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Taxation advice


JJLUK

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I wondered if anyone could provide any advice, insight, or recommendations as to potential advisers?  I am a Partner in an international trade consultancy firm which is registered in the UK. I am considering relocating from London with my wife and two small sons to France. This would entail spending most of my time in France, working remotely from home. I expect to be treated as resident in France for tax purposes. However, neither the nature of my work, nor my client base -- which is multi-national in nature -- would change other than I would be e-mailing my advice from France rather than London.

 

With all this in mind, my concerns are twofold. Firstly, that I will drag the LLP and the other Partners into the French tax system; and secondly, that I may be subjected to restrictions on providing my advisory services. Are these valid concerns, or is it simply a case of business as usual except that I will pay French tax on my net income?

 

Are there any accountants, or architects, consultants, etc. who work in France but are employed, or Directors of UK registered businesses who have faced similar issues; and how have they resolved them?

 

All help and assistance greatly fully received.

 

James

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As none of the tax experts have answered I will put in my two pennyworth from experience. The correct thing for you to do is for you to become a French subsidiary of your British company. You could either set up a company in France, or you would work on a self-employed basis contracted to your British company. That will avoid your UK company getting dragged too far into the French system or restricted in what they can do. You would need to be paid a realistic wage - i.e. not an artificially low figure to avoid tax and social security charges, supplemented by artificial 'dividends', 'expenses' etc, otherwise you will undoubtedly attract the suspicion of the French authorities.

Too many people (including professional financial advisers) concentrate solely on the tax implications of such moves. What you need to consider first is social security, which eats up far more of your taxable income in France than the 'impots sur revenues'. On average, you pay 46% in social charges, according to our accountant, and by getting it wrong this can easily go up to above 60%. So it is essential to achieve the right level of 'taxable income', which means setting yourself up under the most appropriate regime for TVA, professional charges etc. Many people will point you towards a micro regime, which limits the amount you can earn and makes paperwork a lot simpler. However it is not necessarily the cheaper option - I found that although I started off under a micro-bnc, and although my clients (and suppliers) were all UK based so TVA did not really enter into the equation, I was better off operating as a TVA-registered French business keeping full accounts.

You might find it best, if the UK and French authorities will agree to it, to put yourself on 'assignment' to France for a year, possibly two (no longer is usually permitted). This means your company applying for a form E101 to cover you and your family for healthcare etc in France while you continue to pay tax and NI in UK. This is really meant for temporary assignments, but can be useful if you want to see how things will work out and lets you settle in before making final decisions - you have to either return to Britain or register your business in France when the E101 expires.

The essential first step, if you decide to make the arrangement permanent, is to find a good accountant with experience of both French and British tax and social security systems. Trying to do it on your own or otherwise cut corners can be a recipe for disaster. The French Chamber of Commerce in London publishes some useful literature and gives advice on setting up in France.

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