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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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We are a UK registered company employing a UAE resident who

Customer Question

We are a UK registered company employing a UAE resident who is going to work for our client in France for a year. What are the Company's obligations to French taxes both in regards ***** ***** welfare and deductions we may need to make from the employee. The UAE resident holds a British passport.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
I will try to help you, but French taxation is so complex most authorities consider it essential to employ a French expert in the matter. You may not be aware that France has about five times as many tax inspectors per head of population as does the UK!
You can find the basic rules for social security deductions by putting 'French Income Tax and National Insurance contributions' into a search engine and then accessing the French-Property.com web site. The social taxes basic rules alone are mind boggling as you will see. It is also the most expensive in the EU.
There exist special rules for expatriates taking up employment in France.
EY give the following advice:
'Expatriate tax law.
A favorable expatriate tax law applies to employees seconded to France after 1 January 2004. This favorable tax regime (Article 81 B of the French tax code) provides that under certain conditions, expatriates seconded to France after 1 January 2004 may not be taxed on compensation items relating to the assignment in France, such as a cost-of-living allowance, housing cost reimbursement and tax equalization payments. The main condition is that the taxpayer must not have been considered a tax resident of France in any of the five tax years preceding his or her year of arrival in France. In addition, up to 20% of the remaining taxable compensation can potentially be excluded if the expatriate performs services outside of France during his or her assignment (non-French workdays). The exemptions are available until 31 December of the fifth year following the year of transfer to France. Administrative regulations on the law, which were released in 2005, provide that the exemptions in the law may not be combined with the benefits under the French headquarters rules (see Expatriate French headquarters and distribution center employees).
Effective from 1 January 2008, the favorable tax regime described above (now Article 155 B) was extended to local hires (including French nationals) who relocate to France and meet the above residency criteria. Taxpayers who satisfy the Article 155 B conditions benefit from a 50% tax exemption with respect to their foreign-source dividends, interest, royalties and capital gains (resulting from sale of securities) for a period of five years (subject to certain conditions concerning the source of such income). Social surtaxes of 15.5% remain payable on the full income.'
If your head is beginning to swim, well mine is! I do not think your company has any option but to employ a French organisation, or at the very least one of the UK's International practices, to make these payments and appropriate deductions on your behalf. I did warn you of this earlier in my answer. You will have to recover such costs from your client. This exercise is not going to come cheap.
So sorry to have to rain on your parade, but I did warn you.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support. I am truly sorry that I could not have been of more assistance to you, but French taxation, ugh!