magon

Hello

We are looking to move to France, lots of research etc, found a place we like, schools for children etc, figures for a french mortgage all looking ok, so been exciting so far then we try to look at how I get "paid" and the taxes involved.

1) We have our own UK Ltd, offering online marketing, PPC etc. Main client in is Canada its pretty simple really. I have no intentions of moving the business to France I plan to work in France for the business.

2) As most people with a small Ltd we pay ourselves a basic salary and dividends but this is under the HR threshold so we are hardly rolling in it.

3) I've been trying to look at what I would do in France as from what I have read being resident in France means our worldwide income is subject to tax in France. Is this true? On that basis I looked at setting up a business in france to contract to my UK business and the auto-entrepreneur route we woudl exceed the limit unless their is an allowance before the 32k kicks in.

4) Looked at Portage route but then it basically halves the amount I'd receive from the invoice the UK + the UK business will still be paying Corp tax etc.

5) I think I might be getting something wrong as I'm not sure how the French could afford to live there!

Can anyone point me in the right direction for advice. Ideally we can get paid from the UK and keep it as simple as that but I assume that isn't likely!

Been a kick in the balls really but not giving up this easily we really want to be there.

Many Thanks in advance

EuroTrash

Unfortunately there is no way round the fact that if you live in France and run a business, you will pay much higher taxes and social contributions. Income tax generally works out lower but then there are all the other taxes - probably income tax has to be lower or as you say, nobody would have anything left to live on! France has a reputation for not being small business friendly, basically it taxes them to death.

However, if you are in business in France, ie you are physically in France while you carry out business related activities, you have to have some kind of business registration here, this is not optional. You then pay your social contributions through the business. Working in France without some kind of French business structure, and not paying social contributions on what you earn, is classed as working on the black, and URSSAF are getting very hot on it.

You have a choice of business regimes, as you've discovered, but on average you should count on around 40 per cent of your profits disappearing in taxes of one kind or another.

Auto entrepreneur is the simplest route but is very restrictive and not ideal for your purposes. If your UK company would be your only 'client' you could be in trouble on that count alone. And yes, the turnover limit is set in stone.

You are correct that you must declare worldwide earnings in France if you live in France. If you have earnings in the UK and you are in the French social security system, you would also pay CSG on your UK earnings.

You may do better to bite the bullet and shift your company to France, it would be far simpler and possibly more cost effective. If you are determined to split it between the two countries, you risk falling foul of the tax authorities unless you have a very clear understanding of the rules and implications. Professional advice might be necessarily, but first find a good advisor because many are no good at all.

InVinoVeritas

The advice from EuroTrash is right on the button. There's no way you're going to pay less on your earnings than in the UK. It's not clear why you want to move to France - just about anywhere else is more small business friendly - if it's to be near relatives that may explain your thinking.

loy loy

I put 40% of my gross salary by each month for cotisations and income tax. Whether this is enough or not I don't know. They are still trying to equalise my 2012 payments. They also for some reason decided to double my income for 2012 which took some sorting out.
I don't recall what business type I have.

For me, wanting to move and live in France. I took the choice to pay my way their way and to become French if you like. The locals certainly appreciate it more if you ever get onto the subject of taxes!

magon

Thank you for the replies.

1) So if I don't physically work for my UK business in France would I be still subject to the same taxation system? Ie if I worked a week a month in the UK.

2) We want to move to France for a number of reasons, mainly we enjoy a variety of outdoor activities, I ski and Mountain bike and where we are looking would afford us very easy access to these activities. We also don't particularly like living in the UK, where we live is getting busier and busier. I accept there is a price for this lifestyle, I am factoring in the "savings" in flights etc - with 60 mins drive we can do everything we dreamed of.

3) We are not expecting a panacea of perfection by living in France and also expected to pay a bit more in tax to live there but hadn't factored for the extent of the tax system.

4) My business is fairly automated so a move to France would allow us look at doing new things, my wife is a teacher here so she might do a language club etc.

5) I guess I'm frustrated we want to embrace a French way of live, we are deliberately avoiding a large English speaking community (says he posting on an expat forum!).

magon

We do want to pay our way, so I guess I'm starting to contradict myself. As my last post mentions we want to embrace living there.

40% doesn't sound as bad as 50% which I seem to keep finding.

InVinoVeritas

Maybe having a place in France but spending less than 183 days here is worth looking at. You would then be considered non-tax resident. If you're planning on spending a week per month in the UK then you would almost certainly be considered UK resident under the new rules anyway.

The percentage tax rate in France depends on how you do the calculation. If you include business taxes and social security you can even end up over 60%.

magon

We have 3 young children so we want to live in one country for their stability.

Gosh 60% is insane, how do french businesses cope? I'm not aware of a substantial difference in living costs (food etc) and given the French don't seem to like personal debt it's amazing they cope or am I missing something?

Working a week a month is perfectly feasible. We wanted to look at a small business within France so maybe this can be my other 3 weeks - not ideal but maybe a start so we can move there before the children get too old.

InVinoVeritas

There's nothing to prevent you being non-French resident and the rest of your family being French resident - in fact if you physically spend a week a month in the UK then this will be the case anyway.

How do the French cope? Badly. It's one of the reasons the "bouclier fiscal" was introduced last year to prevent the effective tax rate exceeding 75%. My own impression (which maybe is no more reliable than French government statistics) is that many businessmen are planning on leaving France either by transferring their businesses or just putting the keys under the door and starting up elsewhere.

magon

Its astounding, our estate agent did say the Government like people to be "employed". Which is great but there obviously needs to be companies to enable employment to happen.

Its going to be a balance that's for sure. Its funny I want to be part of the system but they hardly make it easy. I'll keep seeking a way to achieve this.

EuroTrash

Working exclusively in the UK but having your family based in France certainly has financial advantages if you can get an S1 from HMRC to cover your family's healthcare in France. But in the long term it's not great for family life.

I like to think that there will have to be a change in thinking, surely one day France will wake up and realise that it can't keep on taxing the private sector until it bleeds in order to keep the grossly disproportionate public sector in the style to which it has become accustomed. The higher the taxes, the faster the private sector shrinks, so they raise the taxes on the businesses that are left to try and keep the revenue the same. But in due course there will be no private sector left and then where will the state get the money to pay the fonctionnaires. Either that, or the revolution will happen first. Come and join us magon - it's good fun.