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bigduckontax, Accountant
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Owning a UK company and living in France. I am an English

Customer Question

Owning a UK company and living in France.

I am an English IT contractor currently living in France, but contracting for UK based clients that generally prefer to deal with a company.

I have an SARL (limited company) in France, but even before taxes the cost of simply running a French company for what is effectively a one man band runs into many thousands of Euros.

I am considering creating a new UK based company to deal with clients there, with the aim of invoicing that company as an individual (i.e. not via a French company).

I would not be planning to take all the money out of the UK company or to draw dividends.

Is anyone able to advise me on the legality and implications of such an arrangement?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello Ben, I'm Keith and happy to help you with your question.

 

Your proposals are perfectly proper and quite legal. Presumably you will let the French company run off and then dispose of same. You will have to have a Registered Office in the UK for your company, but that is easily arranged. There is no requirement for a British company to have Directors or shareholders resident in the UK or even be British Citizens. If your annual turnover exceeds or approaches GBP 79K you will need to register for VAT and any supplies made which are not zero rated eg exports will have to have the tax added to the invoices. Your company will build up profits which will be subject to UK Corporation Tax (CT), currently 20% if the turnover does not exceed GBP 300K per annum. You say you will not be taking out all profits. This tax penalty would be reduced by paying yourself a salary and the employer's element of NI or by paying into a pension fund on your behalf.

 

There you are; a general canter through some of the possibilities. Please come back to me if you require more detail.

Expert:  bigduckontax replied 2 years ago.
The Double Taxation Treaty between the UK and France will cover your French tax position. You will have to make a French tax return, but the tax you pay in the UK will be allowed as a credit against your French liability. The one problem you face is health cover as paying UK NI won't count. You should have a look at this area which is really outside the scope of this UK taxation site.

French employment law will not apply.
Customer: replied 2 years ago.

Thank you for your answer, “perfectly proper and quite legal” was exactly what I wanted to hear!


 


However, as much as wish it did, that does not convince me on the French legality.


 


Please correct me on my ignorance / cowboy knowledge on any of the following:


 


I don’t think paying myself a salary is from UK to France is a possibility. To my basic knowledge, if i were an employee, the UK company would still need to pay French social charges - equivalent to UK NI, but around 50% of the salary amount.


 


And as an owner/director drawing either monthly or as dividends, I believe I may need to submit books to the French authorities costing thousands in accountancy fees as it does now - the very thing I am trying to avoid.


 


I am fully registered in France, pay for and receive healthcare for my family. And not trying to dodge the taxman (although I wish he would leave me alone lately) so much as reducing the ridiculous money it costs for bookkeepers, accountants, bank fees (you’d be amazed) that it costs to run twopenny company like mine, and keeping a bit of money in the UK.


 


Yes this question requires answers from multiple areas really, so I shall find the relevant sections.


 


But if in summary you think that from the UK end this is legal then that is a great starting point to start my investigations.


 


Thank you.

Expert:  bigduckontax replied 2 years ago.
Yes!

Thank you for your kind comments. I did warn you that health would be the problem! However a UK company could never be required to subscribe to the French equivalent of NI. I did warn you if you remember that your UK NI payments are largely wasted save for your State Pension.

It is clear from a number of web sites that French tax can be very demanding, France having 5 times as many inspectors per head of population as the UK. You are still going to have them all over you about your income from your UK company.

Vive la France! I will email my ex pat colleague who retired some time ago to the South and see how he manages; he and his wife are entirely funded from the UK. This, of course, will take some time.
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Expert:  bigduckontax replied 2 years ago.
Ben

I have emailed my old friend in France and await a response. I will add to my earlier posts as soon as he gets in contact.

Regards

Keith
Customer: replied 2 years ago.

Thank you for your replies so far.


 


According to authorities here, a UK company actually does need to register and comply with the French social system rules should it wish to employ a French resident remotely.


 


I know about the French healthcare system (and am a fully paid up member), that is not a problem.


 


I live in France, pay tax and social charges here; my question was about the legality of owning a UK based company and invoicing said company as a sole trader from here.


 


You have answered my questions from a UK perspective, but for the French end of things I think I must speak to a lawyer here.


 


I think that I have had my question fee's worth so shall mark as paid.


 


 


 


 

Expert:  bigduckontax replied 2 years ago.

You are very kind. If my friend responds I will, of course, pass on his information. It is always said that French tax is so complex a local person must be engaged.

 

Thank you for your support.

Expert:  bigduckontax replied 2 years ago.
Ben

My pal living in France has now come up with an answer. He doesn't have any trouble with the French NI as both he and his wife are over retirement age and get free health treatment where 65% is paid by the French state and for the remainder they have to cover with health insurance.

As regards French tax he has no trouble at all. All their pensions come from Government pensions, which are not taxed in France, although their State pensions are. They get a form from the French authorities regarding the tax due and HMRC allow this as a credit against UK Income Tax to which Government pensions are liable!

However, I don't think that is getting us any further forward with your problem, but it may help you in the future.

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