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Earned income in UK, live in France


Lori

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I know this has been covered before, but I can't seem to find the recommended websites to research the issue. If husband works for a UK company, all income earned in UK and taxed in UK, but is a computer software engineer and spends a good deal of time doing this work out of an office in France, but is totally paid in the UK to a UK bank account, does he have any tax liability in France. No income is paid to him (or anyone in the family) in France and ALL income has been taxed in the UK. If I remember most of what I have read on this forum, the answer is he has no tax liability in France because he did not earn anything in France and what he did earn was in another country and already taxed by that country. Can anyone offer a website that might clarify this issue (French or English - matters not). Thanks again, and sorry for bringing up what I'm sure has been covered to death....

Lori
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Sorry to sidetrack slightly, I'm afraid I don't have a link for you.

But from the point of view of you and your family, as you live in France, you do need to think about access to the French health and social security services. To do this you need an E form (e.g. E106, E101, not E111); to be employed by a French employer or to be registered self-employed in France, which will mean you need to be in the French tax system.

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Lori,

No that's not possible. The French system does not have a solution for that , yet.

We had the same situation but with a German company. The French law states that is you live here, work here you should pay taxes here unless you can qualify as a border worker.

Border workers are subject to strict rules and laws and working in the UK 'virtually' does not qualify as such. My husband is a Software Engineer as well and has his home office and works for a German Linux company. Only solution is that his employer opens up a subsidiary here or that your husband becomes self employed as a Profession Liberale, We chose the last option as his employer didn't want to go the other route.

Make sure if he choses to become self employed that he adds 20% on top of his current income that he will need to pay to French taxes and social security. That part is now paid by his employer.

The virtual office is becoming more and more popular with IT people. Lots of people see the benefit in working from home and choosing to live where you like. In the US it's very common to do so and the whole business society has accepted that. However Europe and France in particular are struggling to catch up with this especially since working in another country has become easier for IT people. Law and taxes are till way behind this new way of employment and they are working on new rules and law but so far no solution has been found.

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Tink (22)
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Thanks Will & Tink:

Will, we have purchased private medical insurance coverage that covers us in France and anywhere else in Europe. We renew this each year, so we are not a part of the National French Health System. Our issue is strictly an income tax one.

Tink, I should clarify that my husband is an American, working for the London Regional office of an American company. He has NEVER lived in France (but is considering working out of our home in France for one year - still for the same company, but what they call - and I'm sure you are familiar with the term "remote"). I live here with my daughter, but I do not work and have no French income. My husband could (but this is the main question) continue paying income taxes, etc. to the UK, where he is paid. He would prefer to do this, but we can't seem to find where the law is written to cover this issue. Have found all the descriptions of "fiscal domicile" in the French government websites regarding to income taxes, but they do not cover this type of situation. My husband does not have a carte de sejour for the moment. He has never needed one as he has never lived here. I do have mine and have renewed it each year. How would he be liable to France when there is a non-double taxation law with the UK?? I just can't seem to find the law on this. Any further help you can offer would be appreciated. Perhaps we will just have to find a good Accounting firm and make an appt. .. Still not sure. We would like to remain within the law, but it is so hard to find out WHAT THAT LAW IS??????

Thanks again to all who can offer any help.

Lori
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Lori,

Perhaps this quote from the PKF book “Guide to Taxation in France” will help:

 

“Under French domestic law, tax residence (domicile fiscal) for individuals is determined according to three criteria, the first of which is in reality two separate tests - the “home” and the “principle residence” tests. If any one of the tests is satisfied the individual is considered to be resident in France for the tax year.

 

His home or principle residence is in France. The concept of home (foyer fiscal) embraces the notions of stability and permanence. It means, for example, that a person will be considered fiscally domiciled in France, even if he himself works abroad, if his wife and children live in France.”

 

It then goes on to state:

 

“The “home” test takes precedence over the “principle residence” test, and if it is possible to determine the place where a family usually gather or live, the time spent criteria (183 day rule) can be ignored.”

 

This appears to cover your situation, however if I were in your position I would speak directly to PKF and pay for a proper financial and legal consideration of your situation. You can contact PKF on 0044 1481 72 79 27.

 

Hope this helps.

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Hello Les Lauriers: Love the picture of the dog. Is it your dog?

Yes, we read the description of the domicile fiscal definition. My husband currently has an apartment in Glasgow where he lives. If he took a year to work out of our home in France, he would give up that apartment. Therefore, it "sounds" like he would be fiscally domiciled here in France as he would be living here with us and he would have no other domicile. However, how does this come into the double taxation issue? Perhaps this is not know or not clear. We will, most probably, make an appt. with an Accountant here in France. My husband's tax returns are prepared by Ernst & Young. They have an office on the Cote Azur, so we will probably inquire with them. It is interesting the description of Fiscally Domiciled. We understood this to mean where you are housed and paid. It is unclear where the paid, but housed elsewhere situation is covered. A bit complicated. By example, if he is to stay in France for five months, then leave and work in Glasgow again for a month or two, then come back, could he avoid the need for a carte de sejour (not here six consecutive months)? If he is not a resident or temporary resident of France, and he is paid in the UK and taxed in the UK, how can France have a claim on his income? I can see we need professional advice. If anyone knows of a good Accountant in the Vaucluse - or nearby (Avignon), we'd love to hear the name.

Thanks to all for the help offered.

Lori
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Lori,

As an American doesn't he need a visa to work in the EU?

Besides that, anyone staying or planning to stay longer that 90 days in france has to apply for a Carte de Sejour. That was the law. For EU citizens that has changed since this year and the need to apply for a CdS has gone. However we still applied for an extension and are awaiting our official document of denial so we can show that to officials who still ask for a CdS as identification.

For a long stay visa for an American citizen(longer that 90 days) see the website of the French embassy at http://www.info-france-usa.org/visitingfrance/usvisas.asp and scroll down to Long Stay Visa. Also see http://riviera.angloinfo.com/information/1/cds.asp

As I said the French law doesn't provide a solution for these new kind of workplaces. They will give you the option of either register a self employed or the UK employer must establish a subsidiary in France.

We used an account to sort this out for us who's located at the Cote d'Azur . I will have to look up his name as my husband is on a conference at the moment. But I would think that Ernst & Young are more than qualified to do so. They know his situation and have his files so I would try them first if i were you.

Please keep us posted, would like to know what they think his options are.

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Tink (22)
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Lori,

Further to my earlier reply, I was assuming, wrongly, that as you described your husband as a UK taxpayer, that he is British, or at least, European. In some ways the fact that he is American makes it simpler, but in other ways it's more complex. As far as simplicity is concerned, because he cannot take advantage of opportunities available to EU citizens to work short-term in other EU countries, he will be regarded as a French taxpayer if he lives in France. This will mean that as well as tax, he will be obliged to pay in to the French social security system, as French residents/taxpayers are required to join the system rather than have private medical insurance.

However, the issue is complicated (but probably to your advantage) because as he is already a UK taxpayer, if he can arrange it so that he spends less than 183 days of any tax year in France (for the purposes of the UK tax year this could probably be just under a year continuously in France from mid October to early October the next year, as the UK tax year ends in early April), he should be able to remain a UK taxpayer, and you could retain your current healthcare arrangements.

I'm not at all sure that there is a double taxation treaty between France and the USA, if there is not you could end up being taxed twice should your husband lose his UK tax status, even temporarily, so that could work to your disadvantage. It's a good point too about a visa being needed. As a non-EU citizen, he still needs to obtain a carte de sejour to stay in France longer than three months - with proof of income and helathcare arrangements this should not pose a problem.

You would need to confirm this with a good accountant of course.

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sorry to veer off topic a wee bit but, re Profession Liberale (Tinks reply above): I am just considering the best way to set up to work in France. I can satisfy the critera to work as Profession Liberale due to the type of work i do but I was wondering if 20% of earnings would cover all social charges and taxes...I was worried about it being far worse. Its not the tax i am worried about so much as the healthcare contributions. My earnings would be less than 20,000 euros a year so not much. Is 20% as bad as it gets?

 

Thanks. El

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Thanks Will & Tink et al:

Yes, Tink, my husband does have a Visa to work in the UK. His company sorted all that out before he arrived there. As for the Carte de Sejour here, yes, we understand the laws. Thank goodness these are very clear. I just thought that if he had never lived here and never needed a carte de sejour, his work status might start out differently. I think I understand all that you both have said. It makes sense. The Profession Liberte seems to be the only legal way for him to take a year of sabbatical to work out of the house. We NEVER really get to see him ... unless we go to where-ever he is. Plan to make the appt. with Ernst & Young. Tink, if you have anyone closer to the Vaucluse, we'd love to hear the name and number. Would love to converse with you Tink as you sound as though you are in a very similar life situation as we are.

Anyway, thanks to all who responded. It is all greatly appreciated. !

Lori
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Hi, We are planning to move to France in a couple of years when my husband retires at 55. He will get his pension from California and we understand we still have to pay US taxes. As an American is obliged to pay US taxes wherever they live.

How does your husband overcome that problem, being as he works for an American firm? We don't want to pay French and American taxes, one lot is bad enough.

Kris
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Hi, We are planning to move to France in a couple of years when my husband retires at 55. He will get his pension from California and we understand we still have to pay US taxes. As an American is obliged to pay US taxes wherever they live.

How does your husband overcome that problem, being as he works for an American firm? We don't want to pay French and American taxes, one lot is bad enough.

Kris
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[quote]sorry to veer off topic a wee bit but, re Profession Liberale (Tinks reply above): I am just considering the best way to set up to work in France. I can satisfy the critera to work as Profession Liber...[/quote]

El,

The 20% I mentioned are on top of you normally gross income i.e. before tax and other contributions.

So if you gross income with an employer would be 20.000 per year you should add another 20% op top of that for contributions your employer normally makes for you.

I'm not familiar with the tax and contributions paid in the UK but I can give you and example of German and other EU countries situation. In Germany/Netherlands and France about an average 35% of your gross salary goes to taxes and social contributions. So if your salary/income is gross 20.000 deduct 30-35% and another 20% for what now the employer pays. So total you would need to pay as being self employed in France would roughly be about 50% to 55% of your gross income.

This is the advice our account gave us before my husband signed a new contract with his employer. I personally thought the 20% was a bit on the low side but so far it seems to work out. Although its hard to keep track because the figures change for year to year because of the leveling out you have to do. I guess we can definitely tell if it the right amount after 5 years.

Hope this all makes sense to you ;-) If not let me know and I'll try again.

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Tink (22)
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[quote]Hi, We are planning to move to France in a couple of years when my husband retires at 55. He will get his pension from California and we understand we still have to pay US taxes. As an American is obl...[/quote]

The US has a tax treaty with France on double tax, so there no need to be afraid to pay double tax. There are many accountancy firms who handle US tax for US citizens in France

There are Taxpayer Service Specialists available for tax assistance on US income tax matters at the IRS office at the US Consulate in Paris, France.

You can call also the International Customer Service Site in Philadelphia at:

Tel. (215) 516-2000 (This is not a toll-free call.)

Fax: (215) 516-2555.

Phone service there is available from 6:00 a.m. to 2:00 a.m. (EST) Monday thru Friday.

Per diem rates can be accessed on the internet:

*The rates for travel within the continental US (CONUS) are at: http://www.fss.gsa.gov

*The rates for travel outside CONUS are at: http://www.state.gov

The US embassy website in paris has loads of information about paying taxes in France and has a .pdf available called 'Tax Guide for U.S. Citizens and Resident Aliens Abroad'. You can access the page at http://www.amb-usa.fr/irs/irs.htm and will find the link there on that page.

Also a link on that page is the Tax Treaty between France and the U.S.

Another interesting link on the US embassy guide is the Blue Book, Guide for U.S. Citizens Residing in France

http://www.amb-usa.fr/CONSUL/guideoas/guidehome.htm

Hope this helps.

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Tink (22)

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