small business

[Senrabbit]

This has no doubt been tackled before but, unfortunately, the search engines on these forums are not much use. I have a small web design business in the UK and wish to do the same in France. As the business is co-owned in the Uk by my sons, I would prefer any monies rec'd in France for work done in France, to go to the UK main office. Is this possible or do I have to set up again in France?

[Will]

This question is asked on an almost weekly basis.

If you live in France, you pay tax in France. If you carry out work while in France you have to pay social charges, covering health service contributions etc. In order to do this while working for a company in another country, you have to set up a subsidiary company in France. Most people find this is uneconomic as they are liable for paying both employer charges (through the company) and employee charges (through the salary you draw). You cannot pay yourself less than the minimum wage.

EU rules may, if you set things up correctly before moving to France, give a temporary respite from this but in most cases if it continues for more than two years you have to register your business in France.

France is definitely not friendly towards small businesses.

[Owens88]

A UK co can 'sell' its services worldwide, and especially in the eu. It can visit its overseas clients. None of that changes where the business is based. (Incidentally a French co. can do the same into the UK). It may even have some period of extended time to train/install assist etc. One would have to check that out. There is probably a 'threshold' over which time one is officially 'working' in France.

Sales messages (i.e promotion) can cross boundaries.

HOWEVER if living in France, and earning an income from wherever, surely the French tax people want to know? I dunno the rules on that.

My roundabout point was to question whether the uk co. was going to 'do the odd web-site for French companies' or whether you want to set up a French associate/subsidiary/start-up.

John

 

[Senrabbit]

HOWEVER if living in France, and earning an income from wherever, surely the French tax people want to know? I dunno the rules on that.

Yes they most certainly would.  Indeed even if we were to send all the earnings back to our uk company they would still have to be declared here. 

My roundabout point was to question whether the uk co. was going to 'do the odd website for French companies' or whether you want to set up a French associate/subsidiary/startup.

Well, that is the whole point.  Under european laws of cabotage I think that any company that is registered in an eu state can sell its wares in any other eu state.  The problem I have is exactly as the previous poster has outlined in this and other posts.  Whether it is legal to operate from the UK and carry out web design here through that company. So long as one is declaring one's earnings to the relevant tax authorities, what difference can it make.  A French haulage firm surely does not have to register in the UK to deliver in the Uk, If I buy something online from the Uk it can be delivered to France without any problem.

It seems to me therefore that the solution is to continue to use the UK company, operate as an agent in France without remuneration and accept a share of the profits as a director of the UK company. These profits to be declared in france or the Uk as one wishes. (or as the authorities decide)  What could possibly be wrong with that. I would then pay my social charges as a private individual paid out of the earnings from my directorship of the UK company.

I am open to any advice on this.

[Owens88]

I am inclined towards your interpretaion but IANAL, or anywhere near an expert. Obviusly if you are doing work here (e.g. significant time on client's site) then the situation is different.

 

Just being careful / pedantic.

A Director is an employee not paid out of dividends.

A Shareholder recieves only dividends (i.e. share of profits).

One can be both shareholder and director (in fact this is common) but they are legally separate and the taxation is different.

So, the question, if you are living in France on 'earnings' or 'dividends' from UK what is the effect on your local tax and social payments ?

Good luck and I would love to know the answer.

 

John

 

By the way I liked your analogy about the haulage business. The UK is plagued with continental hauliers driving lhd vehicle semi-permanently based in the UK but 'based' outside. The lorry that nearly killed me a couple of years ago (on the M1) was part of a fleet of 16 that serviced a lot of work between NE England and SW via Midlands.

Methinks the French would be less tolerant of that than the UK authorities.

 

John

 

[Iceni]

1.  Share ownership is not relevant as to where a business is carried out.

2.  The UK tax authorities work on the principle of "worker's bum on seat" to determine whether tax/NI is applicable on earnings not location of customer. Occasional visits to an overseas customer would not normally require the company to be set up in that country.

3.  Are the sons also employed by the UK co ?

4.  Seek proper, professional advice - the saloon bar of the Dog & Duck is not the most appropriate place on complex questions such as yours.

p.s.  No-one is "paid out" of dividends - they are an appropriation of profits

John

not

[Senrabbit]

The sons are directors and shareholders and do their part of the work. The problem I have always found with asking "professional advice" is that the so-called professionals never seem to be that knowledgeable and charge a lot of money. Whilst I agree with you that the "dog and duck" is not the place to get all one's information, I feel that you are denigrating the information that is passed through these forums. For example the information about the Apce website has been invaluable, as the information I need is all there.

There have been many instances over the last two years that I have combed these forums and found the information I sought.  Usually in a lot less time and for a lot less expenditure, than it would have cost me to seek out an "expert" or "professional", only to be told that they don't deal with that area of expertise.

Or perhaps, you could point me in the direction of an expert?

[Iceni]

"Whilst I agree with you that the "dog and duck" is not the place to get all one's information, I feel that you are denigrating the information that is passed through these forums."

This forum is an excellent source of information on many things - I happen to believe that complex financial and tax matters require advice from relevant international professionals.

I have never had need for information such as you require therfore cannot recommend anyone.

John

not

 

[Teamedup]

I am with Iceni on this. This forum is very good. However there is no way I would use any information I gleaned on here without checking on it properly.

If you want free info try the Chambres de Commerce, Caisse de Maladie and URSSAF and in the UK National Insurance and the Inland Revenue. These folks should have some relevant info and maybe pass you onto further agencies and maybe even put you in touch with an accountant who knows their stuff.

My opinion, is that if you are working and living in France for a UK company then at some point you will need to open a french branch of that company and that is costly as we all know. I could be wrong about that ofcourse, but there again I may not be.

[Owens88]

 

>I am with Iceni on this. This forum is very good. However there is no way I would use any information I gleaned on here without checking on it properly.

I agree wholeheartedly but often the info here guides one toward the right questions to ask, or stuff to verify.

>My opinion, is that if you are working and living in France for a UK company then at some point you will need to open a french branch of that company and that is costly as we all know. I could be wrong about that ofcourse, but there again I may not be.

I think that the grey area is whether the OP is actually working in France.  For example he could live in Italy but work for a a UK company as a director, popping in now and again, or not work at all and receive dividends as a result of a UK shareholding. The fact that the UK company is selling into France (as I used to based in the UK on behalf of an Israeli company) doesn't specifically necessitate a French branch 'I believe'.

The fact that the guy is living in France and prepared to declare his worldwide income to the French authorities suggests that he is not into any deception?

 

[Senrabbit]

It is an interesting situation and, Owens88, you are quite right, I am not trying to avoid paying my way, I am merely looking at whether I need to go the route of setting up a French branch with all that entails, when I simply do not need to.  One also wonders where the experts get their information from. Would I go to a French speaking english expert who may know little more than I, or to a french expert whom I am unable to understand. 

Fortunately I need do neither. This site seem to give me all the information I need and the url was given out on this forum in another post. As to "professionals", are they the people who wrecked all our pensions? I could go on. Anyway the site is APCE and the url is http://www.apce.com/index.php  The information is even in good english.  They also point to other sites whereby I may even be able to get business start-up grants etc. Thank god for the "dog and duck".

[hardhat]

i havent got a uk company any more,but if i had and i wanted to know what you want to know, i would go and ask the uk tax man,your still paying his wages use him and dont be fobbed off,ask him what the uk would be happy with and get it in writing with someones name and signiture on it

[Will]

Despite popular opinion the British Inland Revenue people are generally very helpful.

However, I would not expect them to know much about French law, so I would recommend talking to the French Chamber of Commerce in London, who can advise you officially on French business matters, in English.

I think it is social security and health charges that are the main issue here rather than tax - if you are not careful you could end up paying very heavy charges, as other forum users have found when they have tried working in France for an English company.

[Viv]

Isn't this something that Living France magazine could do a feature on? It is clearly such an important issue for people moving to France.

I'm not talking about covering every type of business obviously, but perhaps a feature on the matter of pin money/ part time businesses , as these attract so many questions, so frequently.

 

[Owens88]

SenRabbit That apce.com site that you recommended is a cracker, including an equivalent to 'self employed' status that I haven't seen mentioned before.

 Having re-read the thread I am not sure whether you want to operate as a 'representation office ' as defined on that site or a ' sub-office' ....

........or indeed whether you are a UK worker living in France and sometimes taking work home with you ......

 .....(and possibly sometimes making representation visits on behalf of the UK company)....

.....or not really working much at all (wherever) merely taking a dividend from the UK.

The devil will be in the detail I am sure.

By the way, as web design is something that doesn't need a physical presence is your UK company also going to sell into other eu countries ?

What the apce.com site doesn't seem to mention is the impact on 'employers' charges etc. if you go the sub-office/representation office route.

As others have said its time for the experts but it would be great if you posted the actual info when you have had time for it to distill !

Good luck

John

[Senrabbit]

Of course I will, in about 2 months when I have worked it all out.  It seems to me that the whole thing could be quite brain stretching.

[Iceni]

"Despite popular opinion the British Inland Revenue people are generally very helpful. "

I'm sure they are WTC but they are unlikely to help you minimise yr tax/NI liabilities.

Good luck with APCE Senrabbit though I suspect that they will not know much about the UK side of yr business. I am pleased that you have decided on professional advice 

John

not

[Senrabbit]

Having just read your reply Iceni, I would like to point out that the Inland Revenue have always been extremely helpful to me in the Uk as reagards advice about reducing my tax liability. Far more so than the so-called "professional" who simply wanted to charge me more each year for doing less. I would not be using the Apce site for advice about the Uk side, why would I when it is a site devoted to setting up a small business in France?  It seems to me that you have spent more time on this post pushing the notion that only a professional can be of use to me rather than actually reading the post. I also find it slightly offensive that you seem to feel that no-one but a "professional" has the intelligence to work things out for themselves!!

[Iceni]

Senrabbit

Why are there professionals if it is all so easy. I run my own business in France - which started out similar to yours. John is talking from experience and we are running on the right side of all the laws. How did we do this - we went to the professionals both gov. based and paid for.

If you do not want advice or comments from those who have done something similar before, why post your questions on a board populated by such people.

John can fight his own battles but I find your comments offensive. It was the IR who told us that if we did the work in France - ie bum on seat in France we had to pay our taxes and social charges in France - this I think has already been mentioned in this thread.

Do your own thing, but don't ask for advice and moan when you don't like it.

NOT JOHN

[Teamedup]

I agree with Iceni, why ask then?

 

Iceni has done this and there are not that many people about who have such experience. And if you do get it wrong then it could end up being a nightmare. As far as I can see you have been given sensible advice.

 

And if anyone wants to bore us all with talk of cliques and gangs, the only one there is, is purely imaginary and bears no relation to reality.

 

[Bobc]

I would agree with John & Di re professional advice.

When we were setting up our SARL in 2000 we were advised to seek the help of the Boutique de Gestion AILE (Aide à l’Initiative Local Economique) in Agen. This is a State funded organisation offering advice to start-up companies in Lot-et-Garonne.

Jacqueline Rouzic and her team patiently guided us through the minefields of paperwork and provided advice on everything from the best bank for a business account (Banque Populaire - Crédit Agricole were hopeless) to the best software for producing devis, invoices, TVA returns, etc (EBP www.ebp.fr).

She also made us aware of the various grants and interest-free loans that were available in 47 for start-up businesses. With her help and the business plans that she wrote for us we obtained one grant and two interest-free loans which went towards a new van, tools and an office computer and software.

Other people on her team found us a good accountant (Laurence Charik-Mathivet - In Extenso Confluent in Tonneins) and provided invaluable advice on minimising our taxes and social charges.

Finally, Mme. Rouzic organised the required ad in the regional paper advising of our new business and the reception at a local hotel with the Maire and other local business people.

Without her help we would not been able to set up the business so quickly and efficiently - the cost? Nothing.

I am sure that similar organisations exist in all areas of France.

Regards,

Bob Clarke
http://perso.wanadoo.fr/grindoux

[Senrabbit]

"Why are there professionals if it is all so easy. I run my own business in France - which started out similar to yours. John is talking from experience and we are running on the right side of all the laws. How did we do this - we went to the professionals both gov. based and paid for.

If you do not want advice or comments from those who have done something similar before, why post your questions on a board populated by such people.

John can fight his own battles but I find your comments offensive. It was the IR who told us that if we did the work in France - ie bum on seat in France we had to pay our taxes and social charges in France - this I think has already been mentioned in this thread.

Do your own thing, but don't ask for advice and moan when you don't like it."

Had I wanted the advice of always ask a professional, I would not have made the post.  What I was looking for was experience from others who might have come across the same problem .  I know I can go to a professional and that is what prompted my reply as to you allowing that other posters to this forum do lay claim to a modicum of intelligence.  Have you never thought it odd, that every thread on these forums usually ends up in an argument, that involves the same old crew who are always willing to give you the benefit of their experience.  quite often of course that advice is wrong. I was not moaning about the advice I had received, merely your insistence on overwriting the advice (good stuff some of it) that others wished to give with your online advice about professionals.

At present I am suffering due to "professional advice" in the shape of an IFA. I have also received bad advice from solicitors. And as for bank managers, aagh. The experience of "non-professionals" who have gone through the mill is worth 10 times that of professionals.

[Iceni]

This part of the same old crew is running a business in France - earning money and would not dream of offering you any further advice other than being polite costs nothing and in business can reap vast rewards.

By the way I would have thought APCE comes under the heading of professional.

John and

[Bobc]

"Had I wanted the advice of always ask a professional, I would not have made the post.  What I was looking for was experience from others who might have come across the same problem ."

I thought that is what I tried to do in my reply.

Finding a website with information on available grants is one thing - getting is another. For every grant available there are dozens of applicants - without professional (free) advice, your chances would be very low.

Realistically, I doubt that website design would qualify for any grants - certainly not in 47.

Are you going to employ workers in France, pass work to other French companies, purchase materials in France, pay tax and TVA in France?

Regards,

Bob Clarke
http://perso.wanadoo.fr/grindoux

[Will]

You can get a pretty good idea of the basics from forums like this, but the information should only be used as a rough guiide, and cannot be guaranteed. Even the best information is based only on one person's experience and may not apply in other similar cases.

And that is the whole essence of things in France. Unlike Britain, where the laws and rules are much more clearly defined, and you can get chapter and verse (or conversely, professional advisers can get things very wrong as many have found) France has guidelines that contradict other guidelines, rules that create loopholes in other rules, and everything is open to interpretation, negotioation and argument. That's why you need a professional on your side, because they will do this with more impact than you will ever achieve. You can get so far on your own, particularly if the local bureaucrats are reasonably helpful and sympathetic, but you won't solve everything. Such organisations as Bobc's bureaux de gestion are invaluable, but they tend to be set up for certain types of business and although they can provide a comprehensive source of advice for, say, an electrician, they are not equipped to deal with other types of business like web design (or my own magazine publishing related activities).

It seems to be a characteristic of many British abroad that they dislike paying for anything. Yes, good professional advice costs - though it's incredible what you can find out for free. The advisers I use charge around 500€ per year inc TVA but that buys you their services for the year in dealing with French officialdom. In the great scheme of things that is a small price to pay, even for a small business like mine.