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setting up a uk limited company non resident... can avoid having to set up in france?


Blade
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Even if your company is resident in the UK (and you would have to be

able to prove that all management and control decisions were made in

the UK -  i.e. directors/key staff etc resident in UK and holding

meetings in the UK) you would still be liable for French taxes. 

Under the terms of the UK: French double tax treaty if you have an

office or even an agent in France who has the authority to conclude

transactions (take orders / agree terms etc etc) then you would have a

'permanent establishment' aka a French branch.  Any activities

(read profit) of this French 'branch' would be taxed as though

it was a company resident in France.  The UK company would then be

subject to UK corporation tax on all its profits (including those of the

French branch) but it would get relief for any tax paid in

France  - to the extent that it was less than the UK tax

due.   So in actuality you would make your affairs more

complex.

Other considerations - if your UK company owns property and has less

than five shareholder (broadly!) it could be classed as a 'close

investment holding company' and so automatically pay the full rate of

corporation tax.  It would have certain other reliefs denied to it

- substantial shareholdings relief/business assets relief/certain IHT

reliefs.  In addition, using a company to own property is

something you should do with care as gains made on any properties could

be taxed twice - once in the company when the property was sold and

again when the profits were extracted from the company.  In

addition if any employees (e.g. directors) of the company (or, in some

cases, family members) used the French property (say for holidays) then

the director/employee could be liable to UK tax on the 'benefit in

kind' (I say could, as it would depend on other things such as

relationship with director, any amounts paid for the use, levels of UK

income etc etc).

Btw - am new here - hello everyone :)

Hastobe

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[quote user="Blade"]what french regulations are they? why would accountant say this then?[/quote]

Was he an English acountant? Why would you expect him to understand French law?

And don't try to rely on "free movement of goods and services", these regs do not override local regulations.

If you want an exact answer, ask a qualified French person - you could start with the Chambre de Commerce, their advice is usually free.

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was a tax specialist uk/france. will review further and maybe renew contact to understand further.[quote user="nicktrollope"][quote user="Blade"]what french regulations are they? why would accountant say this then?[/quote]

Was he an English acountant? Why would you expect him to understand French law?
And don't try to rely on "free movement of goods and services", these regs do not override local regulations.
If you want an exact answer, ask a qualified French person - you could start with the Chambre de Commerce, their advice is usually free.

[/quote]
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Nick, you say that English accountants / tax advisors do not understand

international (aka French) law and cross border transactions but

applying that logic a French accountant would also be useless as they

wouldn't necessarily understand the UK tax implications of a particular

arrangement. (No offence Nick!!)

There are a whole range of accountants (both in France and the UK)

ranging from those who are best left to preparing basic accounts for

small businesses / dealing with straightforward domestic tax

liabilities to those who are competent in dealing with very complex

business and tax issues and a whole range in between.  You pay your money and take your

choice.  If your affairs are more complex, my advice would be not to go for a cheaper local

accountant but use an office of a larger practice - whether that be in

France or UK. 

Imho - there are very few easy loopholes to avoid tax or compliance with regulations - most are wishful thinking and hearsay!

Hastobe

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[quote user="hastobe"]Nick, you say that English accountants / tax advisors do not understand

international (aka French) law and cross border transactions but

applying that logic a French accountant would also be useless as they

wouldn't necessarily understand the UK tax implications of a particular

arrangement. (No offence Nick!!)

Imho - there are very few easy loopholes to avoid tax or compliance with regulations - most are wishful thinking and hearsay!

Hastobe

[/quote]

No I did not. I asked if the OP expected a UK accountant to understand French regs. I can't speak for all tax advisers - I don't know them! My experience (20 years of running UK businesses, couple of years running French ones) and that of the Forum (plenty of posts if people bothered to search for them) suggest that the Authorities here have the situation pretty well stitched up. As you suggest, wishful thinking.

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There are always dangers in trying to bypass the system. You may, by following that proposal, save a small amount of personal tax in one country but leave yourself open to paying out more in company taxes in both countries, plus high French social charges for example. Something that may save a bit of money for one type of business may be totally the wrong solution for any other enterprise.

There is, unfortunately, at least one 'tax adviser' who proposes solutions like this in magazine articles and on web sites - even gives examples. You then pay handsomely for them to look into setting you up in the 'most tax efficient' way. Then, after your 1000€ + expenses + TVA (or whatever - that's the sort of sum I have seen quoted) has been paid, you get the advice to register your business in France - which you could have done anyway.

The French Chamber of Commerce in London publishes a book about setting up in business in France, which is well worth reading. You will find in that book that there is no reason why you cannot continue to use a UK limited company, but for most activities, to comply with French law; you have to employ yourself through a French subsidiary, which means in turn that you have to pay both employer and employee cotisations, and you are bound by French employment laws, amounting to far more expense and bureaucracy than just setting up in France in your own right.

We always advise people to take professional advice. That advice stands, but make sure you choose a qualified and suitably knowledgeable professional, who comes on recommendations of others, rather than dubious self-publicity.

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[quote user="Will the Conqueror"]

We always advise people to take

professional advice. That advice stands, but make sure you choose a

qualified and suitably knowledgeable professional, who comes on

recommendations of others, rather than dubious self-publicity.

[/quote]

Exactly Will -  'accountant' (French or English) does not

necessarily equal expert in expat tax (of whatever flavour) - in fact

'accountant' doesn't necessarily mean expert in tax period!  I

wasn't trying to be antagonistic to Nick - just trying to point out that to the

OP'er (in general terms) some of the particular issues that would arise

from using a UK company. 

Btw Nick - I'm also pretty experienced - currently acting group head of

tax for a pretty well known bank and was previously a senior manager

working in international tax for a large office of one of the big four

international accounting firms.  Experience was primarily US,

Danish and German tax but also did some French tax work.  I've

also been in the profession for twenty plus years. 

Hastobe

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