Undeclared income in France
Feb 9th 2018, 8:48 pm
#1
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Undeclared income in France
Hello, I was hoping I could ask for some advice regarding income that I did not declare in France.
I went to work for acompany in 2013
They offered me a job based on me invoicing them for my hours worked, which they would pay me on a self-employed basis as I was registered self employed in the UK. I opened a French bank account to have this paid into. I left France in March 2015
Not realising at the time (ignorance or whatever else it was ) this is not a legal way to employ someone in France.
A few years has passed, and I am increasingly worried that the french tax authorities may investigate into this, and eventually discover this income, I was wondering if there was a way I could disclose this to the relevant authority to attempt to clear my tax liabilities as much as I can?
thanks!
I went to work for acompany in 2013
They offered me a job based on me invoicing them for my hours worked, which they would pay me on a self-employed basis as I was registered self employed in the UK. I opened a French bank account to have this paid into. I left France in March 2015
Not realising at the time (ignorance or whatever else it was ) this is not a legal way to employ someone in France.
A few years has passed, and I am increasingly worried that the french tax authorities may investigate into this, and eventually discover this income, I was wondering if there was a way I could disclose this to the relevant authority to attempt to clear my tax liabilities as much as I can?
thanks!
Last edited by BEVS; Sep 13th 2018 at 11:43 pm. Reason: Mod note: This post has been edited to remove some particulars.
Feb 10th 2018, 6:59 am
#2
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Re: Undeclared income in France
<snip>
The tax office don't routinely investigate more than three years back, and their investigations are mainly triggered by things that get flagged up on the computer - usually discrepancies in tax declarations, or taxpayers who on paper seem to be spending more than they earn and generally living beyond their means. They do not scrutinise every payment into every bank account in France.
However if for some reason you are really itching to give the taxman some money, all you need to do is contact the local tax office of the address where you lived at the time and give them all the facts or figures. They may agree to process late declarations for 2013, 2014 and 2015, in which case they'll send you the forms to complete, or they may decide it's far too much hassle and tell you to forget about it.
There's also the issue that technically you were "working on the black", ie you weren't registered to work in France and you weren't paying social security contributions on your earnings. If URSSAF (the social security collections agency) gets involved as a result of you stirring the tax question up, you'll probably end up wishing you hadn't. It's unlikely they would; these days they probably would because since 2017 the tax office shares information with URSSAF, but at the time you're talking about they didn't. However you would have to be a bit careful which box on the tax form you declare the earnings in. There's boxes for self employed earnings but you can't use those if you don't have a siret number (business registration number). I don't actually know how you would declare it, because there isn't a box for "earnings on the black".
The tax office don't routinely investigate more than three years back, and their investigations are mainly triggered by things that get flagged up on the computer - usually discrepancies in tax declarations, or taxpayers who on paper seem to be spending more than they earn and generally living beyond their means. They do not scrutinise every payment into every bank account in France.
However if for some reason you are really itching to give the taxman some money, all you need to do is contact the local tax office of the address where you lived at the time and give them all the facts or figures. They may agree to process late declarations for 2013, 2014 and 2015, in which case they'll send you the forms to complete, or they may decide it's far too much hassle and tell you to forget about it.
There's also the issue that technically you were "working on the black", ie you weren't registered to work in France and you weren't paying social security contributions on your earnings. If URSSAF (the social security collections agency) gets involved as a result of you stirring the tax question up, you'll probably end up wishing you hadn't. It's unlikely they would; these days they probably would because since 2017 the tax office shares information with URSSAF, but at the time you're talking about they didn't. However you would have to be a bit careful which box on the tax form you declare the earnings in. There's boxes for self employed earnings but you can't use those if you don't have a siret number (business registration number). I don't actually know how you would declare it, because there isn't a box for "earnings on the black".
Last edited by BEVS; Sep 12th 2018 at 10:46 pm. Reason: Just re privacy and the right to anon.
Feb 10th 2018, 7:07 am
#3
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Re: Undeclared income in France
Hello, I was hoping I could ask for some advice regarding income that I did not declare in France.
I went to work for acompany in 2013
They offered me a job based on me invoicing them for my hours worked, which they would pay me on a self-employed basis as I was registered self employed in the UK. I opened a French bank account to have this paid into. I left France in March 2015
Not realising at the time (ignorance or whatever else it was ) this is not a legal way to employ someone in France.
A few years has passed, and I am increasingly worried that the french tax authorities may investigate into this, and eventually discover this income, I was wondering if there was a way I could disclose this to the relevant authority to attempt to clear my tax liabilities as much as I can?
thanks!
I went to work for acompany in 2013
They offered me a job based on me invoicing them for my hours worked, which they would pay me on a self-employed basis as I was registered self employed in the UK. I opened a French bank account to have this paid into. I left France in March 2015
Not realising at the time (ignorance or whatever else it was ) this is not a legal way to employ someone in France.
A few years has passed, and I am increasingly worried that the french tax authorities may investigate into this, and eventually discover this income, I was wondering if there was a way I could disclose this to the relevant authority to attempt to clear my tax liabilities as much as I can?
thanks!
Some one more in the know will come along to advise better, but your time in France covered three fiscal years and, depending on how much you earned during 2014, you may not even be taxable in France. (And if you paid UK taxes on this salary, then you're probably only guilty of not submitting Tax Declarations in France).
The prescription for recovery of unpaid tax is 3 years, so IMO the Fisc won't bother you.
On the other hand, the URSSAF (Social Security organisation) might discover your situation during a contrôle of your former French employers and possibly your Bank. The prescription for non-payment of côtisations in an illegal situation is 5 years, so you and they still risk fines.
P.S. ET beat me to it!!
Last edited by BEVS; Sep 13th 2018 at 11:44 pm. Reason: Some particulars removed
Feb 10th 2018, 10:17 am
#4
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Re: Undeclared income in France
Having read the additional info you posted elsewhere, I don't think you realise how much disentangling this might involve, versus the extreme unlikelihood of it ever being picked up.
Firstly, it's a personal responsibility in France to declare your income to the taxman each year, whether you're an employee or self employed or whatever. Even if you had been employed, your employer would not have been not responsible for paying tax on your behalf, employers do not get involved with their employees' income tax affairs. Had you been an employee, they'd have deducted social security contribution from your salary but they don't deduct income tax, because there is no PAYE system in France. So going to the authorities and claiming that you should have been on an employment contract wouldn't change the fact that you hadn't met your own personal obligation to declare your income, although it could have plenty of other interesting implications.
Secondly, it's not as simple as popping up out of the blue and declaring 'income' and paying tax on it. The fisc need to know the exact source and nature of the income, or they won't know how to calculate your tax liability on it. Self-employment income is taxed differently according to what business structure you registered under and what tax régime you opted for. The fact that you worked unregistered during three tax years will inevitably come out if you tell the truth.
So it's potentially a complicated can of worms, and once you start taking the lid off it's out of your hands how many worms wriggle out. Once you start the process you won't be able to stop it if the authorities do happen to get interested and decide dig right down to the bottom of the can. To give you an idea: self employed people providing a service in France typically pay social contributions of approx 25% of turnover. That's how much you would have paid at the time if you'd been correctly registered to work in France. Add on late payment fines going back 3 and 4 years, and your backdated social security debts could work out at 50% or more of what you earned. Plus probably a small amount of income tax on top of that.
In my opinion it would be insane to voluntarily do anything that runs even the remotest risk of kicking all this off, but of course it's up to you.
Firstly, it's a personal responsibility in France to declare your income to the taxman each year, whether you're an employee or self employed or whatever. Even if you had been employed, your employer would not have been not responsible for paying tax on your behalf, employers do not get involved with their employees' income tax affairs. Had you been an employee, they'd have deducted social security contribution from your salary but they don't deduct income tax, because there is no PAYE system in France. So going to the authorities and claiming that you should have been on an employment contract wouldn't change the fact that you hadn't met your own personal obligation to declare your income, although it could have plenty of other interesting implications.
Secondly, it's not as simple as popping up out of the blue and declaring 'income' and paying tax on it. The fisc need to know the exact source and nature of the income, or they won't know how to calculate your tax liability on it. Self-employment income is taxed differently according to what business structure you registered under and what tax régime you opted for. The fact that you worked unregistered during three tax years will inevitably come out if you tell the truth.
So it's potentially a complicated can of worms, and once you start taking the lid off it's out of your hands how many worms wriggle out. Once you start the process you won't be able to stop it if the authorities do happen to get interested and decide dig right down to the bottom of the can. To give you an idea: self employed people providing a service in France typically pay social contributions of approx 25% of turnover. That's how much you would have paid at the time if you'd been correctly registered to work in France. Add on late payment fines going back 3 and 4 years, and your backdated social security debts could work out at 50% or more of what you earned. Plus probably a small amount of income tax on top of that.
In my opinion it would be insane to voluntarily do anything that runs even the remotest risk of kicking all this off, but of course it's up to you.
Last edited by EuroTrash; Feb 10th 2018 at 10:19 am.
Feb 10th 2018, 11:50 am
#5
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Joined: Apr 2008
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Re: Undeclared income in France
Having read the additional info you posted elsewhere, I don't think you realise how much disentangling this might involve, versus the extreme unlikelihood of it ever being picked up.
Firstly, it's a personal responsibility in France to declare your income to the taxman each year, whether you're an employee or self employed or whatever. Even if you had been employed, your employer would not have been not responsible for paying tax on your behalf, employers do not get involved with their employees' income tax affairs. Had you been an employee, they'd have deducted social security contribution from your salary but they don't deduct income tax, because there is no PAYE system in France. So going to the authorities and claiming that you should have been on an employment contract wouldn't change the fact that you hadn't met your own personal obligation to declare your income, although it could have plenty of other interesting implications.
Secondly, it's not as simple as popping up out of the blue and declaring 'income' and paying tax on it. The fisc need to know the exact source and nature of the income, or they won't know how to calculate your tax liability on it. Self-employment income is taxed differently according to what business structure you registered under and what tax régime you opted for. The fact that you worked unregistered during three tax years will inevitably come out if you tell the truth.
So it's potentially a complicated can of worms, and once you start taking the lid off it's out of your hands how many worms wriggle out. Once you start the process you won't be able to stop it if the authorities do happen to get interested and decide dig right down to the bottom of the can. To give you an idea: self employed people providing a service in France typically pay social contributions of approx 25% of turnover. That's how much you would have paid at the time if you'd been correctly registered to work in France. Add on late payment fines going back 3 and 4 years, and your backdated social security debts could work out at 50% or more of what you earned. Plus probably a small amount of income tax on top of that.
In my opinion it would be insane to voluntarily do anything that runs even the remotest risk of kicking all this off, but of course it's up to you.
Firstly, it's a personal responsibility in France to declare your income to the taxman each year, whether you're an employee or self employed or whatever. Even if you had been employed, your employer would not have been not responsible for paying tax on your behalf, employers do not get involved with their employees' income tax affairs. Had you been an employee, they'd have deducted social security contribution from your salary but they don't deduct income tax, because there is no PAYE system in France. So going to the authorities and claiming that you should have been on an employment contract wouldn't change the fact that you hadn't met your own personal obligation to declare your income, although it could have plenty of other interesting implications.
Secondly, it's not as simple as popping up out of the blue and declaring 'income' and paying tax on it. The fisc need to know the exact source and nature of the income, or they won't know how to calculate your tax liability on it. Self-employment income is taxed differently according to what business structure you registered under and what tax régime you opted for. The fact that you worked unregistered during three tax years will inevitably come out if you tell the truth.
So it's potentially a complicated can of worms, and once you start taking the lid off it's out of your hands how many worms wriggle out. Once you start the process you won't be able to stop it if the authorities do happen to get interested and decide dig right down to the bottom of the can. To give you an idea: self employed people providing a service in France typically pay social contributions of approx 25% of turnover. That's how much you would have paid at the time if you'd been correctly registered to work in France. Add on late payment fines going back 3 and 4 years, and your backdated social security debts could work out at 50% or more of what you earned. Plus probably a small amount of income tax on top of that.
In my opinion it would be insane to voluntarily do anything that runs even the remotest risk of kicking all this off, but of course it's up to you.
I'm no expert on how much Income Tax would be involved on your 2014 earnings, but, as ET says, you and your French employers are guilty of "disguised employment" from URSSAF's viewpoint, i.e. "Self-employed" workers can't work for one sole employer, they must be salaried employees.
I'm inclined to agree with ET and you should let sleeping dogs lie. If by chance the powers-that-be catch up with you in the next couple of years, then contact your former employers to find out how they've dealt with the issue, submit all your bona fide accounts, and hope for the best!
But be aware of the legal principle in France: Ignorance of the law is no excuse!
