Paid in UK, Living and working in France

[Heloise]

Hello. Can anyone let me know what the tax position is if you are working for a UK company operating in France, but paying through the UK system? We would be living in France on a permanent basis, over the 183 days, but our wages would be taxed by the IR. What is the legal position? Would it effect our healthcare situation as our employer wouldn't be paying French social security? Any help would be greatly appreciated as we're not sure whether to accept this type of job.

[Will]

Whether or not you are able to be resident in France and pay taxes etc elsewhere is something that comes up frequently here and at other similar forums. You will find some of the discussions using the search facility.

Without knowing all the details - there are of course exceptions to the rules - it would seem that the job could well be rather dodgy. If you are a French resident (and France applies several other residence criteria as well the Britain's 183-day qualification, making it more difficult to escape the net) you are obliged to declare your world-wide income, including that which has been taxed elsewhere. So any irregularities will certainly come to light.

You are right to be concerned about healthcare. You might be able to get treatment with an EHIC (which replaces the E111) but that is not how it should be done. In those cases where it can be done, mostly involving temporary assignments overseas, it needs to be supplemented by a form like an E101 issued though your employer. The DWP/Revenue & Customs booklet SA29 gives chapter and verse on social security in Europe and it is well worth getting a copy (it can be downloaded from the Internet).

I'm not saying the proposed job is illegal - but it does look, on the face of it, irregular. What should happen in these circumstances is that you would be employed by a French subsidiary of the UK company, under French employment law, which would pay French employer's social security charges, and you would pay the employee charges and be responsible for your own tax, in France.

[Deimos]

I am no

expert so go with what others say rather than my comment (if there are

conflicts).

 

[quote

user="Will the Conqueror"]

You are right to be concerned about healthcare. You might be able to get

treatment with an EHIC (which replaces the E111) but that is not how it should

be done.

[/quote]

 

I believe the EHIC (E111) will give you limited cover abroad

(from the UK).  The country you are

visiting will “patch you up” to a state where you can return to the UK for

proper treatment.

 

[quote

user="Will the Conqueror"]

it needs to be supplemented by a form like an E101 issued though your

employer.

[/quote]

 

An E101 needs to be applied for by your employer BEFORE you

depart the UK.  It is valid for one

year.  After that, if due to “unforeseen

circumstances” it becomes necessary for you to stay in France for a further

year an E102 would be applied for. 

These are for temporary posting from e.g. UK to France.  You are thus normally expected to return to

the UK after that.  There are quite a

few additional regulations around their use. 

“God knows” what would happen if after the E101/E102 you then changed to

permanent.  I expect there would be the

risk of a lot of backdating, etc. which would probably get very expensive.  when you have an E101/102, you can also get

an E106 (but from the HMRC/IR rather than DWP – different department).  In theory the E101/E102 route can go for up

to an EU limit of 5 years, but the French authorities never allow more that 2

years in total.

 

[quote

user="Will the Conqueror"]

I'm not saying the proposed job is illegal - but it does look, on

the face of it, irregular. What should happen in these circumstances is

that you would be employed by a French subsidiary of the UK company, under

French employment law, which would pay French employer's social security

charges, and you would pay the employee charges and be responsible for your own

tax, in France.

[/quote]

A tax adviser I asked about this once commented to me “its

expensive – which is why very few people/companies do it”.  I am possibly in a similar’ish situation –

working for a UK company living and working in France.  I recently discovered that my company had

done “absolutely no paperwork” for this. 

When I pestered them they went vague and started commenting about “it

was me who wanted to go to France”, etc. 

when I told them “the law” their response was “just let the French

authorities try …” and “there is no way on earth we are going to do that”, etc.

 

In my case (with such an employer), I felt I could end up

getting “caught in the middle” between French Authorities and UK employer.  In the end I resigned from the company –

partly as I needed to resolve the situation despite who was right and who

wrong.

I am told it is expensive for employers to do this,

particularly for few employees.  Not

only the high French employer NI contributions, but to maintain a French

company as well.

How successful you are would probably depend to a large

extent on your UK company (how rich, how much the “want to keep you”, If you

need to be in France, etc.)

Sorry if I sound negative, but maybe I’m biased by my own

personal situation.

Ian

 

[Will]

Ian,

What you have added is perfectly correct. You were wise to take the action you did - I can remember an earlier forum member who got stung for both employer and employee cotisations after her employer failed to set up a subsidiary to pay for letting her carry on some of her former duties on a part-time basis while living in France. I think she managed to negotiate a lower settlement, but even so...

The EHIC is comparatively new, and people are not totally clear about its correct use. The old E111 was quite plain - it gave temporary cover for visitors to another EU country requiring emergency treatment. But the EHIC replaces E109, E110, and E128, as well as E111, of which the E128 is perhaps the most significant - this was the form required by workers posted abroad, students studying abroad etc, i.e. people requiring more than just emergency cover. So some will tell you that EHIC is quite in order for those living and working in France, others will tell you it is not. If you are working (for an employer or self-employed) you still require E101 in order to actually join the French system.

My experience - though I am not God - was that there was no problem transferring to becoming a registered profession liberale in France on expiry of E101/E102. There was no question of backdating. I don't think an E106 could be issued after two years of E101/E102, and there would be little or no point in having one concurrently - the only practical difference is that some CPAMs will issue a carte vitale with E106, most will not do so with E101 due to its 'migrant worker' status, CV merely easing the process of refunding medical fees, E101 still entitles you to refunds. CLEISS in Paris will only normally allow two years of E101/E102, and this seems to be DWP's favoured limit too, though I have been told of people working on these forms for eight years in Germany. Not every type of work is eligible for cover under E101 etc. No doubt others may have had different experiences.

I would advise anybody to read booklet SA29 from DWP which fully explains the various E forms etc.

There is a myth in circulation at present that new rules allow people living in France and paid in sterling to pay tax and NI in Britain; as far as can be ascertained this is a myth, or at best a half-truth, probably put about by unregistered workers to justify their dodgy status.

[Later]

 I'm trying to figure this out for myself.  Took some advice last week and was told that I would probably pay 50.4% equivalent of income tax and NI and my employer (in my case my own small company based in England) would pay a whacking great 40% cotisations on top of that.  Which means that for every euro I received the French authorities would get something like €1.80 (and they will get some VAT on top of this amount).  That is, in order for me to get €1 in my pocket, I have to earn €2, half of which goes in income tax and cotisations that I am due to pay, and then on top of this my employer will pay 40 cents for each of the two euros I need to earn in order to get my €1, which means my employer will pay an additional 40 + 40 = 80 cents.  This means my employer needs to generate €3.32 (with VAT) just so I can have €1. 

[Opalienne]

I recently met someone who lives in France, is employed by a British company, and pays tax in France and NI in England.   I asked how this was possible and he didn't really know.   Can anyone throw any light on it?  It sounds strange to me......

[bejay]

Heloise and john.

If you haven't done so already have a look at the post " Reducing cotisation payments" on the Earning a living in France page. It discusses  similar situations to yours. Its not very encouraging I'm afraid.

bj

[Later]

BJ thanks for bringing that to my attention.  It's very sobering indeed. The IT consultants in those posts were saying they pay 60% stoppages on their income. That means they work for eight months of the year just to pay their income tax and other charges.