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Here goes again!  I'm in the throes of making a final decision about relocating from the UK to Pas de Calais but am still pretty unclear about whether the French taxman will allow me to afford it.  I'm self employed and earn a pretty small amount, c 25k sterling, which is liveable on with the relatively benign system of taxation and allowances in the UK.  If I relocate, my main business expense will be the travelling costs (fuel, ferry) to get to my clients in London.

Can anyone give me some sort of guidance on whether these expenses are allowable for self-employed people in France and roughly what I might expect to pay in terms of tax and social charges?  I've tried the "DIY" system on www.impots.gouv.fr but it's geared mainly towards employees and doesn't offer much information for the self-employed.

Having made more than my fair share of bad moves and stupid decisions over the years I'm keen to try my best to get this one right - I much prefer life in France and can't really afford to buy a place in the UK anymore after the ex is paid off but I also do need something to show for my efforts after the taxman has had his cut!

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You are simply talking about income tax on the impots web site. If you run a business here you will be hit far harder with the cotisations.

Have you spoken to anyone in the Chambre de Commerce about this?

A couple of web sites for people setting up businesses have been mentioned in the last week or so on here.

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Hmmm, you're not kidding, TU!

Unless I've confused my self totally, the URSSAF site tells me that, on an income of 40k euros and with no exonerations, my first full year's cotisations would be 4,795 euros, the second 5,793 euros and the third 25,736!

Does that sound feasible to anyone?  If those figures are correct, it's hardly surprising that so many people work on the black or that TK gets so upset about it.

Is it a case of deducting the equivalent of personal allowances, allowable costs etc first or does one, as I did, use the gross income figure?

Someone/anyone, tell me I've missed something obvious here!

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Sounds about right to me.

Work it out!  The rule of thumb, yes there is one.  The taxes, cotisations roughly work out between 60 - 70% of turnover.  And yes I did say TURNOVER.

Shocking, I know but true.  Not good to be tax resident as a business in France.
Deby

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And I am correct in understanding that a self-employed individual is required to be registered as a business of some sort, am I not?

Looks to me as though a lot of money invested in passports for pussy-cats was a bit of a waste! 

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As a sole trader you have the choice of registering as a business (SARL, EARL etc) or travailleur independant - the latter is usually simpler, particularly if you can come under the heading of profession liberale or similar (which means you probably don't have to do a business course, and can register direct with URSSAF rather than through a chambre). What seems 100% certain, and take the advice of those who say otherwise with a large pinch of salt, is that you have to register with somebody, get a SIRET number and pay cotisations.

Those who choose to live in France have to live according to the French system - the fact that it is more expensive, more bureaucratic, and less convenient than working in Britain, as well as being more difficult to understand, is no excuse for not doing so. If Kayjay is having second thoughts then now is the time to have them. Please don't join the band of those who didn't do their homework, thought they would be OK, but can't manage here in France.

For what it's worth we manage on a somewhat similar amount to that you originally mentioned plus what is left from Mrs C's part-time SMIC salary after things like car expenses (which she has to cover from the salary) are taken into account. In Britain, and when we first came here, I needed more work from other clients to exist. We are far from rich, but better off than many British here. If you need to travel to UK to visit clients then it is deductible, as are many other things. Your accountant will advise.

 

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If you are going to be returning to the UK to see clients and work, can you not remain domiciled in the UK as far as tax and N.I. is concerned?  You still have to fill in a French tax form but if you have a limited company in the UK, I believe it's only your drawings as an employee of your company that the French taxman is interested in and you will have paid tax in Britain anyway.

If you can use an U.K address, such as your accountant, it might work.

Depending on how much of your work you actually do whilst in France, I would have thought it might be worth regarding your French home as a maison secondaire.

I'm sure that other people may regard that as the wrong way to do things but if you can find a French accountant it could be worth seeing what they think of that scenario.

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Unfortunately, La B, it's not what I regard as my most convenient domicile but what Monsieur Impot does!  If I take up permanent residence in france, or spend 6 months and a day there, or even spend more time in France than anywhere else I believe, then he will deem me to fiscally resident there.  I don't fancy a van-load of flics on my door-step, nor a few days of dry bread and water, even if it is baguette and Perrier!

A little more research on the URSSAF site reveals that if I were earning 25,000 euros a year I would pay cotisation of 4,795 then 3,797 and 17,318 in the 3rd year!  How on earth is anyone expected to run a business, eat and pay his bills on less than 8,000 euros a year?  It's certainly no wonder that the black economy is thriving while the rest of the economy is in the doldrums...

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La B's solution will work if you are actually physically in UK when you do the work- rather than just visting the clients in UK. But if you do the work in France you come under the French system. I know, I am in exactly that position myself (we even have a house in UK which is not rented out, and where I live during my frequent trips back, so would not need an accommodation address). There is the question of 'how do they know' which some might think worth taking a chance on. But I'm not prepared to take the risk - amassing enough ferry tickets with the right dates on to prove you spent enough time in UK to do the work would, certainly at Brittany Ferries' fares, outweigh any tax saving. I don't see the UK tax man allowing many trips to what would be your French holiday home.

You would also have to work a fiddle with E111 or EHIC for your health care - maybe OK if you only need emergency care but definitely not kosher for most regular treatments.

The idea of having a UK limited company and employing yourself in France is quite legal, and is in fact put forward by some 'experts' as a way of saving personal tax. This it may do, but French law says that for an overseas company to employ anybody in France, other than on a short term basis, the foreign company has to set up a subsidiary in France. That lays you open to two lots of company taxation, and - here's the crunch - all the costs of registration and social security charges that you would have to pay if you just registered yourself in France. In fact, under this arrangment, you end up paying both employer and employee social contributions, so most people are likely to end up quite a bit worse off this way.

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Echoing what Will has already said, it would be very wise to talk to an accountant (French) at the earliest opportunity. There are many possible regimes under which a business can be established depending upon its precise activity. Micro regimes, for example, can provide considerable benefits in terms of cotistations and income tax, though they have some marked downsides too. The accountant may want paying for their advice, of course, but you may find a few hundred euros spent now well worth the expense.
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[quote]La B's solution will work if you are actually physically in UK when you do the work- rather than just visting the clients in UK. But if you do the work in France you come under the French system. I kn...[/quote]

Are you sure about that, Will?  My understanding is that you had to pay French tax on your world-wide earnings if you were fiscally domiciled in France.  Like you, I guess, I would have to go to the UK to actually work at my clients' offices but, as I said, I was under the impression that Monsieur Impôt had already sussed that one out.  Or are you saying that the UK address would be my UK company address, in which case the UK tax man wouldn't allow travelling expenses as that would, I believe, constitute commuting to work?
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Kayjay.

I regret being negative but read the posts of 'The winter of my discontent' in Postbag of this forum.

I have been a 'sole trader' in France for a long time. It's really a hiding to nothing registering in France. Keep registered in UK it will save you agony, frustration and poverty. Live in France yes. Operate a business, forget it.

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Kayjay, yes I am pretty much sure about that. The advice to hand, and previous discussions on this forum, suggest that under those circumstances you may well count as fiscally resident in both countries, depending on things like whether you spent the statutory 183 days in UK and had a main home and/or dependents in France. As you carry out the work in Britain, you will be taxed in England. If fiscally resident in France you would declare the income in France, but would not be taxed again as a double taxation agreement exists between the two countries. You would of course need a valid British address.

What in the way of commuting/travelling expenses is allowable for self-employed people taxed in the UK is a complex subject in itself, and one on which you would need to take professional advice. My understanding from when I was last taxed in UK is that regular travel to the same place of work would not be allowed, but if you worked for several different clients you could claim travel expenses, also if you normally worked at your home or office you could claim for travel from there to consult with your clients. You would not be able to claim for travel from your UK address to a French holiday home, (unless you needed to see a client, go to a conference, carry out research etc. nearby).

It is a rather special case, and won't suit everybody. There are loads of possible pitfalls, so if you were considering this you would need to take advice from good accountants and/or the UK Inland Revenue to ensure it would work for you, and your family.

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I had thought about that, La B, but it seems that property prices are quite a bit higher north of the border!  Also, it's not the tax that's the killer but the cotisation payments and I haven't a clue what those are like there.

Anyone en Belgique reading this?

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