National Insurance

[Zac]

I have been living in France since Sep 2007 and work from home for a UK company by computer.  I return to the UK every 6 - 8 weeks and sometimes work in the US for the same company.  Newcastle has classed me as working at distance, therefore I am not entitled to an E106.  I stopped paying UK tax in December 2007 and I am now in the French system having just paid my first French tax bill.  My question is, how do I apply to be part of the French system to pay Social Contributions/Coissitations instead of National Insurance in the UK.  My employer looked into this initially, before Apr 2008 and after he spoke with Newcastle he was advised to stop paying the employers contribution as well as not deducting my contributions. 

This he did in Apr this year.  He and me are struggling to speak/write to the correct people and my question is to ask if anybody on the forum is able to point us in the right direction.  I believe that the contributions are higher in France for both my employer and me; could anybody advise me by how much (%) this would be.  Also I would expect the payments to be backdated to Apr (or perhaps Dec 2007).

Obviously I am concerned as to how much will have to pay in contributions, but I also want to be within the French system i.e. to be legal and correct.

If any body can help I will be grateful and I apologise if the same questions have been hammered out before - Zac

[giantpanda]

Hi!

It depends of your statute.

If you are an employee of a GB firm, they have to register you in France, and they have to pay Social Security contributions for you in France ( This is done best over a société de portage, who does the work for them ).

If you are independent, then you have to register at the URSAAF as "travailleur indépendant ", and that can be costly especially since there are practically minimum contributions.

Yours,

giantpanda

[Will]

You have three options.

1. Your employer sets up a subsidiary company in France in order to employ you. Few, if any, do this on account of the cost.

2. You become self employed in France and work on contract to your employer. This is probably about the most cost-effective for you all. It means you registering as a business - how and where you do this, and which bodies you affiliate to for the nearest French equivalents of NI vary according to what you actually do.

3. You work through a portage company - this is the simplest in terms of paperwork etc but as well as your own French social security contributions you pay a fee to the company. See http://www.freelanceinfrance.com/ for an explanation of how it works with one particular such company that has an English-language operation. Note that this is not a recommendation because I have no experience of this route, though I do have considerable personal experience of option 2.

If you or your employer want more information, the French Chamber of Commerce in London is very helpful and used to publish a regularly-updated book - I don't know if it still does, but worth asking.

My advice would be to regularise your situation as soon as possible. You are effectively working 'on the black' at present which can have serious implications; attempting to pay backdated contributions is likely to open up all sorts of cans of worms, so if you can keep quiet about the fact that you have been working in France for a year I would advise you to do so - as far as they are concerned you could have been commuting back to Britain and doing the work there, although if that was so you would normally be taxed in Britain and have to declare that income in France as 'already taxed elsewhere'. In fact, I am surprised that as you are in the tax system you haven't had a visit from anybody asking awkward questions about the source of your income - this should be enough to trigger an alarm somewhere in the system.

What are you doing about health cover at present? This is another potential area of concern.

[JMB]

UK NI is about 13% if I am not wrong.  Employer and employee equivalent in France is about four times that much.

[Panda]

Under option 2 of Will's post (self employed) the combination of tax an NI equiv comes out at about 25% of gross income on a micro regime.  As has been discussed many times this is about the same as the combo of UK tax and NI.

I am currently operating exactly as Will has laid out in option 2 doing exactly what you are doing and have been for 5 years with no problems.  For me it was the only viable option as my employer did not want a french subsidiary.

I also agree with Will about not going too far back with your declaration.

[Will]

Panda's estimate sounds about right; but it's best to ask an accountant. Although the micro regime suits a lot of people it isn't always the best option. The réel regime allows you to offset all costs and expenses rather than a standard percentage.

Cotisations are payable at around 46% of taxable income, and a good accountant will apply all allowable costs and deductions to get the taxable income down as low as possible. This, of course, impacts too on your personal tax which is payable later and is over and above the 46% cotisations. That may be one good reason for opting out of the micro; another is that the réel allows you to reclaim TVA (including some English VAT, and travel costs if you need to go back regularly, as I did). So do take proper advice about the right regime for you. Incidentally, the portage company in my link makes a flat 50% of invoice value (plus TVA) deduction. When you consider the 46% cotisation rate plus accountancy fees that looks like reasonable value, but bear in mind that an accountant can generally get cotisations down to 25% or sometimes less in real terms, plus you will pay lower personal tax, and have the opportunity to reclaim TVA, so an accountant can more than pay for himself. A micro regime is, by definition, a low income, so there is usually little tax to be paid.

There is an option 4, but it can't apply to the original poster as he is already established in France. If you are merely taking the same job to France, and retaining a UK address, you can be on 'temporary assignment', still paying British tax and NI but joining the French health and social security system via an E form, usually E101 but in some circumstances a 'workers E106'. This allows you time to see whether or not being in France will work for you and your employers, as well as saving you both cost and hassle. It can, under some circumstances, be used by self-employed people too. When the E form expiry approaches (normally two years) you can then decide that the temporary assignment has become permanent, and register yourself in France. This option is not available to everybody, for a variety of reasons, but well worth looking into before you up sticks and go to France - it allows you to test the water, and gives you time to get properly sorted out if that's what you decide you want to do. 

[Panda]

[quote user="Will"]

 Incidentally, the portage company in my link makes a flat 50% of invoice value (plus TVA) deduction. [/quote]

How do they take account of the allowances (abatement) for the micro in a portage.  If I had to give 50% of every invoice away I would be well out of pocket compared to being an independent mico.  Perhaps I've misunderstood as this would be 50% of gross income not taxable as I read it.

[Will]

I don't have any experience of portage companies - I would imagine that particular one is not really geared up to dealing with the micro regime, whereas with others it might be possible to operate through them as a micro. When I first registered in France portage companies probably existed, but we never heard of them. When I looked into them later, they never seemed particularly cost-effective for me, but other people seem more than happy to use them.

[Albert the InfoGipsy]

[quote user="Panda"][quote user="Will"]

 Incidentally, the portage company in my link makes a flat 50% of invoice value (plus TVA) deduction. [/quote]

How do they take account of the allowances (abatement) for the micro in a portage.  If I had to give 50% of every invoice away I would be well out of pocket compared to being an independent mico.  Perhaps I've misunderstood as this would be 50% of gross income not taxable as I read it.

[/quote]

A portage is ana alternative to a micro, not something to be combined with it. I've been looking at the various options and I can't see any way that a portage makes sense if you have a fairly regular turnover.

I'm currently in the transition stages of being based in the UK but spending several weeks at a time in France. As such I'm treating all my current earnings as UK taxable. This is only for a couple of months, so hardly worth the hassle of getting an E101 or whatever. However, by January I should have established myself in France and shall almost certainly follow option 2 as I can  bill my UK company for work done in France  and pay myself  directly for any I do in the UK. Looking at the figures it will probably make sense to operate in France as an autoentrepreneur, with the UK company paying expenses like flights and hotel bills on client visits.

[AnOther]

Unfortunately this sounds like a case of lack of research because it seems you have boxed yourself into a bit of a difficult corner. I'm not suggesting deceit or dishonesty but fully informed you could possibly have played your cards differently and got yourself into the health system with a workers E106 which would have been renewable for as long as you continued to work for your UK employer.

That possibility has now gone and is irrevocoverable unless you were to go back to UK and put in 2 full tax years of NI.

Quite what your best move is now I really can't say but good luck.

[Will]

Ernie - long-term workers E106s only seem to be available to civil servants and people in a very few specialised trades or professions. E101 is more likely, and it is far from certain that even that can be issued unless the employer can convince the powers that be that it is much more of a proper temporary arrangement, not just a convenient was of easing into a permanent move. The E101 lasts for a year, and by agreement between Britain and France can be renewed once, so the most you get is two years.

The original poster needs to legalise his situation as soon as possible, and probably the best thing to do is keep quiet about how he has lived and worked over the past year (unless specifically asked of course, then honesty is the best policy as there's still a good chance that the French officials would just forget it for an easy life). My major concern for him is that he apparently has no proper health cover, which is not only highly risky in case of illness or accident, but means he is effectively living illegally in France.

Regarding the micro regime and portage, thinking about it Albert is quite right - it's obvious, the two things are not compatible. The micro-bic or micro-bnc (like the forthcoming very similar autoentrepreneur) are simplified taxation regimes for the self-employed/small business. Under a portage agreement you are actually employed, under an employment contract, by the portage company.

[AnOther]

Nice to feel special for the right reasons then [:D]

Without knowing the full details and circumstances of the OP's employment and his decision to move to france it's impossible to know whether an E106, of either variety, could have been a possibility but my point was, and please forgive me if I'm wrong or this sounds harsh, it seems fairly clear that insufficient or at least flawed research went into this enterprise and if the full situation had been appreciated beforehand then this question would never have arisen.

[Will]

Ernie, you aren't wrong and unfortunately reality often sounds harsh, especially in hindsight. I agree that there appears to be a lack of knowledge and research here, most worrying perhaps from the employer. One doesn't expect employees to double check everything, but employers do have a duty to their staff and should either have the knowledge or find out if not sure. But that isn't often what happens, certainly in my experience. And in this case it seems that the employer was given information from Newcastle that may not have been wrong, but was certainly incomplete.

Regarding the workers' E106 - if yours is/was valid for more than a year, or at the most two, at a time then you are indeed special.

To go back to the original question, regarding the amount of French 'NI', employee's contributions, on a fairly average sort of salary, amount to 20% in very round figures, and the employer has to pay another 40% or so. This is not a single charge, like the UK NI, but is made up of many different contributions to various bodies (about 16 in all), which must all be itemised on the pay slip.

[AnOther]

Re my workers E106, is only valid for one year at a time however, but whilst my work circumstances remain as they are and I continue paying UK tax and NI, it is renewable on an annual basis indefinately

[giantpanda]

[quote user="Panda"][quote user="Will"]

 Incidentally, the portage company in my link makes a flat 50% of invoice value (plus TVA) deduction. [/quote]

[/quote]

Hi!

I am afraid you have misunderstood the suggestion.

Portage is only suggested in the case of an " employee". i.e. representing the GB company.

Not in the case  of choosing the ' travailleur indépendant " situation.

Yours,

giantpanda

[anniefromwales]

http://www.urssaf.fr/profil/independants/documentation/depliants/travailleur_independant_01.html

http://www.lerucher.com/dossiers/travail_independant/info1.asp

Both in French but between them quite informative about what is involved in being a travailleur independant and the latest changes to the regime

[Albert the InfoGipsy]

Thanks, Annie. I've now bookmarked those.

Only thing I couldn't see at a quick look was anything to do with the autoentrepreneur statut that starts next year. It may not be right for everyone, but probably for a lot of travailleur independant startups it could make life easier.

 

[anniefromwales]

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

[Zac]

Thank you all very much for taking the time to reply to my enquiry with positive advice, which is more than welcome.  I will reply/react to each individuals advice over the next couple of days, but one question I have to ask is how far back should I go with regard to the issue.  I feel April 2008 would be okay, but any advice would be appreciated.

I have been in touch with my employer and given him the information that you all kindly provided and enforced the point that it his duty to start sorting this out properly.  However I do know that I am not blameless and could have been more  pro-active.  I will keep you abreast of the situation, which obviously I want/need to progress.

Regards, Zac

[Will]

Although ignorance is not usually taken as an excuse in legal terms, I don't think either you or your employer need beat yourselves up unduly. It is, after all, a very complicated subject and very easy to get things wrong. I suppose the 'right' answer is that you should go back to when you and your employer stopped paying NI contributions, but knowing French officialdom, they will most likely be so happy that you want to regularise yourself, and relatively unwilling to make extra work and complications for themselves, that they will be happy to begin taking cotisations from the date you register in France (or whatever other option you choose). But there is no guarantee of this of course, there are awkward little Hitlers in France as well [:)].

[JMB]

Surely you mean little Napoleans ... :-)

[Will]

That's the man who runs France [;-)]