Blade Posted January 1, 2006 Share Posted January 1, 2006 i was told by an accountant a while back that this is an interesting way around things. anyone do this? advantages or disadvantages? well worth being a uk or france tax resident? Link to comment Share on other sites More sharing options...
Nick Trollope Posted January 1, 2006 Share Posted January 1, 2006 [quote user="Blade"]i was told by an accountant a while back that this is an interesting way around things. anyone do this? advantages or disadvantages? well worth being a uk or france tax resident?[/quote] Nope, it won't excuse you from complying with French regulations. Link to comment Share on other sites More sharing options...
Blade Posted January 1, 2006 Author Share Posted January 1, 2006 what french regulations are they? why would accountant say this then? Link to comment Share on other sites More sharing options...
hastobe Posted January 1, 2006 Share Posted January 1, 2006 Even if your company is resident in the UK (and you would have to beable to prove that all management and control decisions were made inthe UK - i.e. directors/key staff etc resident in UK and holdingmeetings in the UK) you would still be liable for French taxes. Under the terms of the UK: French double tax treaty if you have anoffice or even an agent in France who has the authority to concludetransactions (take orders / agree terms etc etc) then you would have a'permanent establishment' aka a French branch. Any activities(read profit) of this French 'branch' would be taxed as thoughit was a company resident in France. The UK company would then besubject to UK corporation tax on all its profits (including those of theFrench branch) but it would get relief for any tax paid inFrance - to the extent that it was less than the UK taxdue. So in actuality you would make your affairs morecomplex.Other considerations - if your UK company owns property and has lessthan five shareholder (broadly!) it could be classed as a 'closeinvestment holding company' and so automatically pay the full rate ofcorporation tax. It would have certain other reliefs denied to it- substantial shareholdings relief/business assets relief/certain IHTreliefs. In addition, using a company to own property issomething you should do with care as gains made on any properties couldbe taxed twice - once in the company when the property was sold andagain when the profits were extracted from the company. Inaddition if any employees (e.g. directors) of the company (or, in somecases, family members) used the French property (say for holidays) thenthe director/employee could be liable to UK tax on the 'benefit inkind' (I say could, as it would depend on other things such asrelationship with director, any amounts paid for the use, levels of UKincome etc etc).Btw - am new here - hello everyone :)Hastobe Link to comment Share on other sites More sharing options...
Nick Trollope Posted January 1, 2006 Share Posted January 1, 2006 [quote user="Blade"]what french regulations are they? why would accountant say this then?[/quote]Was he an English acountant? Why would you expect him to understand French law?And don't try to rely on "free movement of goods and services", these regs do not override local regulations.If you want an exact answer, ask a qualified French person - you could start with the Chambre de Commerce, their advice is usually free. Link to comment Share on other sites More sharing options...
Blade Posted January 1, 2006 Author Share Posted January 1, 2006 was a tax specialist uk/france. will review further and maybe renew contact to understand further.[quote user="nicktrollope"][quote user="Blade"]what french regulations are they? why would accountant say this then?[/quote]Was he an English acountant? Why would you expect him to understand French law?And don't try to rely on "free movement of goods and services", these regs do not override local regulations.If you want an exact answer, ask a qualified French person - you could start with the Chambre de Commerce, their advice is usually free.[/quote] Link to comment Share on other sites More sharing options...
0zeb100ddMMyyyy0Falseen-USTrue Posted January 1, 2006 Share Posted January 1, 2006 HelloIt's a bit pointless relying on most CCI's in my experiance they don't know where their butt is.Regards Link to comment Share on other sites More sharing options...
hastobe Posted January 1, 2006 Share Posted January 1, 2006 Nick, you say that English accountants / tax advisors do not understandinternational (aka French) law and cross border transactions butapplying that logic a French accountant would also be useless as theywouldn't necessarily understand the UK tax implications of a particulararrangement. (No offence Nick!!)There are a whole range of accountants (both in France and the UK)ranging from those who are best left to preparing basic accounts forsmall businesses / dealing with straightforward domestic taxliabilities to those who are competent in dealing with very complexbusiness and tax issues and a whole range in between. You pay your money and take yourchoice. If your affairs are more complex, my advice would be not to go for a cheaper localaccountant but use an office of a larger practice - whether that be inFrance or UK. Imho - there are very few easy loopholes to avoid tax or compliance with regulations - most are wishful thinking and hearsay!Hastobe Link to comment Share on other sites More sharing options...
Nick Trollope Posted January 2, 2006 Share Posted January 2, 2006 [quote user="hastobe"]Nick, you say that English accountants / tax advisors do not understandinternational (aka French) law and cross border transactions butapplying that logic a French accountant would also be useless as theywouldn't necessarily understand the UK tax implications of a particulararrangement. (No offence Nick!!)Imho - there are very few easy loopholes to avoid tax or compliance with regulations - most are wishful thinking and hearsay!Hastobe[/quote]No I did not. I asked if the OP expected a UK accountant to understand French regs. I can't speak for all tax advisers - I don't know them! My experience (20 years of running UK businesses, couple of years running French ones) and that of the Forum (plenty of posts if people bothered to search for them) suggest that the Authorities here have the situation pretty well stitched up. As you suggest, wishful thinking. Link to comment Share on other sites More sharing options...
Will Posted January 2, 2006 Share Posted January 2, 2006 There are always dangers in trying to bypass the system. You may, by following that proposal, save a small amount of personal tax in one country but leave yourself open to paying out more in company taxes in both countries, plus high French social charges for example. Something that may save a bit of money for one type of business may be totally the wrong solution for any other enterprise.There is, unfortunately, at least one 'tax adviser' who proposes solutions like this in magazine articles and on web sites - even gives examples. You then pay handsomely for them to look into setting you up in the 'most tax efficient' way. Then, after your 1000€ + expenses + TVA (or whatever - that's the sort of sum I have seen quoted) has been paid, you get the advice to register your business in France - which you could have done anyway.The French Chamber of Commerce in London publishes a book about setting up in business in France, which is well worth reading. You will find in that book that there is no reason why you cannot continue to use a UK limited company, but for most activities, to comply with French law; you have to employ yourself through a French subsidiary, which means in turn that you have to pay both employer and employee cotisations, and you are bound by French employment laws, amounting to far more expense and bureaucracy than just setting up in France in your own right.We always advise people to take professional advice. That advice stands, but make sure you choose a qualified and suitably knowledgeable professional, who comes on recommendations of others, rather than dubious self-publicity. Link to comment Share on other sites More sharing options...
hastobe Posted January 2, 2006 Share Posted January 2, 2006 [quote user="Will the Conqueror"]We always advise people to takeprofessional advice. That advice stands, but make sure you choose aqualified and suitably knowledgeable professional, who comes onrecommendations of others, rather than dubious self-publicity.[/quote]Exactly Will - 'accountant' (French or English) does notnecessarily equal expert in expat tax (of whatever flavour) - in fact'accountant' doesn't necessarily mean expert in tax period! Iwasn't trying to be antagonistic to Nick - just trying to point out that to theOP'er (in general terms) some of the particular issues that would arisefrom using a UK company. Btw Nick - I'm also pretty experienced - currently acting group head oftax for a pretty well known bank and was previously a senior managerworking in international tax for a large office of one of the big fourinternational accounting firms. Experience was primarily US,Danish and German tax but also did some French tax work. I'vealso been in the profession for twenty plus years. Hastobe Link to comment Share on other sites More sharing options...
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