oliklom

Hello there,

We are Uk citizen but resident in France and planning to set up a ltd company in the uk.

I have a couple of questions:

If we took the minimum tax free salary of approx £6500 in the uk, would we have to declare it to France and also pay some french income tax on it?

If we took the minimum tax free dividend (I know that they 're not tax free so to speak but as good as) of approx £30000 in the uk, would we have to declare it to France and also pay some french income tax on it?

So basically by paying ourselves £6500 + £30000 we would stay under the 37500 bracket for uk tax purppurposes would the french income tax see it this way???

Many thanks for your input!

cyrian

Have you moved from Spain?
There have been several recent posts talking about taxation between the UK and France.
If you are a basic rate taxpayer in the UK and receive a UK dividend then you receive a tax credit which means that you pay no further income tax on it. If you are a higher rate taxpayer then you pay the difference between the tax credit and the dividend rate of tax.
You dont get dividend income "tax free" - the company pays the tax out of pre-dividend profits then the after-tax profits are distributed as dividend and a tax credit issued for the tax already paid on the dividend.
If you are tax resident in France then you have to declare your entire world-wide income and assets and that includes dividend income; rental income; pensions; bank interest etc.
My guess is that France will not recognise "tax credits" and you will be taxed on the dividend. You will also be liable for the health charge on your entire income.
If you have world-wide assets including your home(s) and business assets then you may be liable for wealth tax also.
Get professional advice - it could save you money.
Good luck

oliklom

Thank you for that!

So your saying that even if we took the tax free salary of approx £6500 in the uk this would still generate some income tax once declared in France?

G-J-B

Hi oliklom, I'm afraid I'm not tax expert, but you will find things work very differently here, and certain things that are tax free in the UK, are taxed when you're in France. The best thing to do is to seek the advice of an expert comptable who speaks English/French, because these matters can get very complicated.

cyrian

Hi Oliklom
So your saying that even if we took the tax free salary of approx £6500 in the uk this would still generate some income tax once declared in France?
No I am not saying that.
I suggested that you read several recent posts about the topic of taxation between the UK and France.
You would declare the amount of income and the tax paid to the french tax office. They are not concerned about any "tax-free" element but simply that you have paid tax on this income. There is a treaty between the 2 countries whereby income is not double taxed.
I was addressing the part re dividend income which if you generate taxable profits are taxed via corporation tax prior to declaring a dividend.
Small companies CT rate is currently 21% and will fall to 20% next April.
You (in theory) would have to pay basic rate tax on this dividend but you receive a "tax credit" certificate which eliminates this tax in the UK. If you are a higher rate taxpayer then you pay the difference between the tax paid and 32.5% which is the higher dividend rate or 42.5% which is the new mega-rate.
I just don't know how you explain that to the french tax office. Yes you have to declare it all to the french tax office
I have a friend who (after taking tax advice) registered his company in Jersey.
You need to get professional advice from someone who has experience in UK/French taxation.
Good luck

To G-J-B Is grass green or purple?

G-J-B

Perhaps the question you should be asking is, what colour is grass at night?