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Anyone else on a "Detachment Aggreement?"


Crevette

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I am on year two of a five year "detatchment aggreement" - that is to say that I work in France but am paid in the UK, I pay UK Social Security/Pension contributions, but french tax (I have a "NT" / No Tax UK tax code).

Anyone else in the same situation? There are a few "french tax" peculiarities which I'd like to share.

Regards,

-Rob-

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  • 1 month later...

Yes I'm on detatchment which started 1st Jan 2005.  French Tax/UK social security.  We have a property in the UK heavily mortgaged to offset the investment income, my wife's not working over here and has no income other than some bank interest and we've managed to secure UK child benefit for my daughter.

I understand I'll have to do 2 tax returns 1 in the UK to Apr 2005, then 1 in France from 1 Jan - 31 Dec 2005.  I have applied for a NT code but this seems to be taking an absolute age to come through so for the moment I am paying tax in the UK but expect to claim this back.

Any tips you have would be greatly appreciated! 

Also if anyone has some thoughts on the following or redirect me to some suitable links I would be really grateful:

1) I read somewhere that I must pay UK tax on the property income, but as the property is mortgaged I expect this to be nil.  Am I right that I must also declare this on my French tax return and what is the effect of me doing this?

2) As I'm married and have a child I want to use their allowances "parts" I think they are called to reduce my French tax bill.  Must I therefore declare my wife's bank interest in the UK?

3) We also own a small plot of land in New Zealand (where my wife is from).  There's no capital gains tax in New Zealand if we were to sell this would we be subject to French Capital Gains tax?

Thanks

Paul

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Hi Paul,

Nice to know I am not the only one - although our situations are very different as I have no wife/kids (getting married in August!) and not property in other countries - therefore I can't really help with your questions.

You are right in that your french tax part will be less if you are married and with a kid (in effect, you declare the joint income as well which is split by the parts - which is a big advantage if your wife is not earning).

I have had Price Watrehous Cooper sort out the NT code and it took just a couple of months! I would chace this up if it is taking longer.

The big problem for me is the rate of exchange to use on your salary. It seems it is not 100% clear what to use and differnet tax inspectors use different rates. I think that my tax advisors used a (mean) average of the rates over the 12 months period and applied it to my gross salary.

Hope this helps - sorry not to offer more for your property questsions.

-Rob-

 

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I'd be really interested if you could explain what a 'detachment agreement' is. We've been in France 2.5 years; husband came over to work for a French company but has since been made redundant. Ideally one of us would like to work for a UK company but continue to live in France, but I've heard scary reports that they would make you open a 'French branch' of the company and pay French employer's charges. Can anyone resident in France get one of these agreements if they start working for a UK employer?

Jo

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Hi Jo,

Its difficult for me to find the details (it was set up by my company) but I found some details about it for working in japan - but I guess it's the same principal.

http://www.uknow.or.jp/be_e/visa/travel/s_security/s_security01.htm

You may want to try the British Embassy in France  - but I caouldn't find anything specific. they have not been much use in the past with questions I have asked them but you may fare better. ;

http://www.britishembassy.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1065713996370

I was posted abroard by my company to work in a sub branch in anonther country - not sure how it works if no sub-branch exists. I have a friend who is looking to start up (from a UK comapny) a french branch, so I will ask him how it works.

I do know that I am a lot cheaper for my company than the same employee working for France - this is because employee taxes are less in the Uk than France.

-Rob-

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Hi Rob,

Thanks for your reply. To me it would be reasonable if paid monthly in sterling to use an average rate over the 12 month period.  But I will check see if I can find out from the French accountants who will prepare my tax return.  I have been on detatchment before and the one thing I was hit with in the UK was having a UK tax return prepared by my company's accountants counted as a taxable benefit which I had to pay for.

The way detatchment has been explained to me is that where a company has a subsidiary overseas in my case Paris is head office and I am employed in the London subsidiary, an employees contract can be structured in such as to choose the tax and social security regimes that should be applied when that employee moves between the offices, a kind of mix and match.  The most beneficial for France apparently in my situation is to have French tax and UK social security.  French tax is lower (wife not working + kid) and UK social secuity deductions are lower.  The net net is I should be better off - the downside as far as I can see is that I have to take out expensive health insurance (done through PPP for myself and family) and if I lose my job I dont get any of the generous support available of I were to have been on a local French contract.  I think this is only possible for periods up to 4 or 5 years then I am obliged to switch to a French contract.

Regards

Paul

 

 

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