Starting a business in England v France

[MOZMAN]

We have owned a house in France for 11 years as a second home and believe we have some perspective on both countries and theease of creating a business in either country.  I looked at setting up a small business in France about 2 years ago.  The restrictions to offer multiple services, the red tape, level of tax and social charges and employment laws make it an enterprise for the brain dead in France.  Sorry if youy have ebusiness, but I am making comparison.

I set up a consultancy business in England about 12 months ago.  Ltd Company set up in 24 hrs and I can offer any service I want.  My Wife and I are Directors and can earn about £16k with no tax or NI.  Use of allowances expands this in reality.  This is only a small business but I estimate that quite legally I will not part with any money for any form of tax for two years.

The French under Hollande seem keen to tax entrepreneurs and wealth creators to death.  What do they think this will do?  They will leave of course as happened under Labour in the UK in the 70's.  Is this man brain dead?  But of course his motivation is to build the power of the state, look after the socilist public sector workers.  Individual businesses are going to be squeezed, Hollande does not want small entrepreneurs.  He wants the power of the state.  He will subsidise big firms and industry and drive small business to the wall.

I for one would be delighted to spend 182 days a year in France per year but thank God I would still be UK tax resident.  I look forward to the day that I do retire to France having sold my business and other assets in the UK with the bonus of then having a primary home in France which will not attract the draconian rate of Capital Gains Tax that this moron has imposed.  He really would not be allowed to run a sweetshop here.

I regret that the French are really in for a rude awakening.  Wealth creation will decline and this will continue to accellerate, those working and with business will get incresingly robbed.  The cycle will get ever quicker.  Both the UK aand France have to grasp the nettle of growing the pie not taking bigger slices from smaller pies.  At least in the UK there is half a chance of making a go of a new business!!!!!    

[Russethouse]

"set up a consultancy business in England about 12 months ago. Ltd Company set up in 24 hrs and I can offer any service I want"

Just a small point:

my understanding is that when you register with Companies House you have to choose a category and your activities should be broadly related to that.....

[NormanH]

I don't see the attraction of France for you.

[ebaynut]

France is a beautiful country, it is the French that spoil it.  [:D]

[Quillan]

[quote user="Russethouse"]"set up a consultancy business in England about 12 months ago. Ltd Company set up in 24 hrs and I can offer any service I want" Just a small point: my understanding is that when you register with Companies House you have to choose a category and your activities should be broadly related to that.....[/quote]

He is talking about an 'off the shelve' company I believe for which you can then change the name if you like. Normally you chose the category and they give you a list of names already registered within that category. You get everything in the pack like shares document, what your company does (loosely), registration form, change of directors form and company stamp etc. I used to pay around £80 for all this but I see now you can get them for as little as £4.99. Other people will set up a company for you, you choose the name and they will have it formed within three hours or so they say. It is probably because it can all be done via the Internet these days.

[EuroTrash]

Your observations are quite correct, I don't think anybody would argue with the facts. But knowing the facts, your decision depends on your personal priorities, doesn't it. I moved my business to France and the charges on approx the same level of income are significantly higher. As you say I paid virtually nothing in the UK, here I pay 20% of everything. But I don't really care, it's only money and my aim in life never has been to make lots of money. I'm happier living in France than I was in the UK so I consider myself lucky that I can afford the lifestyle I want. I certainly don't keep looking at the UK and thinking 'I'd be richer if I still lived there.' Yes it would be great if social charges were lower here - but they're not, and I knew the score when I moved.

Live and let live, horses for courses and all that. It's great that countries are so different in the way they are run, otherwise if they were all the same how would anyone decide where they wanted to live. As NormanH says, the UK is clearly the right decision for you.

[Benjamin]

[quote user="EuroTrash"]Yes it would be great if social charges were lower here - but they're not, and I knew the score when I moved.

Live and let live, horses for courses and all that.[/quote]

I think you're missing part of the point MOZMAN is making.

France is already seeing taxes/social costs rising. Will you be as content as you currently are when you see the massive increase in State employee numbers that your taxes will be funding?

[MOZMAN]

Hi Norman, The whole point of the post was to highlight the issues France faces with offering a tax system that is inflexible and onerous.  The best way of doing this is to draw comparison with an economy that I know well in the UK.  Two years ago I was offered a decent job in French terms in Caen.  When you considered the taxes etc, just not worth it.  Clearly financial needs and priorities change through life.  Pension provision is being hammered so it is upto individuals to find ways of providing for themselves.  Paying loads of money to the State as reward for running a business and taking big risks is not the way forward.  In effect the UK realise this and France do not.  Still too many matters that have not evolved from the axe that Napoleon took to the laws. The revolution was in 1793, things need to move on.

Regarding the attraction of France to us.  The recent article from a senior French politician in the Telegraph says it all.  She is concerned that the World is vilifying France for draconian tax policies and that this will harm France.  She majored on the usual positive aspects of variety of landscape, food, culture etc.  All these are true.  But people need jobs and generally a fair reward for effort.  The beauty of France for us is that we can enjoy all of these for upto 6 mths a year whilst not being hammered by Hollande.  When we choose to retire it then comes down to where the permanent resting place is and that it suits ones finances.  In any event Governments of all persuasions will act as modern day Dick Turpin's, it is just to what degree and the French simply have it wrong.  It is often said that the French operate the only working Communist style economy in the world that works.  I now challenge that it will work.  France are losing many entrepreneurs and high earners so that says it all.  These people will still enjoy France for much of their lives but not at the cost France demands.

 

Regards,   Pete

[EuroTrash]

Benjamin wrote the following post at 20/01/2013 12:20:

EuroTrash wrote:

Yes it would be great if social charges were lower here - but they're not, and I knew the score when I moved. Live and let live, horses for courses and all that.

I think you're missing part of the point MOZMAN is making.

France is already seeing taxes/social costs rising. Will you be as content as you currently are when you see the massive increase in State employee numbers that your taxes will be funding?

There's lots of things I don't like and never have about how public money is spent in France. And in the UK too come to that. Benefits that are so high people have no incentive to work, MPs salaries and expenses, etc, etc. Actually I used to think the UK was pretty stupid to let me earn a perfectly decent living and not pay any taxes. But I gave up trying to change the world. It may sound selfish but frankly, as long as I can keep enough in my bank to fund my chosen lifestyle then I will be perfectly content. I think Hollande is very misguided but since he won't listen to me I certainly don't intend to raise my blood pressure stressing about things I can't change. If and when the time comes that I can't afford it any more, then I will re-think. But so far, low earners such as me don't do too badly under the French tax system, it's the higher earners that look to be being squeezed.

[Mr Ceour de Lion II]

I tried setting up a business in France a few years back, and ended up on the autoentrepreneur scheme, but the whole work system in France is enough to make you not bother. You do all the work, and the state takes such a massive portion of it. Very unfair in my eyes, and all it does is leads to people wondering why you even bother to try. At least it did me. One poster said money isn't everything, well no, it's not, but if you earn it, you at least have the right to keep most of it, after all, you did the time.

I am in the US now, and despite the fact Obama is in power, there is a great deal more opportunity and encouragement to have a go, to try to make something of yourself without being taxed to hell and back.

There are plenty of things I do miss about France, the architecture, the bread (oh how I miss the bread), my old friends and the sheer beauty of the place, it is certainly not a place to be in your working years. Great place to retire though.

As with everything in life, there is a cost. Live and work in France, experience a great culture, but expect a low income, live and work in the US, expect opportunities, but crap bread!

[MOZMAN]

This is true. However in France as a Consultant I would have been more limited than in the UK in terms of the specifics that could be covered and the French myopia that people can only do things if they have French qualifications. My Wife has an honours Degree and PGCE, yet this is not good enough for the French. French professionals are allowed to come here and work, we recognise hard earned qualifications. The French remain protectionist and inward looking. The British as an island nation have always looked out and this is a fundamental difference, especially with the EURO issues, that will go on for years.

I would have loved to have settled in France two years ago. The culture and perceived way of life are seductive. We have a lovely home in a beautiful place. But it was clear that we could not trust France in the likely shape of Hollande to be realistic. We see far to many people in France sponging off the state, playing Rapido in the local Tabac. It was like this in UK before Thatcher and thankfully she had the bottle to sort this. I remember Red Robbo at British Leyland. France needs similar momentum, but it will not happen.

The idea of two hours for lunch is great. But not being able to speak to anyone at Britline at lunch time is simply archaic in a modern business world.

France needs business people and entrepreneurs to create jobs and wealth. Hollande is simply driving this away as Labour did in Britain in the 70's. I think France needs dose of Anglo Saxon logic.

[MOZMAN]

Largely correct. The category of business consultant is wide ranging and allows me to offer many more services than I would have been able to in France. Also an issue with France recognising qualifications.

It took three hours and in fact it cost me £4.99 and then I got £50 back into the new account I opened with Barclatys. So made a profit from starting a company.

So, simple,cost effective and relevant. Not only that 20 months before one pays Corporation Tax and 21 months before I pay any self assessment income tax. These will be zero, so effectively another 12 months before I pay my tax that will then be due. This involves no fiddling, just working to the available rules.  Only pay £2.40 per week for NI as I have paid my 30 years in. Governments have lost the right for people to be charitable to the State. They lost control of public finaces through greed and I do not feel the need to be one of those that is exploited to dig them out of the hole. France is great and I love the cuddly bits - but not at all cost. How many have had to sell up and come back because of economic factors. Why are so many French coming here. I am told there are half a million in London.

[Mr Ceour de Lion II]

It sounds to me it's all back to front, but socialism always has been to my mind. It should be about encouraging and getting people into work by lowering the tax rate, so that many more people can pay tax, albeit at a less rate. Then, there would be more money floating around for people to buy things which again generates income for the state, and everyone's happy. The way Hollande seems to approach it is to make the people who have got off their backsides and made investment, taken risks and so on to be financially healthy to pay for everyone else. That's both immoral and backward thinking. No wonder certain people are giving up their citizenship...

[MOZMAN]

I understand your points and they are about personal choice and values. The thread is about competitiveness economically and how that impacts on individuals. Norman missed the point completely. It is possible to enjoy both cultures, and I enjoy France. But not to the extent where it could result in financial misery if Hollande keeps going as he is. His actions against the rich are complete suicide. Who will want to invest in France other than the French?

I am always pleased if people have found contentment and clearly you have. I do not get high blood pressure by worrying about things I can not change, but things will not change if we do not debate them. If things remain under the lid you end up with Bastille Day. I do not think people would want that again!!!!!

[Mr Ceour de Lion II]

It's all linked though. The essence should be about getting people to work, whether by their own enterprise, or by making it attractive for employers to employ staff through tax breaks etc. As a result, it makes France very uncompetitive, and seems to be all about cure instead of prevention ie pay for the unemployed by making the rich pay more taxes, rather than encouraging free enterprise and getting people into the workforce. The whole point as you correctly make, is that no one is going to invest in France. They seem to invest in the poor rather than the rich, which is a little illogical seeing as the poor have little to contribute.

For sure, it's possible to enjoy both cultures as you are doing. I think that's called getting the best of both worlds, and why the hell not? :)

[EuroTrash]

I could be wrong but I'm not sure the French are really looking for outside investment if it means losing their 'Frenchness'. Economically it doesn't make sense but culturally, they want it to make sense. Hollande seemed genuinely shocked that France's super rich would choose to go abroad in order to avoid higher taxes - the French are still supposed to think along the lines of 'it's not about what your country can do for you but what you can do for your country', certainly that concept has lasted better here than in the UK but not as many still think that way as Hollande hoped.

[Mr Ceour de Lion II]

As Deperdieu put it, the hundreds of thousands of euros of tax he (and the rich) has already put into the French economy isn't enough? He must pay more? Hollande must have been very short sighted not to have seen that. That's extremely poor and deluded leadership imo.

[nomoss]

[quote user="EuroTrash"] ..................... Hollande seemed genuinely shocked that France's super rich would choose to go abroad in order to avoid higher taxes .................. [/quote]

I think Hollande would be shocked to realise that people can live happily in any country other than France  [:D], and he probably has many like minded compatriots.

[MOZMAN]

Eurotrash makes the point of doing things for your country and not what it does for you. This is fine when things are going well and the money is flowing. The reality is that it has not been flowing for several years. This was masked in France due to the falseness of Sarkozy massaging economics before the election. In the Uk we were ahead of France in the cycle as our elections were some time before.

I do not think 'State' has the right to expect us humble citezens/subjects (depending how you look at this) to keep tightening our belt and paying for Government inability to manage a business. No matter you politics Machiavelli rules the individual - more so in some. If Hollande does not know this then he is truely an idiot!!!!

There are some excellent sayings like 'enjoy the best of both worlds' and 'do not put all your eggs in one basket'. I actually think that enjoying two cultures makes one appreciate each cuture more and the differences when in either.

We must take off the rosy coloured glasses and understand that fundamentally economics drives everything. I have spoken with my local Farmer in France many times about our relative cultures and politics. Emanuelle is hard working with a family and aspires to look aftre his family. He was dreading the fact that the French would put Hollande in. During a recession that last thing you need is Socialism that takes and gives to those that only want to take. You need an entrepreneurial approach that creates and rewards wealth. It is the private sector that creates the money and tax to pay for public servants. If my business struggles I work harder, cut my costs where I can and accept that that is how it is.  The only safety net is the one I make.  I should not expect a handout.  I know a lady in my local town who works with the Maire and she has been frustrated for years at the Socialist mindset that does not reward enterprise.

Going back to the start of my thread, this is really the point.  If the pie gets smaller so to do the slices and the peasants will start fighting over the scraps - Reminds me of the revolution and Bastille Day!!!!!

[Quillan]

It is France and the French mentality that is the problem. The way they are educated and bought up. It is like for many that the 'spirit' is driven out of them and they become part of 'the system' and loose any aspirations they have.

About six or seven years ago we had a couple stay where the chap was a professor at one of the Grande Ecoles in Paris. We talked about business startups and the help given in the UK during the first couple of years, free banking, tax relief etc and that after about three years about 50% had failed but the other 50% went from strength to strength and started to employ people. He told me that this level of failure would not be acceptable in France, not just because the business's failed but also because of the potential loss of income to the banks and the tax man. He said it was made hard in France so that only those who were going to make a success would start up a new business and sometimes they might have one in ten fail which was not good. The thing is this is what he and his fellow professors thought and taught to those that would become directors or politicians later in life. In my mind this is also part of the 'rot' in France.

Possible the biggest change for the French was the introduction of the AE scheme which to them was a massive risk but I think it was not enough and still does not encourage people to start businesses in big enough numbers.

More recently we had a group stay who were directors of different companies in France. One chap was a business director of one part of EDF. He said that France was like a woman who wants the pleasure of children but does not want the pain of giving birth (it's not my intention to be sexist, I am just repeating what he said).

Somebody mentioned the amount of functionaires in France and when I think about this EDF man and another ordinary couple where the husband also worked for EDF I can understand why people want to be one. Those working for EDF only pay about 10% of their electricity bills. Ordinary workers get holidays in holiday villages owned by EDF at ridiculous prices like €100 a week per couple all inclusive. Directors don't get to go to these holiday villages they get a lump sum towards their holidays so they can pick themselves. They can stay at a cheaper pace, like ours and pocket the difference. All of this is tax free where as in the UK it would be classed as 'payment in kind'. Of course they also get to retire at 50 or 55 on almost full pay. Lots of state run companies and departments are the same, SNCF, La Poste etc, etc. Perhaps that's why we all have to pay so much tax.

[Alan Zoff]

An SNCF chap used to come into the local bar. There was always some harmless banter between him and the landlord who accused him of being lazy ("did nothing but punch a few tickets all day") and mean (which was why he had stayed single) and he was just waiting till he hit 50 (or was it 55?) when he would retire with a massive pension.

Unfortunately for the chap, he only received his lucrative pension for a few months as he dropped down dead with a heart attack soon after retirement, his health presumably not helped by a life of doing very little apart from visiting the bar and chain-smoking. But the point the landlord frequently made was that a large part of the French population saw such a job as the ideal to aim for.

[MOZMAN]

France is a land of bureaucrats. Bureaucrats do not make money or create wealth and properity. They suck money out and often get in the way, This does also so happen more in the UK than of yore. The observations of French business professionals and academics does really say it all. The goose is being killed and there will be few eggs. 

Personally I think you would have to be very brave to start a business in France that employed people.

If you are earning enough to be happy then great.  But what happens if tax becomes too great and what about retirement.  Do people really want the upset that is involved with packing bags, giving up the great aspects of France culture and lifestyle because they have a system that is so clearly broken.  Not a place to do business,  Get your wealth elsewhere then retire to France and enjoy it.

[EuroTrash]

I agree with Quillan, it is a mindset issue. I believe French kids have lessons at school about society and their duties as a citizen, too extreme maybe, whereas maybe a little more of that in the UK rather than all 'me me me' might not be a bad thing. I also think the OPs references to the Revolution are relevant though perhaps not in the way he thinks - 1800 is really not that long ago in the history of a country, the UK has only got through half a dozen or so monarchs since then, and I do get the feeling that that it is recent enough for the French to still be proud that their ancestors fought for today's democracy and they are unwilling to throw it out as no longer fit for purpose. They are certainly not going to start another revolution but maybe they should move on from the last one.

But for all that, when you look at the huge difference in the French and UK mindsets when it comes to business, I don't see a corresponding huge difference in their respective economies - they're both in the sticky stuff.

[Quillan]

[quote user="Alan Zoff"]An SNCF chap used to come into the local bar. There was always some harmless banter between him and the landlord who accused him of being lazy ("did nothing but punch a few tickets all day") and mean (which was why he had stayed single) and he was just waiting till he hit 50 (or was it 55?) when he would retire with a massive pension. Unfortunately for the chap, he only received his lucrative pension for a few months as he dropped down dead with a heart attack soon after retirement, his health presumably not helped by a life of doing very little apart from visiting the bar and chain-smoking. But the point the landlord frequently made was that a large part of the French population saw such a job as the ideal to aim for.[/quote]

Our local SNCF chap plays boules and at the bar afterwards people often have a go at him about his pension, he retired at 50 because the SNCF is classed as hard manual work even though he was much like your chap. We only get three trains a day and he sells the tickets, he would be lucky if he sold ten per day. Perhaps if he laid track people might be a little more sympathetic.

This last lot of EDF people who stayed were only with us for one night as we were halfway to their holiday village. If it were not for another couple I would never have known about these 'perks', to be truthful they were sort of having a go at the two EDF couples in a light but serious way. See in my mind if they didn't have this perk then they would stay in a place perhaps like mine. I would pay tax, well two taxes actually and social contributions which the state is loosing out on. It seems to me like France has not, in some ways, moved no further on than the 60's where companies, even private companies offered such perks. I can remember as a child going on such holidays and company picnics with my parents. Of course all that has long gone in the UK and other countries I suspect.

[idun]

Mozman, remember that unless you are retired, then you could lose your right to NHS hospital care if you are out of the UK for more than 90 days a year. I realise that GP's remain available, but last time I was at hospital there was a notice up about this.

I agree about it being hard to run a business in France. Artisans for example are hit hard, and when I questioned their prices when I first moved to France, was, to my surprise, told how much they had to pay in social charges. Same for the big employers too, their costs are enormous, no wonder salaries remain so low.