Business Owner in Spain - Live in France

Hi All,

Bit of a complicated one this and I will bespeaking to another accountant but thought I would put it out there. I have two main questions/problems:

  1. For the past 3 years or so I have lived in France and have worked under the auto-entrepreneur scheme providing recruitment services mainly to 2 different companies in Bulgaria and Malta.

I received a notification from the tax office stating that last year I had exceeded the TVA level of c€35k and that I need to pay this. An accountant advised me a year back that this wouldn’t be the case as I was invoicing companies in Bulgaria and Malta. I was physically in France but I worked with no one else in France i.e. placing Bulgarian people in Bulgaria and likewise for Malta.

So my first question is does anyone have an answer as to whether I should have charged TVA as reading online every article seems to give a different opinion.

  1. This is where it gets more fun LOL. At the end of last year I formed a new company based in Barcelona, there are two shareholders myself and one other holding 50% each. The other shareholder is financing the business and offered me a guaranteed monthly payment for year 1 until we are up and running.

An accountant told me I can invoice the company in Spain through my auto-entrepreneur status however to me something doesn’t feel right with that i.e. I am working on the business full time as a director (all be it very hands on from the ground up) so it’s not like I am just providing a specific service.

So my question is what is the best way to get paid this monthly payment i.e. do I need to register it as some sort of salary payment in France or are there other options for me to receive it. I don;t think it can be done as a dividend because the company won’t be in profit this year. Alternatively is there a better way for me to receive the money outside of the business in a direct person to person contract and if so how could this work?

I very much want to be compliant in France but it’s not easy!

Thanks for any ideas.

Your situation sounds a little complicated… I would suggest you go and speak face-to-face with your Tax folk… armed with all your papers etc.

You can explain to them that your Accountant told you differently to what they are claiming … and see what they make of that. :thinking:

At the very least, they might clarify why their judgement differs from that of your Accountant.

and…they can help/advise you with correctly arranging your future financial set-up (I would have thought)

Are you registered for VAT? f you’re above the threshold you need to be VAT registered and doing the returns even if at the end of the day there are no payments involved.
Presumably you have been sending in your intracommunity VAT returns for French customs which you have to do in any case?

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This might help:

My advice would be to hire the services of a French accountant for the French VAT issue, they can advise on what kind of VAT returns you should make, and deal with payment thereof as your intermediary with regard to the French tax office. Even if this is only for last year’s excess, it might be worth paying for their services, and also getting them to advise you on the payments you are likely to receive from the Spanish outfit (be it salary, detached worker status, or whatever), as I imagine, if I’ve understood correctly, that you will be running down the AE activity in France in the long term ? Some accountants will also carry out DES declarations for you. All of this will have a cost of course, but better that than being caught up in a tax inspection by the French tax authorities.

EDIT : the one reason I don’t recommend going to the tax office immediately is because they see things in a particular way that may not always be justified given the precise circumstances of your activity - accountants have a duty of confidentiality, and are trained in advising their clients within a given set of factual circumstances, whereas revealing all to your local tax officer may not be the best strategy in the immediate term.

Makes me wonder about the advice he has already received from his Accountant … if indeed it was wrong advice, does he have any recourse against said Accountant… ???

Not unless he acted on that advice, and that advice was given as part of a client-accountant relationship. If it was an off-the-cuff, corner of the coffee shop conversation, or even an introductory question over the phone, then it would be difficult to prove that a relationship existed. Even then, trying to sue an accountant for professional liability mistakes is like trying to get blood from a stone. This is why so many accountant firms no longer actually offer practical advice to clients (unless you go with one of the larger firms), they’re either too scared of being sued, or else feel they can’t bill you for their time if they do.

The advantage of getting them to do it in your stead (and paying them for it) is that they are then liable for any cock-ups, assuming that they are fully aware of the client’s situation. Obviously, if the client is doing something dodgy and doesn’t tell the accountant, then it seems pretty likely that any liability for incorrect action of the accountant would easily be waived. One might argue that it is the accountant’s duty to be proactive in second-guessing what the client might do. Fortunately, we haven’t got to that point yet to my knowledge (but I’m not an accountant, so don’t quote me on that part of their deontology). In my profession, we have similar deontological quandaries to discuss as case law evolves, fortunately, we haven’t yet attained completely nanny state status.

One reason not to go and speak to the tax man first, and seek paying professional advice before acting. These things need to be done right, in the right order, or it can get quickly complicated.