Living in both France in the UK and employed in both

[mascamps.com]

Any thoughts on what the tax implications of doing the following:

1) Employed six months per year in the UK but on a "term-time" type contract ie receiving pay every month of the year from this employer; and

2) The other six months of the year working in France on a self-employed basis.

My thinking is that the UK employment would take precendence in that it would pay 12 months per year (albeit whilst just being "at work" in the UK for six months per year) and that therefore all tax, social security and health contributions would be payable only in the UK (including the income from the French job too obviously). However, I'm sure that it's not nearly so simple as that. For one thing, if the UK job did take precedence like that, would that mean that the self-employment in France wouldn't need to be registered with the Chambre of Commerce? To add a (hopefully minor) complication into the fray, there would probably be ongoing income (at a much lower level) from the self-employment in France during the six months spent in the UK.

I realise that there would be implications in and around the six month timetable in that sometimes more than 180 days (which I think is the yardstick for tax residency) would be spent in the UK, other times that 180+ might be in France (indeed more than 180 could be spent in both countries). I dread to even contemplate changing tax residency potentially on an annual basis but hopefully there is some sensible mechanism to avoid needing to do that.

 

Arnold

 

[Iceni]

I am pretty sure that the yardstick is 183 days and AFAIK this excludes days or arrival and departure - at least in UK.

IMHO you need professional advice but others on this forum will tell you differently. www.inlandrevenue.gov.uk is a place to start but does not adequately cover the rules in France where social security is the real nightmare rather than income tax.

From the info you have provided I think that I would opt for tax resident status in UK - because of the language and I have more experience of their "system" - thus avoiding the need to declare worldwide earnings here in France. UK rules on "where you are liable to pay" are fairly simple - they use the bum on seat method whilst you earn your money. The fact that you are paid over a 12 month period for 6 months work would not seem relevant.  

The scenario you describe has the potential for the worst of both worlds unless you are very, very careful.

Sorry to appear so gloomy but as an accountant in an earlier life I have seen how easy it can be to get it wrong.

HTH a bit.

John

not

[Opalienne]

I have another complicated situation in the same vein.   I am resident in the UK but my husband is resident in France since May.   He has a small pension that he receives directly into his French bank account and I transfer money from the UK every month for everything else.   He will have to complete his first French income tax return next year.  

What would be the most tax efficient way to do this?  Presumably he has to declare himself as married, even though we live apart most of the time (though we are not separated)?  And, if so, how does he declare the money I transfer, which will be already taxed in the UK?   And does it mean that I have to declare all my income to the French tax authorities?   I can see this getting very complicated.    I have asked French accountants but no-one seems to be able to give me a definitive answer.......    TIA for any help

 

 

[andyh4]

To Arnold first, I think you will find yourself in the position of being tax resident in both countries, and as John suggests you really need professional advice.  Certainly for my declarations to the UK tax authorities they were interested in periods over 90 days spent in the UK (not 180 or 183) - and that was being employed totally outside of the UK.  Working in the UK, will I think make you tax resident there, and living in France for more than 183 days, or intending to remain permenantly, or working in Frane will make you a tax resident there as well.

Opalienne,  again professional advice is what you need, since there may be some ways to fine tune your tax situation, but in your case I think it is simpler, you pay tax in the UK.  Your husband must declare your income on his tax return - but as taxed within the EU - so it won't be taxed a second time, but will be taken into consideration if there is tax to pay as a result of his pension.

 

[mascamps.com]

Hmmm. As suspected, not simple.

I thought this scenario would be complex but wife in UK, hubby in France beats that. Since the UK tax at an individual level Opalienne would be taxed in the UK for sure. However, France tax by family so they'd want to tax her too. Now there are dual tax agreements between the two countries so there shouldn't be double taxation but I can't see how that would really work unless both you & your husband were both taxed by the one place as all the tax (as far as I know) works at the family level therefore he'd be paying social charges etc. for you which in effect you had already paid. Not to mention the issue of joint bank accounts, ISAs, etc.

Further to my "little" question, I've been doing a bit more thinking and wondering about two areas:

First, taking the "6 months". That's 182/183 days so presumably the "where are you tax resident" question is really an issue of where you are more than 50% of the year. Now, I had been thinking initially that it would be a broad brush "6 months" but in practice there is around 3 weeks of holiday time in that and, in principle, the "6 months" in the UK might be as little as 160 days ie not sufficient to be tax resident. However, it's also possible the the "6 months" in France could also be as low as 160 days (or, more importantly, less than the 183 days for tax residency). I suspect that more likely the 183 days could end up being spent in the UK one year, France the next although, of course, since the UK & French tax years aren't in sync I imagine that it would be possible to be tax resident in France for, say, 2006 whilst also being tax resident in the UK for 2006/2007. In theory too, you might not reach 183 days in either France or the UK if you took a holiday somewhere else. Haven't thought through the implications of this paragraph yet!

Second, a potential simplification... the work would be for a UK government agency so I wonder if this throws out all the complications as you'd then be treated as a Crown Servant all the time and therefore "grabbed" by the UK tax authorities regardless of whether or not you were in the UK 183 days or not?

The 90 day business is related to whether they can "reclaim" you after you've made yourself non-resident in the UK as far as I know. Presumably that's also to avoid people going to three countries per year as in my paragraph above, thereby avoiding being tax resident in any of them: presumably if you weren't tax resident in any of the three you'd not pay tax anywhere (no doubt there's something in the rules somewhere to stop people doing that).

 

Arnold

 

[adrianpmills]

To Arnold - if you spend more than 183 days in a tax year in the UK you will be resident.  If you claim to have left the UK then your return visits must average fewer than 91 days per year since you left or over the previous four years, whichever is the sooner.

It therefore sounds like you are UK resident as your 'visits' exceed 91 days per year.

However, the french may also regard you as resident if you spend the majority of the year there - or on other determinant factors, eg:  if your family is based there - kiddies in school.

You could decide to remain UK resident and take precautions to avoid french tax residency, or you might consult the tax treaty tie-breaker rules to find out if there's a way of avoiding UK tax residency.  However, a possibility of dual residence would probably warrant professional advice as no doubt both tax authorities would seek to claim you.