Tweedpipe

To add some clarification, I was employed for many years by a large UK multinational company, working in France with salary paid in UK. Many years ago (over 20) the same company left it to each individual to sort out their own tax situation, whether payable in UK, France or wherever. This led to abuse by some individuals, which resulted in the then, newly formed HR group, becoming very aware and concerned of the potential litigation, and especially damage to the company name.
The situation was eventually totally revised, which resulted in an amount of virtual 'tax' being deducted from the salary of each employee, and a multi-lingual professional accountant set up to manage social security contributions in France and elsewhere, and to monitor the tax payment of each company employee worldwide.
Obviously this is an exceedingly expensive exercise for any UK company, so it's not surprising to learn that some may turn a blind eye, and wish to not become involved. In this case the employee should absolutely make sure what his/her responsibilities are regarding legal employment, social security contributions and income tax payment in France, as over the last few years the authorities have been very active, and efficient in 'sounding out' those who do not conform. As already mentioned the penalties are high.
As mentioned elsewhere some people may be working in France and paying taxes in UK, simply because they don't know otherwise, and should this be the case, with no annual tax declaration being made in France, imho they are skating on very thin ice.

Heather1978

My job is very confusing at the moment the way it works is I have to register as self employed in the uk however I would from home as a travel company and they pay me once a month commission I have earned however I have to do a self assesment . So would I pay tax to the uk and France or would France claim the tax back from the uk ?

Touraine

Could you not register as self employed in France (Auto-E) and your 'client' (your company) pays you commission into your French bank account.

You only pay tax in the country you are living in.

Heather1978

Hmmm I'm not sure about that would it not work if I was paid into an English account ?

EuroTrash

That looks rather like the only option on the table. Not ideal because an auto entrepreneur with only one client, well it's going to look like travail dissimulé. But maybe since it's commission only and there is presumably no employment contract, it is OK. Would be better still if you can collect a few other odds and sods of work from different sources, so that not all the payments into your bank show as originating from the same person/company.

The other problem is that after UK charges, the 25%-ish of total income that France will take off of you, is going to seem awfully high. But it's either that, or keep looking over your shoulder hoping the authorities haven't noticed what you're doing.

As Touraine says, if you don't live in the UK and don't have a place of business in the UK, why would you submit a UK tax form. When you move abroad you fill in a form to tell HMRC that you're leaving, and the date when you're leaving. Your tax liability in the UK ends on that date unless you have rental income from a UK property or a UK government pension or something like that. You should also tell your bank, and they should start paying your bank interest gross because that'll be taxable in France as well.

That's the proper way to do things, at any rate.

EuroTrash

Makes no difference really, income is income, but you should have a separate UK account for business income because that is the rule for all "auto entrepreneurs". I assume UK banks still offer 'free' banking so no issue there.

AE is very simple - you have to issue an invoice for everything (even if the company files it straight in the trash), you can issue the invoice in £, and you convert the £ into € at the rate in force on the day you invoiced or on the day you received the payment, doesn't really matter which as long as you're consistent. Obviously you declare the total amount you received in € and pay charges based on that.

Heather1978

[
So I would only pay tax in France ? I could possibly pick up some other bits and bobs . I don't see it being a problem being paid into a French account .

UOTE=EuroTrash;11672703]That looks rather like the only option on the table. Not ideal because an auto entrepreneur with only one client, well it's going to look like travail dissimulé. But maybe since it's commission only and there is presumably no employment contract, it is OK. Would be better still if you can collect a few other odds and sods of work from different sources, so that not all the payments into your bank show as originating from the same person/company.

The other problem is that after UK charges, the 25%-ish of total income that France will take off of you, is going to seem awfully high. But it's either that, or keep looking over your shoulder hoping the authorities haven't noticed what you're doing.

As Touraine says, if you don't live in the UK and don't have a place of business in the UK, why would you submit a UK tax form. When you move abroad you fill in a form to tell HMRC that you're leaving, and the date when you're leaving. Your tax liability in the UK ends on that date unless you have rental income from a UK property or a UK government pension or something like that. You should also tell your bank, and they should start paying your bank interest gross because that'll be taxable in France as well.

That's the proper way to do things, at any rate.[/QUOTE]

EuroTrash

Yes absolutely, that's how it's supposed to work. You just tell HMRC you are leaving the UK. There is a 'residence test' that they apply but if somebody is genuinely moving to France to live, they should automatically be classed as a 'leaver'.
Income tax in France is not bad, although social security cotisations are horrendous.

On the AE scheme you potentially have two options for paying tax. Either you pay income tax at a small percentage of your turnover on a kind of PAYE basis (somewhere very roughly around 2 per cent), then when you declare your income at the end of the year you don't pay any more tax on it. Or, you don't pay any income tax until the end of the year, and then you declare your AE income on your tax form as untaxed, much as you would in the UK, except that in France it's added in with the rest of the household income for the purposes of calculating a tax bill per household not per individual. (Saying that, I'm not sure whether or not you can opt to be taxed separately if you're living together as a couple but with no legal partnership.)

You choose which will work out best for you - it will depend on how much you earn, and how much the total household income is. There are calculators online that will work out projections for you.