I have a small software development company in the UK since 2015. However, I stopped my activity in 2019 and moved to France where I’ve created a new software development company (SASU).
I would like to close my UK company and move all remaining money (~£40K) to France. However, I am not sure what is the most optimal way in terms of taxes.
It seems that the most obvious way is to transfer this money to my personal account and claim it as dividends in my French tax declaration? However, does anyone know if I need to pay extra taxes in the UK?
I am also curious if there an alternative way to transfer this money to my new French company? In such case, maybe I could use this money for my professional activities (I continue developing the same software as I did in my own UK company) and pay French corporate taxes at the end of the year?
I will appreciate any suggestions! Thank you very much!!!
Look at making a business investment in France? I am not sure of the minimum amounts required, but I understand there is very favourable treatment for those setting up a business in France.
So we are in a similar situation and will probably close our consulting company in April to coincide with the tax year end. Slight difference is that we need to just liquidate and keep the cash rather than reinvest in a business here. Our accountant has advised that we close the company and take the cash out as capital gain and there are some limits Don’t know the details yet - the accountant is getting us the full proposal after Christmas. You should look into this approach.
Thank you for your suggestion @ykm71 .
I assume that you live in France - do you plan to pay capital gain tax in France or there is something to be paid in the UK too?
Thanks!
I was vaguely thinking perhaps shutting the ukco down might not be ideal. Optimising the payout over more than one year may be the way to go.
If you are employed by the UK co then your employer could miraculously contribute up to £40k gross p.a. to your pension fund.
Contributions by your employer directly to your pension fund (not via payroll but direct to the fund) can be much more than your salary. The combination of your own contributions (if any) and your employer’s contributions should not exceed a gross taxable value of £40k in a tax year to be taxfree. So depending on your marginal tax rate, the net cash to get a £40k credit to your pension might be, say, somewhere between £22k? And ??£32k???.
The rest of the £40k, once you’ve used up this year’s gross £40k allowance, you can go back starting to up to the oldest of the 3 previous tax years and use up any unused up-to-£40k there, then forward through the years if you had unused allowance from those (up to £40k each year). All taxfree as employer’s pension contributions. I think NI-free too? So could even be worth paying some tax if in a hurry to do it in one go.
PS x2 if both you and your partner are employed in the business.
The only fly in the ointment being you can still have contributions made taxfree to your uk pension scheme for years you were resident including any last partial year plus one extra… I think. It could be worth a bit of googling (HMRC site) or ask an IFA.
I thought he wanted to extract cash from the UK company? Hence buying some none existant IP could work. It works for Microsoft, Apple and others in ireland
I suppose a loan from the UK company to the French company at an “arm’s-length” interest rate could be interesting too. X% over UK base rate adjusted to UK base rate quarterly could get interesting as a rate structure over next 3 years or so. I am not sure if French accountant could find anything to object to in this, or not, but could be worth asking.
Dear all! Thank you for your interesting and useful suggestions - I am leaning towards taking the cash out of the closed company as capital gain, transferring it to my personal account in France and paying all taxes in France…
Part of the advice that I’m waiting on from my accountant - there are different rates between France and UK. Yes, I live in France. I’ll let you know the advice I get after The Christmas break.
Yogesh
some IP to sell to the UK company.