UK employee, French tax?

[BJSLIV]

The reason I used the word intellectual was to distinguish it from carpentry or such like where things are physically and obviously being done in France.

I agree with what you are saying, but there are some who would claim something along the lines of "I am still doing exactly what I did before, for a/my company back in the UK. Its just that the computer is on a long lead so the output is still in the Uk. So thats where thye work is being done and where I will be taxed"

I thinks its wrong, but that is the logic that some are following, and it must be  hard for the authorities to track down, unlike a wall or a roof, and we all know that there are enough people getting away with obvious work like that.

[Richardbk]

'But if I'm not mistaken, you'd still have to pay social contributions in France if you are resident there'

No... we've just been through this above. If you are a border worker in the EU and you are in effect a regular commuter you are allowed to pay tax and NI in the country of employment. A border worker in EU terms is defined as returning to place of residence at least once per week. Residence is for example where your family is installed. The country hosting your company of employment provides you with a E106 , or other means to enable you access to the services in your resident country. In addition you are entitled access to services in the country that is hosting the company. Note that this only works if you are employed by a single company. If you do work in multiple companies and / or EU countries you will be taxed in the country of residence.

A teleworker based in france is clearly performing the work in france  they will pay tax and NI in france.

The grey area concerns those teleworkers that are performing some work in france and some in the UK. Clearly it is difficult to track this. However, if you take the EU directives as currently defined these people should be paying tax and NI in France since they are clearly performing their activities in more than one EU country.

regs
Richard

[Will]

I thought that the E forms covered solely social benefits rather than taxation, though I agree that in practice it comes down to much the same thing as one generally has to pay social contributions in the country in which one's main income is taxed.

I think you'll find that the various E forms are fine for temporary or short-to-medium term arrangements, but in practice there is a time limit. The forms have a period of validity, mostly of one year, though I believe the E106 can last for two years. When the forms expire, they have to be renewed by the country that issued them (e.g. Newcastle for UK), but only if the renewal is accepted by the relevant authority in the country in which the person is working (e.g. CLEISS in Paris for France). EU guidelines allow, I believe, a maximum period of five years of being based in one country and paying charges in another, though this is at the discretion of the country in which you are based, and CLEISS in France will, I'm told, only very rarely agree to a period longer than two years.

It may be that if you travel between employment and residence on a weekly basis there is yet another arrangement, but I don't know why, or how the authorities would know in a Europe that is supposed to allow free movement.

It all boils down to EU guidelines being very complicated, and open to so many variations and interpretations - the chances of being able, legally and long-term, to live in one country and pay your dues in another are pretty slim, and is it really worth the aggravation?

Those who choose to live in France need to embrace all aspects of living here, you can't only take advantage of those parts that suit you.

[Richardbk]

"I think you'll find that the various E forms are fine for temporary or short-to-medium term arrangements, but in practice there is a time limit. The forms have a period of validity, mostly of one year, though I believe the E106 can last for two years. When the forms expire, they have to be renewed by the country that issued them (e.g. Newcastle for UK), but only if the renewal is accepted by the relevant authority in the country in which the person is working (e.g. CLEISS in Paris for France). EU guidelines allow, I believe, a maximum period of five years of being based in one country and paying charges in another, though this is at the discretion of the country in which you are based, and CLEISS in France will, I'm told, only very rarely agree to a period longer than two years."

 

There are  no time limits on cross border worker arrangements.  You can be working in one EU country and living in another for the whole of your life. The EU regulations in this area are very clear. as long as you are commuting, you can continue to pay TAX and NI in the country where your employer is based. Whether the UK says it will issue for upto 2 years is another issue. Clearly under the EU arrangements for cross border working the UK is oblidged to continue to issue the E106,  or some other mechanism that enables access to health care in France. If not then there is a very good case for raising a complaint to the European Commission, which is in fact a very simple and cost free process , which you can start by simply filling in  form on the web. However, for some EU countries there are bi-lateral agreements and in some cases taxes  are paid in the country of residence. E,g Benelux <-> france.  I do not think there is currently an arrangement between FR and UK, although this would need to be checked.

Another interesting aspect of this is that if you do pay NI in another country, you are completely exempt from CRDS/CSG taxes, which have recently been deemed by the EU to be social taxes, and since the NI is paid elsewhere the French government has no right to claim these on any of your income, either direct or indirect.

regs

Richard

 

 

[Will]

I wish you luck in what you are doing. I'm beginning to rather like your suggestion. Genuine cross-border commuting is a practice that is fairly common in Europe (and not just the EU - plenty of people work in Switzerland and live in France for example), and I can see how this could be applied if you work on a regular basis for, say, 3-5 days in UK and return to your family in France for the other 2-4 days of the week.

In practice though I don't see how the authorities could discriminate against doing some of your work at your employer's premises and some at home. So I think I understand about travelling between UK and France at some point once a week to make it appear you are a genuine commuter. The word 'commuting' as opposed to just 'working' seems to be the key issue.

I'd still be cautious though before committing to such an arrangement, as the French are notorious for putting their own interpretation on EU directives and getting away with it. The UK eventually reimburses France for sums paid out on E forms on behalf of its citizens so I can't see that going down too well with the UK government if the idea catches on. I'm still not sure either about the E106, or the long-term entitlement to reciprocal health access, especially as the new European health card (AKA the E111 replacement) is to be used for those working in other EU member states as well as those just visiting, this replacing some of the E forms for this purpose, and that has a validity of one year.

The CRDS etc loophole is interesting - I wonder how long it will be before the French manage to close this? Just guessing, but the difference in residence qualifications for tax purposes between various EU countries might enable France to claim people are liable for these extra charges even if they are not actually paying tax in France.

What I am certain is not legally possible in the long-term, and this is what the original discussion was about, is to avoid paying French tax and social charges when you are actually carrying out the work in France, even if it is solely for a UK company and paid in sterling.

[BJSLIV]

When this subject cropped up last year, I thought that the final outcome was that there was no acceptance in France and/or the UK of the concept of Border working.

I suppose thats the problem with these Pub Based Lawyers , depends on who is in there for a drink at the time.

[Tink]

>>I do not think there is currently an arrangement between FR and UK, although this would need to be checked.<<

I checked that last year. There is no agreement between FR and UK, mainly because Border workers are also bound by a distance and certain areas (like Alsace and Germany). The distance UK<->FR has always been considered too far. There has been plans for a border worker regulation in the Euro tunnel area because there were plans by the UK government to allow workers to take up resident on that part in France. However this plan has died out and I haven't heard of it again.

We indeed discussed the same topic last year and as far as I know the regulation hasn't changed.

If needed I can look up the link of the Border Worker Regulation website.

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Tink (22)

[Richardbk]

some info ...

http://europa.eu.int/comm/employment_social/fundamental_rights/movement/guide_en.htm#6

note that this is the default regulation. It is only overridden in the case that there are specific bi-lateral agreements. If there is no FR-UK agreement then this is the framework that applies.

note also the definition of frontier worker - there is nothing in respect of distance to border etc, it is simply base don the notion of working in one country, whilst residing in another.

http://europa.eu.int/citizensrights/index_en.cfm?action=guide&guide=working#3.10

regs

Richard

 

 

[Perdigots]

[quote]In very round figures, employer contributions can amount to some 40% of your salary, and employee contributions of 20-25%, depending on amount. So expect to retain about a third of what you will be pa...[/quote]

Re your figures Will on employee and employer contributions totallying 66% - I have to say these have somewhat terrified me! 

 I am French resident, and am looking to work here in France for a UK company. I am trying to find out what sort of French taxes and social charges I would have to pay.   I am trying to find out the specific rules that apply in detail, and the bottom line I am trying to find out is how much of my salary therefore would I need to allow for paying my tax and social contributions i.e work on 25%, 35% etc. 

My husband currently does some parttime teaching work in France for a French company, for which he is regarded as a salaried employee.  Of his gross pay, his cotisations come to about 40% of which his employer pays about 70%, and he pays the remaining 30%.  At the end of the year he declares this income and then pays the appropriate tax on it.  My question is,  working for a UK company in France as a french resident, would this not be roughly similar to working for a french company as a french resident, the only but significant difference being that you are liable for the employer contributions as well?

Any thoughts on this would be gratefully appreciated, as I can see from the forum that several of you have already wrestled with this one, and we are just trying to find out if we are looking at losing 40% or 66% of our gross salary, before we leap in!

Thanks, Sheralee

 

[Tink]

>>Any thoughts on this would be gratefully appreciated, as I can see from the forum that several of you have already wrestled with this one, and we are just trying to find out if we are looking at losing 40% or 66% of our gross salary, before we leap in!<<

I'm afraid Will is right. My husband worked for a German/US company here in France. We consulted a French accountant before agreeing to this contract, he added his contributions and the employers contributions to his salary. Which than added up to almost 60%. However we couldn't know exactly what the amount was going to be because it's all really confusing. Now we're 3 years later and it turns out that it's more than 60%. I think Will's 66% is much closer.

The French scheme of taxes and contributions in the 'Profession Liberale' is laid out in years.

Year 1, pay little because you do not have a tax history or know what your income is going to be. Based on a low figure they want you to make payments.

Year 2, now pay more because you have filed a tax form which states you income. Based on that AND what you payed less last year you have to make payments. You'll have to catch up.

Year 3, your income stayed the same but you made high payments, this year it's going to be leveled out.

Year 4, you finally have stabilized your income and tax situation and now hopefully have a clue what your monthly payments will be.

So you see, that's why they also say that even though you do not have made much money (as is the case for people who are in the hospitality business) you still have to make payments until you can file a tax return.

My advice would be to visit a French accountant who can tell you how much your gross income need to be to stay on the same level as you are now while being taxed in the UK. He can give you a rough figure which may be 3 or 4 % off but overall you know how much you will need to make.

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Tink (22)

[Will]

The 66% is a realistic figure, but is a bit of a worst case figure, as it is what would apply if you ended up paying both employer and employee social charges - nevertheless it is something that can feasibly happen unless you get things right at the outset, so advice from somebody qualified in French financial matters is essential.

As a profession liberale social charges are likely to be more in the order of 30-40% depending on several variables like how much you actually earn. Again, professional advice would be a very good idea.

Don't forget this is just the social charge - you also have to budget for income tax, which appears to be rather similar to or slightly less than you would earn as an equivalent self-employed person in UK, again depending on what expenses etc you are entitled to claim.

[Perdigots]

Thanks for replying so quickly! This has given me lots of food for thought, and I don't have all the answers yet - but I'm confident I'll get there! Am going to do some ferreting over the next week and I'll report back if I come up with anything useful - Thanks again, Sheralee

[Lavie]

Could someone please confirm:

a 'micro bic' is a small business with turnover under 29,000 euros (unless running a gite or b&B)

an 'enterprise individuelle' is a one man business with a turnover more than 29,000 which involves TVA payments

so what is a 'profession liberale' as mentioned by Will earlier? As i can't even see this mentioned on the APCE website  

[Will]

It would probably have been better to say Travailleur Independant - basically anybody self employed who might not be an EARL. A Profession liberale tends to be somebody operating as a professional, like a consultant, within the travailleur independant framework.

[Lavie]

Thk u for explaining that.

[AnnaJAnna]

Another message for Steve here. Steve, my husband and I wish to move to France on the basis that he will continue to work for his UK employer, with the work taking place in France. You mentioned that your payments for employer and employee contributions came to around 43%. There has been some other posts which have mentioned contributions of up to 66%! Do you have any idea of how your 43% is broken down, ie, what percentage is paid for employer/employee?

Kind Regards,

[BJSLIV]

what percentage is paid for employer/employee?

What comes as a nasty shock to  people who make some informal arrangement with their UK employer, is that they end up effectively paying both the employers and employees share. This is because most employers don't want to get involved in setting up French branches , dealing with the french authorities,for the benefit of one employee.

Even if you cut a deal for the employer to increase your pay to reflect their savings in NI costs, the employee can loose out due to the much higher level of charges in France.

 

Beware.

 

[AnnaJAnna]

Yes, that part is understood. I was interested in undertstanding how Steve's 43% total contributions (employee and employer) was broken down. This is quite far away from the 60+% Will quoted.

Thanks.