How do you small businessmen manage?

[Dianned]

We have been reading with increasing horror of the taxes, particularly the "cotisations" payable by small businessmen in France, and as a consequence have put our dreams of living in France on - probably permanent - hold!

We are internet marketers and run our business in the UK as a Limited Company, paying corporation tax on the dividend and largely avoiding income tax. We understand from what we've read that we would have to set up as either a French company or self-employed, even though we "trade" in England and internationally, not particularly on the French market.

From various posts on this forum and other sources we have deduced that even if we live mortage-free in France (we're currently saddled with 900 per month in mortgage payments), we would end up worse off in France if small businessmen are taxed at 54% or whatever the ridiculous figure turns out to be.

We've also read and heard hints that it needn't be so bad, if you have a creative accountant, but one of the people who told us this worked for a big international tax consultancy and wanted to charge up to 1200 for a "report" on our situation. I don't want to pay that in order to be told our French dream is over, as it seems to be, now we have discovered how punitive the French system can be on small business enterprises.

My question is, how do you small businessmen manage with such a punishing tax regime? Don't you feel you're just working for the tax man? Or are there ways round it, other than working on the "black"?
Thanks
DianneD

[Will]

It's not the taxes that are the problem, these are on a par with - or even a bit less than - in Britain, as long as your profits are not too high. Sensible accounting can keep these to a fairly low level. I wouldn't advise using the expensive company you refer to, it's probably the same 'specialist' that quoted me 1000 for completing a single-sheet A4 form that we did for the price of a phone call to URSSAF and a stamp. Anyway, the tax is charged on what is left after the cotisations.

The 54% or more figure - the 'cotisations' - refers mainly to the social security charges, the highest of which go to the health service and retirement fund. There are also professional fees depending on what you are doing.

Whan you add up UK NI contributions, what you would pay into a private medical scheme, a modest pension fund, and the various taxes, you will find that French charges are not quite as horrific as they appear at first.

Good luck, anyway.

Will (50)
Forum moderator

[Jo53]

Despite the system, which I agree is punitive, there seems to be a great appetite among the French for setting up one's own business. The newsagents are full of magazines offering advice and ideas on 'se lancer' or 'creer sa boite'. If your French is up to it, a publication I find useful is L'Entreprise, which has a great website at lentreprise.com.

There is an interesting paper on the internet at
http://www.stcfrance.org/arnoult.doc
- though I think there have been some beneficial changes since it was written. The consultant who wrote it might be worth getting in touch with.

So obviously, people do manage (though they complain as well). And maybe you won't be as much worse off as you think: for example, you probably have a huge council tax bill in the UK, whereas in France local taxes are pretty low in rural areas. Your home and contents insurance will also be negligible here. In the end it depends on your priority: is it the French lifestyle of your dreams (which of course will have its ups and downs, but may prove to be everything you hope for); or is it the amount of cash coming in to your bank account? Unfortunately, it doesn't seem possible to have both. You don't have to burn your boats by giving it a try - eg renting here at first instead of buying, keeping your property in the UK until you know whether the move will work out (tho are you liable for French CGT if you sell your English home while you are resident in France? A horrible thought.)

Best wishes
Jo (preparing herself to dive into the cold water of freelancing in France - have looked at all the options and can't escape the cotisations)

[Lori]

Is it not possible for you to continue with your business profits going to a UK bank account and therefore no income coming to you in France? I know other people who do this. I don't really know all the details, but they got fed up with the taxes and cotisations here in France and closed down their business here, moved the operation to UK. While they live and do most of the work here. Just a thought.

We are living in Provence (Americans not Brits) and I find France more expensive than the U.S. in MANY ways. However, my husband is currently working in Glasgow and on a few recent visits there, I was SHOCKED by what you folks in the UK pay for things (particularly food and wine). I thought it was bad here. Some things here are not expensive (by my thinking), others are beyond comprehension.

We still love it here, but I do not find it inexpensive.