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UK Ltd Co.; options when moving to France


Gudkarma

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I hope this is the most appropriate forum.

I'm moving to France (permanently) soon with my wife and children. At the moment, we have a small business (a Ltd Co.) of which the two of us are owners and joint directors, which has about £30k in cash in the bank.

I'd really appreciate any advice on what I need to do here. My preference would be to maintain the Co. and simply keep paying ourselves the tax efficient amount per month (it's around £1k).

Are we "allowed" to do this - or do I have to wind the Co. up and pay us a special dividend of the whole amount?

I will be doing a small amount of work from France which is the same kind of work the Co. does now.

Any advice re my options here would be much appreciated.

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You need to see a good accountant. Basically what you should do is to open a French subsidiary of your company if you want to pay yourself - though there are alternative solutions. You should pay at least the minimum wage and you can't necessarily hide your income under 'dividends' or similar. Do get professional advice because the consequences of getting it wrong can be serious.
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Thanks for the advice Will; I'll do that.

Is the advice I need best coming from a French Accountant? If so, any advice as to about finding one?

I'd kind of decided to wind the company up here, make the move and then invoice for the bits n' pieces of work I'll do from France on a freelance / sole trader type basis from a UK address as I will be splitting my time between France and the UK (though by far the greater length of time will be in France).

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Ideally, you need an accountancy practice that understands both French and English systems. We use one based near Rennes, not the cheapest, but certainly not the dearest either, with an excellent range of knowledge and experience, including some staff specialising in dealing with English-run businesses. They have clients all over France.

There is a website here (don't be too put off by one of the senior staff being called Hervé Fraud) [:D]

You will find that you cannot just do freelance work and declare it on your tax form, as in Britain. In France you will need to register as a business before you can start working legally (or you can work through a portage company if the work is regular).

 

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I've just gone through this again with my UK and French accountants.

I also have a Ltd Company in the UK.  The advice I was given is that any work I do in the UK, literally in the UK, where I can prove that was where the work was done - travel costs back to the UK, research in the British Library etc - I put that income/expenditure through the accounts of my UK company and return the accounts through the UK tax system.

Any work that I do in France has to be through the French end of the business.  But, get a Joint Tax Agreement application, because my accountants say that is the most efficient way of dealing with things.  Our UK income/expenditure is assessed for tax and they cross reference with our French tax returns.

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I am confused. If you do not trade and all you want is to take the money in the most tax efficient way and eventually close the co. down - you could do it right now and forget about paperwork at every year-end time. I am no expert and do not rely on this advice, but I'd be tempted to talk to a UK accountant about taking it all as a capital gain while still UK resident. If you've both held the shares for a while you'll get business asset taper relief on any gain and maybe end up paying no tax at all.

I repeat this is only an idea and I am not qualified in any way shape or form.

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  • 1 month later...
Tony

I am interested to hear what you are doing.

We are "going" to be in a similar situation. I have a retail business here, but have a very good manageress. I feel I only will need to be in the shop during December, and 4 to 5 other weeks of the year. I will however be doing the book keeping and stock keeping side of the business in France.

It was my intention to take money out through dividends on an annual basis, thus only paying my corporation tax in UK. I still even though I have discussed this with my own UK accountant am not sure whether I should be paying taxes on what I bring into France. Reading the comments from this forum confuses me even further!!

I would appreciate it therefore if you have got a moment to go into the Joint Tax Agreement further.

Dids!

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If you decide to wind up your UK company then you can rollover any capital gain into the purchase and setting up of your French business.   Whilst there appears to be no specific clause which allows capital gains tax rollover when starting a new business in another eu country there doesn't seem to be anything prohibiting it. Our UK accountant made such an application to the inland revenue on our behalf and it was accepted. What's even better is that once you have been fully French resident for three years, without having a uk income, this rollover liability aparently just vanishes into thin air so even if you later move back to the uk there's no cgt to pay. Yes I know this sounds bizarre and it is, but could be well worth asking your uk accountant about.

As far assettig up your French business, I agree with the others - you need to speak to a firm of French accountants.

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Again I say take appropriate accountancy advice and furthermore I am from the legal area and acted once for a number of companies.  I am not an expert on accountancy but somewhere in the back of my mind I seem to remember that a company must be viewed as a trading company merely paying oneself a dividend per month may not be sufficient.  All I know is that I am paid in the UK and have to account for it here but of course I am not a limited company.  I too have a wonderful accountant in Avranches but you seem to have enough recommendations in that direction.

rdgs

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