in the unlikely event it was needed, could arguably be used as evidence in a tribunal.

[Panda]

Hello

I'm in IT too and registed as a profession liberale as a general consultant, my accountant basically went for as many different aspects of this as possible to cover all eventualities.  When I was on PAYE I had an E106 so no problem there with health, as you are working now you could apply for one of these or do as Will says and go for an E101 if you can get one, either one will allow you to register whilst you sort out your business.  I earn about the same as I would in the UK and pay about 25% of my gross income in charges and tax, I have no acutal overheads to speak of but if you did then this would bring this figure down of course.

Sadly I'm in the Charente, you should advertise for friends (how sad does that sound but you know what I mean) on the other more 'adverty' forums, AngloInfo etc.  there will be others in your area in the same boat. 

Good luck with it!

Panda

[Albert the InfoGipsy]

Paula,

Will is as wise as ever, but the E101 may not be a goer so you need a plan B.

Have you spoken to anybody at your employer about your dreams/plans? Something that many permanent employees are unaware of is how much it costs a company to employ them, over and above their salary. For example, they must pay 11%  employer's National Insurance contribution, so if you go freelance they save that straight away. Many firms allow 50% on top of salary for such costs so paying you 40% more could represent a saving. [:D]

On the other hand they may not even consider the idea of using you as a freelance at any price, so you need to establish where you stand before putting in too much effort.

You've presumably considered all the risks of freelancing, including being at the front of the queue if they need to lay people off. That said, I've been an IT freelance for 10 years, although with a succession of clients. Have a look at Jobserve.com just to see what else is out there.

[Panda]

[quote user="Albert the InfoGipsy"]

Paula,

Will is as wise as ever, but the E101 may not be a goer so you need a plan B.

Have you spoken to anybody at your employer about your dreams/plans? Something that many permanent employees are unaware of is how much it costs a company to employ them, over and above their salary. For example, they must pay 11%  employer's National Insurance contribution, so if you go freelance they save that straight away. Many firms allow 50% on top of salary for such costs so paying you 40% more could represent a saving. [:D]

[/quote]

I'm with Albert on this as I am very aware that I am cheap to my employer, they have a huge benefits package so they save massively having me as freelance as opposed to my previously great package.  I also do the same work in half the hours these days, not sure how that happened (could be the dreadful weather keeoing me at my keyboard for hours), something to be aware of.  I still get paid a lot more than any job I have ever seen worth applying for over here so everyone wins really!

Panda

[PaulaW]

[quote user="Panda"]

Hello

I'm in IT too and registed as a profession liberale as a general consultant, my accountant basically went for as many different aspects of this as possible to cover all eventualities.  When I was on PAYE I had an E106 so no problem there with health, as you are working now you could apply for one of these or do as Will says and go for an E101 if you can get one, either one will allow you to register whilst you sort out your business.  I earn about the same as I would in the UK and pay about 25% of my gross income in charges and tax, I have no acutal overheads to speak of but if you did then this would bring this figure down of course.

Sadly I'm in the Charente, you should advertise for friends (how sad does that sound but you know what I mean) on the other more 'adverty' forums, AngloInfo etc.  there will be others in your area in the same boat. 

Good luck with it!

Panda

[/quote]

Thanks again, Panda.  Your advice is greatly appreciated particularly since your situation seems very close to my own.  A shame you're so far away.  As for advertising for friends, if the reaction of my UK mates is anything to go by, I'll be seeing more of them in France than I ever do here!  My parents have lived in France for some years now too, also in Normandy, and are one of my reasons for making the move - they're not getting any younger.

I would be interested to know, as a percentage of your income (if that's less intrusive), how much your accountant costs - I am struggling to understand why I would only see 50% of my gross salary (on a 7-10% fee) if I use a portage salarial, yet you use only an accountant and save half that. 

[PaulaW]

[quote user="Albert the InfoGipsy"]

Paula,

Will is as wise as ever, but the E101 may not be a goer so you need a plan B.

Have you spoken to anybody at your employer about your dreams/plans? Something that many permanent employees are unaware of is how much it costs a company to employ them, over and above their salary. For example, they must pay 11%  employer's National Insurance contribution, so if you go freelance they save that straight away. Many firms allow 50% on top of salary for such costs so paying you 40% more could represent a saving. [:D]

On the other hand they may not even consider the idea of using you as a freelance at any price, so you need to establish where you stand before putting in too much effort.

You've presumably considered all the risks of freelancing, including being at the front of the queue if they need to lay people off. That said, I've been an IT freelance for 10 years, although with a succession of clients. Have a look at Jobserve.com just to see what else is out there.

[/quote]

Now that really is a different perspective to the many I've heard, thanks Albert.  Both employers have both options on the table - neither want to lose me so have at least said they will take the self-employment route.  That said, they are both somewhat enamoured with the prospect of 'moving into Europe' (me - in a tiny apartment in coastal Normandy = continental domination.  Bless) and have said they would like me to present the positives to them.  You've really helped! 

I have been freelance in the UK before (as a writer, not in IT) so I have a little experience of the pitfalls and perks.  I think even as an employee, these days, you're only really as secure as a period of 30 days' notice, so self-employment doesn't seem so frightening. 

[Albert the InfoGipsy]

Continental domination? Small fry!

My wife & I used to share a Ltd company with 2 totally separate income streams -- Languages and IT. At one time we had a son in Tokyo and another in Moscow whom we could call on for translation support. A mate of mine said "You're not just a conglomerate -- you're a multinational!"

MLB Ltd -- Tokyo, Moscow and Stow-on -the-Wold.

[PaulaW]

[quote user="Albert the InfoGipsy"]

Continental domination? Small fry!

My wife & I used to share a Ltd company with 2 totally separate income streams -- Languages and IT. At one time we had a son in Tokyo and another in Moscow whom we could call on for translation support. A mate of mine said "You're not just a conglomerate -- you're a multinational!"

MLB Ltd -- Tokyo, Moscow and Stow-on -the-Wold.

[/quote]

Albert, you have beaten me hands down.  Unless a brother in a high-rise in Stoke-on-Trent counts... ?

[Will]

[quote user="PaulaW"]As I understand it, the form my employers would have to complete to apply for the E101 asks them to lie - in my case (CA3821/2 ?).  They have to state that my move is temporary and estimate the date of my return, as well as stating it is their wish that I go abroad.  Both my employers are sticklers for the legal side of things and that is a document that, in the unlikely event it was needed, could arguably be used as evidence in a tribunal.
[/quote]

That's why it crosses into grey areas. I understand where you are coming from. I used the E101 when first in France, but then I was already self-employed in England, and taking the same contracts with me without a break, so any stretching the point was purely down to me, with no question of tribunals etc, and, anyway, I could easily justify being in France rather than England. We were genuinely not sure that it would work, so could justify the temporary nature, but Mrs Will's salaried job in France is still there some six years later. 'Lying' never came into it, but being potentially economical with the truth probably did. 

It was simple to register as self employed - as profession liberale, which was done direct with URSSAF and bypassed the chambres de commerce or chambres des metiers which people will tell you you have to register through. Though I didn't fit into any of the pigeon holes so loved by French fonctionnaires. We did the registration ourselves (certain English-based companies wanted a four-figure sum for what amounted to filling in an A4 sheet of paper) and operated as a micro for the initial period, but known turnover was just over the limit for the second year so we used an accountant. The fees were, I think, around 2000€ for the year, but that included everything, and being a mixture of UK-contracted self employment and French salaried (with a lot of questions about employment matters) it was good value, particularly as cotisations were a lot lower with the accountant, despite the higher income. Incidentally, we were operating a small B&B sideline at the same time, which was treated as a totally separate micro entreprise.

Cotisations are, according to the accountant, 46% of taxable income. So it pays handsomely to make full use of allowances etc to keep taxable income as low as possible, and there are many ways a good accountant can do this. If you pay tax afterwards, it is easy to see where the 50% figure comes from. As portage companies charge commission, I would personally go for self-employment rather than portage, but it's down to individual circumstances which is best for you.

 

 

[PaulaW]

[quote user="Panda"]

When I was on PAYE I had an E106 so no problem there with health

[/quote]

Sorry to bombard you with questions, Panda - but what criteria did you meet to qualify for the E106 while employed?  I was told by the powers that be that I can't have one because I am employed and that my only other option is the E101 - confused.

[PaulaW]

[quote user="Will"]

[quote user="PaulaW"]As I understand it, the form my employers would have to complete to apply for the E101 asks them to lie - in my case (CA3821/2 ?).  They have to state that my move is temporary and estimate the date of my return, as well as stating it is their wish that I go abroad.  Both my employers are sticklers for the legal side of things and that is a document that, in the unlikely event it was needed, could arguably be used as evidence in a tribunal.

[/quote]

That's why it crosses into grey areas. I understand where you are coming from. I used the E101 when first in France, but then I was already self-employed in England, and taking the same contracts with me without a break, so any stretching the point was purely down to me, with no question of tribunals etc, and, anyway, I could easily justify being in France rather than England. We were genuinely not sure that it would work, so could justify the temporary nature, but Mrs Will's salaried job in France is still there some six years later. 'Lying' never came into it, but being potentially economical with the truth probably did. 

It was simple to register as self employed - as profession liberale, which was done direct with URSSAF and bypassed the chambres de commerce or chambres des metiers which people will tell you you have to register through. Though I didn't fit into any of the pigeon holes so loved by French fonctionnaires. We did the registration ourselves (certain English-based companies wanted a four-figure sum for what amounted to filling in an A4 sheet of paper) and operated as a micro for the initial period, but known turnover was just over the limit for the second year so we used an accountant. The fees were, I think, around 2000€ for the year, but that included everything, and being a mixture of UK-contracted self employment and French salaried (with a lot of questions about employment matters) it was good value, particularly as cotisations were a lot lower with the accountant, despite the higher income. Incidentally, we were operating a small B&B sideline at the same time, which was treated as a totally separate micro entreprise.

Cotisations are, according to the accountant, 46% of taxable income. So it pays handsomely to make full use of allowances etc to keep taxable income as low as possible, and there are many ways a good accountant can do this. If you pay tax afterwards, it is easy to see where the 50% figure comes from. As portage companies charge commission, I would personally go for self-employment rather than portage, but it's down to individual circumstances which is best for you.

 [/quote]

Thanks for the sound advice, Will.  The profession liberale + accountant sounds like a sensible plan.  What criteria do I need to meet in order to be classified as one, do you know?  Is there a site I can visit with this information on, to save you the job?

There has also been a slight development in that one of my employers has said she may be willing to second me as it seems our clients may want to sub contract some work which would involve me travelling to offices in Paris and Madrid - I wonder how I would fare with only one of my employers doing the seconding...

[PaulaW]

Also, Will (sorry) - I notice on the E101 application form it asks if all my work will be internet and home-based.  Is this a trip-up?  Could my answer determine if the application is turned down or not?

[cooperlola]

[quote user="PaulaW"][quote user="Panda"]

When I was on PAYE I had an E106 so no problem there with health

[/quote]

Sorry to bombard you with questions, Panda - but what criteria did you meet to qualify for the E106 while employed?  I was told by the powers that be that I can't have one because I am employed and that my only other option is the E101 - confused.
[/quote]The E106 is either for those living abroad and not working, or for those living abroad but working in the UK for a UK company.

[Panda]

Hi

When I first left the UK I was completely up front with the DWP and said I will continue to work for  a UK company from home in France, they then sent me an E106.  With hind sight it would seem that they made an error and should not have done this.  Once you are registered as self employed here it makes no difference anyway.  My E106 was also for something like 7 years, no one could ever tell me why they did that either! I think I got a someone who wanted to go home early or something, he just issued the E106 regardless of my eligibility and added a few years too!

To your other question, my accountant probably cost about 5% of my gross income although now that I've done the return for a few years last year I did it myself. 

Panda

 

[Will]

You may find information about profession liberale at www.apce.com, but it's more a question of not meeting criteria rather than meeting them. Basically, if you sell something you have to register through the chambre de commerce; if you work with your hands or make things it's the chambre de metiers; if working on the land you need the MSA; if you are an artist, then the maison des artistes, and so on (gross simplifications I know) - if you aren't any of these things, and you are 'professional' rather than 'commerçant', 'artisan' etc. you will probably end up being classed as a profession liberale. That sounds quite likely to me if you are, say an IT 'consultant' (I was a self-employed magazine editor, something which just doesn't occur normally in French publishing). It only really has a bearing on whom you pay cotisations to; in the past you paid one lot to your primary health assurance provider, another lot to the retirement caisse, and all the rest to URSSAF. Now there is a single body called RSI (régime social des indépendents) that collects all the money, though you are still affiliated to particular caisses for health and retirement. RSI doesn't seem to have caught up entirely with professions liberales though.

It sounds as if it could get rather complicated being seconded by only one employer, and that to two countries. It could well work, though - you can be employed and have a business on the side, though heaven only knows how it would work out in your case for paying cotisations; definitely a question for the accountants.

I don't think the Internet thing is a trip-up; I don't recall that on my E101 application, but that was quite a few years ago now. It's probably to determine whether your physical presence is actually necessary overseas, and if you will need to visit Paris and Madrid reasonably frequently I think you would have a good case for being based in France. Again, it sounds as if professional advice would be worthwhile.

I would agree with Panda that the E106 was probably an error; even the DWP and HMRC can get it wrong sometimes.

[Chancer]

I am getting a bit confused between Will's 46% of taxable income and (I think) Pandas 25% with no real overheads.

Can someone give me some idea of what sortt or type of allowances there are that can be "maximised" perhaps by being "potentially economical with the truth"

Apologies to those whom I have almost certainly quoted out of context but I hope that you get my drift! It is a question that I really would like some idea of the answer to, in the UK I was pretty well up on it and was particularly creative (thats what the VATman called it!) with my expenses but in France I have no-one to ask, everybody is either employed and working on the noire at weekends, on chaumage and working on the noire in the week or self employed but whiter than white with accountants even whiter!

[Will]

JR etc - you would have to ask an accountant. Though I think there is quite some scope for creativity in France, just as there is in Britain. Although costs and allowances will obviously vary greatly according to what you do, the most important thing is to be able to justify the costs. For instance, as my clients were based in London there was no problem with claiming regular travel costs to Britain, but somebody doing building work solely in France would find a ferry ticket once a month rather difficult to justify. People do get investigated, but by using a proper accountant, who is affiliated to an approved organisation or bureau de gestion, you are less likely to come under scrutiny than if you are trying to do complex accounting yourself.

I think that by reducing your 'apparent' income it's not too difficult to make the 46% of taxable income figure look more in line with 25% of incoming money, if you see what I mean.

[Chancer]

[quote user="Will"]

I think that by reducing your 'apparent' income it's not too difficult to make the 46% of taxable income figure look more in line with 25% of incoming money, if you see what I mean.

[/quote]

[:D]

Yes I know exactly what you mean Will, there is not a smily big enough to reflect my expression when I read your very well worded posting.

Thanks a lot, it is not for now but some time in the future and is one more unknown "concern" removed.

[PaulaW]

Thank you all for the fab, as usual, advice and information.  I've

tried many different forums and I have to say this is the best, most

accurate one I have come across in terms of advice.  Maybe there are

just more people here in similar situations, or at least with similar

experiences, to mine.  Cheers again, guys.

[Albert the InfoGipsy]

Where do I send the invoice?

[Zippy]

An absolutely great read thus far. I was in exactly the same situation and am proud to confirm that I have already taken the steps suggested throughout the forum exchange and now operate as a Travailleur Non Salariee / have set up a SARL, am registered in all the relevant caisses and fully entered into the french system. Fantastic you may think. Why do we need to hear this BUT unfortunately for my situation, this is not the end of the self employed living in France / working for a UK Co, as the saga continues.Aagh!

As of January 2008, I have entered a 9month contract with the same UK company to whom I was employed when living in the UK. They have taken legal advice and now think that there is a problem with disguised employment and that they may be condemned for the offence of undeclared works (delit de travail dissimule) and may face a fine of €45000 and a 3 year prison sentence. I have tried to explain that it is not ME with whom they have a contract, but the SARL therefore there is no direct link between myself and the UK company, thus no 'employment' situation. 

The problem is that I currently only have this one Client and I appreciate that a solution would be to consider going part time with them so that I can look for other Clients to invoice. This is something I would prefer not to have to do unless absolutely necessary so would welcome advice from anyone who has any linked experience of this situation?

Many Thanks.