Tax free salary situation

[powerdesal]

Is there anyone on the forum with these circumstances:- Wife fully resident in France, husband working overseas as an expat in a tax free country ( ie KSA or such like), both being EU/British passport holders ( that lets you out Lori [:)]).

The reason I ask is that I am trying to get a grip of how the French tax & social security requirements are applied in actual cases. I will, of course be consulting an accountant when I next visit France but need to get an idea now before I quote a salary requirement to a potential employer.

Obviously I dont want to snoop into the financial affairs of others and can easily be e mailed or pm'd if anyone doesn't want to put anything on this thread.

Regards

[Will]

It depends mainly on what (if any) double taxation agreement may exist between France and UAE.

You are right, you do need to talk to an accountant, and one with knowledge of non-French taxation at that.

From my own experience the most likely situation is that, due to the quirk in the French system that taxes married couples jointly, and due to the fact that your wife is resident, you will have to fill in a French tax return, declaring your worldwide income. That's perfectly standard - it applies equally to couples where one is French and the other UK resident. What then happens is that tax already paid on any of that income is offset against the liability in France (it isn't strictly true to say that income already taxed in UK, for instance, is not taxed again in France, as including that income can easily take you into a higher tax band). As you are not paying income tax in UAE, then it may well be that nothing can be offset against your French tax - but it all depends on what it may say in any doulble taxation agreement that exists.

It's possible (though in the light of what the EU has been doing recently, getting less likely) that an accountant may be able to legally 'lose' some of the income offshore, but that's definitely an area for professional help.

[powerdesal]

[quote user="Will"]

As you are not paying income tax in UAE, then it may well be that nothing can be offset against your French tax - but it all depends on what it may say in any doulble taxation agreement that exists.

[/quote]

Thanks Will, but therein lies the problem.

I will have to check but I strongly suspect that their will be no double taxation agreement with the UAE simply because the UAE do not levy income tax.

It obviously has a major impact on the salary required, and, as I said, I will most certainly be taking professional advice.

I do know that my French contractor friends (working for SIDEM, Paris) say that they do not pay French income tax as they are classed as "expatriates", similar to the UK rules. I don't know if this is a "special" dispensation from the French tax authorities because they are a major exporting company, or even if I am being correctly informed. Thats why I posted this question specifically to find out if anyone else has current information.

[Cjlaws]

There is a double taxation agreement between France and the UAE.
I think the part which will apply to you is this one:

Article 13

Professions dépendantes

1. Sous réserve des dispositions des articles 14, 15 et 16, les salaires, traitements et autres rémunérations similaires qu'un résident d'un Etat reçoit au titre d'un emploi salarié ne sont imposables que dans cet Etat, à moins que l'emploi ne soit exercé dans l'autre Etat. Si l'emploi y est exercé, les rémunérations reçues à ce titre sont imposables dans cet autre Etat.

2. Nonobstant les dispositions du paragraphe 1, les rémunérations qu'un résident d'un Etat reçoit au titre d'un emploi salarié exercé dans l'autre Etat ne sont imposables que dans le premier Etat si :

a) Le bénéficiaire séjourne dans l'autre Etat pendant une période ou des périodes n'excédant pas au total 183 jours au cours de l'année fiscale considérée, et

b) Les rémunérations sont payées par un employeur ou pour le compte d'un employeur qui n'est pas un résident de l'autre Etat, et

c) La charge des rémunérations n'est pas supportée par un établissement stable ou une base fixe que l'employeur a dans l'autre Etat.

3. Sous réserve des dispositions des articles 15 et 16 et nonobstant les dispositions des paragraphes 1 et 2, les rémunérations qu'un professeur ou un chercheur qui est ou qui était immédiatement avant de se rendre dans un Etat, un résident de l'autre Etat et qui séjourne dans le premier Etat à seule fin d'y enseigner ou de s'y livrer à des recherches, reçoit au titre de ces activités, ne sont imposées que dans l'autre Etat. Cette disposition s'applique pendant une période n'excédant pas vingt-quatre mois décomptés à partir de la date de la première arrivée du professeur ou du chercheur dans le premier Etat afin d'y enseigner ou de s'y livrer à des recherches.

4.() Nonobstant les dispositions précédentes du présent article, les rémunérations reçues par un résident d'un Etat au titre d'un emploi salarié exercé à bord d'un navire, ou d'un aéronef, exploité en trafic international ne sont imposables que dans cet Etat.

Toutefois, les rémunérations reçues par un employé d'une entreprise qui exploite en trafic international des navires ou des aéronefs, au titre d'un emploi salarié directement lié à cette exploitation, ne sont imposables que dans l'Etat où le siège de direction effective de l'entreprise est situé, lorsque cet employé possède la nationalité de cet Etat sans posséder en même temps la nationalité de l'autre Etat.

You'll find the whole document HERE 

Of course you must consult an accountant.

Hope that helps.

[powerdesal]

Cj,

Many thanks for that, unfortunately my French skills went into overload on the document, I have printed the extract and the full document and will (hopefully) persuade a French friend to translate it.

I think it was the "legalese" of this state and the other state etc which threw me.

Thanks again.

Regards

[Cjlaws]

Steve -

Very wise to get a Frenchman to translate it!

Basically Article 15 says that a French resident will not be taxed in France in respect of earnings in UAR (the other State) , unless he's there for no more than 183 days in a year AND the

remuneration is paid by, or on behalf of, an employer who is not a resident of UAR (the other State) AND

the remuneration is not

borne by a permanent establishment or a fixed base which the employer has in

UAR (the other State).

But please get proper professional advice. [;-)]

[mayenne53]

Hello

thw 183 day ruke does apply, but resident (France) married spouse makes things more complicated - accountant advise is required. Let us know what the outcome is.