I’m retired, living in Caen, receiving UK state pension directly into my bank account here. Haven’t worked since arriving here last summer, and haven’t yet told the French tax authority that I’m here. (My income has been below the UK tax threshold and HMRC told me I don’t need to do a tax return).
Carte vitale comes courtesy of the UK health form (forgotten the name). The health system also lists me as chronic sick – ALD - which means the mutuelle doesn’t have to pay much for my long, long list of meds and treatments.
In the New Year I’m hoping to start some consultancy work (marketing and PR) for friends and former colleagues in Southampton.
Most of the project will be done by a UK based TV production co, who also have a co in France. One of the directors (colleague of mine for 30 years) who used to live and work here suggests that they employ me from the London office, either on PAYE or on a simple monthly fee freelance basis. They obviously use many freelances and report payments to HMRC [not sure how / when].
My only expenses will be about £250-300 a month for ferry and hotel. Phone calls to the UK are all free with my Orange Fibre deal (or, technically, all in the price) and I pay about £50 a month for various internet subs. I’m happy to wrap these into my monthly fee or wage rate if I go on PAYE.
“That will be a lot simpler than setting up as a microentrepreneur in France. As far as we’re concerned we will be paying for work you do in the Uk on your regular visits to. We could employ you in our Paris studio but I think that will also be complicated,” he said.
So… do I just go back to HMRC and say “some earnings coming in, please put me back in the system” to pay UK tax? And then in the fullness of time tell some branch of the French govt that I have earned £xx in the UK on which I have paid UK tax?
If you travel to the UK to carry out your work, pay your taxes there and include the earnings when you complete your first French tax return next year your situation should be straightforward. However, the moment you pick up your French telephone to do anything connected with work all that changes. If you are physically in France while you are working you have to be registered in France. I’m sure that the French tax office would prefer that you were employed by the company’s French office and that they paid the necessary employers’ contributions but there would be other possibilities.
You might not have completed a tax return in France yet but the fact that you have applied for and received a Carte Vitale means that they will be aware that you are here.
The advice I was given is that taxation is related to earnings, and, earnings (from a location perspective) are earnt where there are bums on seats doing work. So I echo David’s comment about picking up the phone in France. If the role truly has work in two places then you may be able to get into a grey area and use the bulk of the work to determine the main place of work and therefore the tax regime.
Please note I am not a tax advisor but I do know that a tax authority that thinks you are trying to pull wool will come down hard and seek punitive damages on top of any tax they deem to be due so I heartily recommend playing it straight (preferably with professional advice).
Best thing to do is pop into the Impots, ask them. Plenty of people float around Europe working here there and everywhere. Thousands cross the channel everyday working for businesses in the UK, go home weekends, pay tax’s and NI contributions in the UK but live in Bulgaria etc, but its not the same as working for a UK based company and being based in Bulgaria etc. In France there is a set period of time in which you can work under another members system, then after that its register in France, pay NI and tax in France. You could register as a micro, as a service provider, wouldn’t be able to claim any expenses, pay around 25% in charges.
Basically, in order for a French resident who carries out a professional activity in France to not be obliged to pay French cotisations on their professional income, they need to hold a valid “portable health document”/workers S1 form from the country into whose social security system they are paying. As a French resident, you and your employer can’t unilaterally decide you’ll pay NICs in the UK because membership of the NHS is primarily resident based, if you don’t live in the UK then you’re not automatically entitled to NHS cover and therefore can’t pay NICs. You need to apply to HMRC. They’ll make their decision based on your working pattern and will review this each year.
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In France there is a set period of time in which you can work under another members system,
but only if you have the correct paperwork.
EDIT - if the UK agrees to keep you on their books you won’t have to pay French cotisations, but am I right in thinking that the income will be subject to CSG instead? Which I think is set to increase as of Jan 2018?
Thanks for all the info and advice. AIUI if I register as a microentrepreneur I have to pay cotisations and income tax etc on my entire business income, with no deductions for expenses. Unlike the UK freelance regime where I was only liable for tax on the profit (ie receipts less expenses and overheads).
That wouldn’t be so bad if it were just phone calls, stationery etc. But in some of the less busy months I might do only a couple of days work here in France, then a couple of days in the UK. In which case the travel & accom element might be a third of the total. So I think I need an alternative.
Microenterpreneur is just one option. It is usually considered to be the simplest but does not fit all needs. Those who have a high turnover or those with high expenses will be better off looking elsewhere but for those who don’t want the hassle of TVA and accountants it’s advantages often outweigh the disadvantages.
You say you are retired which does add a little complication here as it will make a difference if you are self-employed or if you are employed. As an employee of a UK employer they will, of course, be required to deduct PAYE although if you have reached the state retirement age then you will not have to pay any National Insurance. This could be quite a saving as National Insurance is still payable if you are self-employed over state retirement age (although Class 2 would cease). See attached link.
However, you can’t just chose your tax status. It will be determined according to your particular circumstances whether you are employed or self-employed. You could find yourself having some interesting discussions with HMRC if they don’t agree with your “chosen” method of taxation!
In France, if you have an earned income you pay cotisations. I don’t know if you always continue to pay pension contributions after retirement but AFAIK you pay the other elements (training tax, healthcare etc).On micro you pay cotisations at a fixed rate so being retired makes no difference.
As said, if you have higher than average expenses for your activity sector then microentrepreneur would not be advantageous, you would be better to use a réel structure where you pay cotisations and tax on profit. But from your post it appears you will be working for one company and if that’s the case, claiming to be self employed would in fact be salariat déguisé and could result in severe penalties for your employer.
To be blunt, the situation seems at first sight to be that your employer wants to bend the rules and treat you like a UK resident rather than a French resident in order to save money. It’s understandable and obviously it’s up to you if you want to go along with it, but bear in mind that you will have to declare your income to the fisc, and you’ll have to decide which box on the tax form to enter it in. If it looks unusual and the fisc query it, you could have hassle explaining it.
I suggest the first thing for you and your employer to check is whether HMRC will agree that you should be treated as a UK-based employee. If they agree then you don’t have a problem - once they have issued the paperwork your back is covered and if the fisc or URSSAF want to argue the toss, they will have to argue it with HMRC not with you personally (though if you put in as many or more working hours in France as you do in the UK I doubt HMRC would). Without the paperwork to cover your back, you’re on your own with any queries that may arise with the French authorities.
Possible, I don’t think they would in fact, but definitely worth finding out for sure, because if they do it could have a big impact in the long term. Earning a small income as a micro entrepreneur seems to be allowed without affecting the S1, so it might depend on the level of earnings and the amount of cotisations paid, or, it could be that once you have retired and got the S1, it doesn’t matter if you then start working again. Or it could simply be that folks don’t tell them
And that’s until the UK accomplishes Brexit and is no longer a member of the EU. Then, we shall see what happens.
For the moment, Britain does not tax its citizens not residing* in the UK. What is meant by “residing”? In general, it means a period of six-months - but for the UK it could be different.
If “residing” in France, then one is obliged to make a French income-tax declaration. About that declaration, some guidelines here.
So, where, exactly, should you “put” your savings/funds. I don’t suggest you do so in France. The guidance I have had by “respected French consultants” has been abysmal. Keep it in the UK, or “off-shore”.
*At present, only three countries do so: The United States, the Philippines, and Eritrea. So, consider yourself lucky unless you’re American!
Well…that sounds a bit misleading to me. For instance:
If you live abroad but rent out property in the UK, the rental income is taxable in the UK.
If you live abroad but work in the UK, the income you earn in the UK is taxable in the UK.
If you live abroad but receive a UK government pension, that pension is taxable in the UK.
There are actually quite a lot of cases where people who live abroad do pay some or even all of their tax in the UK. The difference is that if you declare worldwide income in the country where you are resident, so if you live in France but have tax liabilities in both the UK and France, then you declare worldwide income to the fisc and you only declare to HMRC the income that is taxable in the UK, That’s why there is a DTA, to ensure that when you declare the same income in both countries (the country where you’re resident and the country where that income is taxable) it is not taxed twice.
It never fails to amaze me - 102 pages to explain how to decide whether you’re resident or not, more than enough to fry the average person’s brain, and France manages to explain it pretty conclusively in a couple of short paragraphs that everyone can understand.
All I was trying to say is that when Brexit occurs finally, the tax-situation is likely to change. Unless the UK also adopts a FATCA-type legislation - which the EU has already implemented (as regards Americans living in the EU) on behalf of the US.
So, precedence is there, and the EU will likely feel obliged to follow suit. The key question thus remains, where is the maximum level of income beyond which no-tax is applied by one’s country of origin.
*The EU has gone overboard in its quest for funds that have been sent abroad to escape national taxation. It is virtually impossible to track such funds if they are sufficiently well hidden.
*AND, when the EU agreed to do so on behalf of the US, it thought the arrangement was bi-directional. But it isn’t! A French person who has double-nationality (say in Cyprus) can use that identification (passport) for their American holdings. (Which is how the Russian oligarchs are hiding their funds from Russia, whilst their families live in Cyprus!)
*I.e., “Screw you, the EU!” (pardon my poetry … ;^)
The problem with Brexit is - if we leave with no deal in place - then we automatically exit any EU arrangement that covers us, if there is nothing in place then there is nothing in place, not the status quo. So even maintaining the status quo would require formal agreement to do so, and then we start wanting to piss around with the deal… (or have to because circumstances have changed and the old deal no longer “fits”).
I don’t think DTAs are specifically EU arrangements are they, they’re concluded between countries and we also have DTAs with non EU countries. But social security arrangements for cross border workers are a specifically EU arrangement, and presumably will not continue to apply to the UK after Brexit except, as a best case scenario, for people already working under these arrangements. In the case of no deal - who knows.