Micro-Entrepreneur invoicing own UK Ltd company

Hello!

Long time reader, first time poster.

My partner Sarah & I are planning a move to Marseille next July.
We run a book publishing and graphic design UK Ltd company with fairly high turnover but low profits…such is the nature of publishing!

We are trying to understand the best way to set up for our move to France; we have a large amount of book stock here in the UK and most of our market (for both book sales and design activities) will remain here. We will also travel back to London once a month or so to conduct meetings, discussions, face-to-face design work.

Some advice we have been given is that it might be sensible to register as individual micro-entrepreneurs in France and to invoice our UK LTD company for work undertaken by ourselves for the business. However I’m wondering if this is acceptable or legal? It seems ideal to me but also a bit fishy…as we would be invoicing our own business. Would it be different for instance if we were not the majority shareholders in the UK LTD?

Thanks, looking forward to any advice!

It’s complicated but basically if you are working in France on behalf of a British company that company has responsibilities and they can be expensive. As an ME you are not allowed to work for only one client. France does not entertain the gig economy as Britain does.

Hi there Lewis.
Firstly, you are correct to suspect that two individuals living at the same address and each registering as micro entrepreneurs in the same activity, would not be acceptable or legal. If you work with a partner then neither of you is genuinely an “entreprise individuelle” ie a one-person business. You need to set up a business structure suitable for a partnership. Your registations would be unlikely to be processed and if they did slip through there is the danger it would be picked up later on, because the registrations would in themselves suggest you are working in partnership, and an inspection of your accounts would confirm it. You would then be “re-qualified” and expected to retrospectively pay the charges you’d avoided. Explained here https://www.portail-autoentrepreneur.fr/actualites/possibilite-association-auto-entrepreneurs

Your case would be further complicated, as David says, by the fact that in fact neither of you is genuinely self employed. Claiming to be self employed when in fact you work for one company is known as salariat déguisé in France and URSSAF deals with it severely; I believe the UK has the same concept of “disguised employment” but HMRC is less proactive about stopping it.

So one way and another, registering as micro entreprise could lead to a lot of trouble in the long term.

One correct route would be for your UK company to register you with URSSAF as employees based in France. This would involve putting you on a French contract that complies with French labour laws, issuing French payslips each month and paying the appropriate social security contributions. URSSAF has produced a booklet in English to explain the system https://www.urssaf.fr/portail/files/live/sites/urssaf/files/documents/5015-GuideCNFE-UK-2017.pdf and has set up a portal to guide you through the process https://www.tfe.urssaf.fr/tfewebinfo/cms/lang/en/presentation.html

I think this would be your best route if you will in due course after Brexit need cartes de séjours, because having the status of French employees with full employer/employee contributions paid, is pretty much the gold standard; the fact that you’re employed by a UK company shouldn’t make any difference as long as you’re properly registered with URSSAF. The downside of course is the level of cotisations your company will pay.

Otherwise, there are no doubt various ways you can do this by setting up a separate business in France (SAS, SARL or whatever) to work in cooperation with your UK company, you would need to talk to an accountant or business consultant about this. Alternatively unless there are reasons why you need to have a UK Ltd Co, it might be simpler to close that down and move the whole business to France. to avoid having tax liabilities in both countries. You would then have the choice between employing yourselves as salariés, or being gérants non-salariés (TNS-travailleur non salarié). As TNS you pay lower social contributions and have more flexibility. But you could only be TNS of a French company.

Hope this makes sense and gives you an idea of a way forward. Can we take it you’re confident that Brexit won’t end in no deal, or does one or both of you have an EU passport?

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Hi Anna & David

Thank you both so much for the advice. To maybe pick either of your brains further…

Anna your suggestion of the TFE system makes sense, are you able to help point us in the direction of somewhere we could calculate the cotisations that we would need to pay? I assume this would mean we would have cotisations to pay as both the employer and social security contributions as an employee?

Regarding the salariat déguisé - so as a business we invoice and do graphic design work for various clients; so one option possibly would be to just invoice these clients directly as a micro-entrepreneur, therefore avoiding the issue of only invoicing one (our own) business.

Another possibility that I’m unclear on is about whether we are compatible with registering as an artist with the Maison des Artistes as documented below:

https://www.french-property.com/news/french_business/artist_author_france/

http://www.secu-artistes-auteurs.fr/sites/default/files/pdf/Guide%20pratique%20Diffuseurs%20contribuant%20sur%20la%20rémunération%20des%20auteurs.pdf

Effectively our business in in two parts - income from publishing and income from design work. We could keep the publishing income and expenditures in the UK and only run the design work through either a french ME scheme or something else.

We are both graphic designers and work exclusively within the creative industries so I believe we meet the criteria. This part of course is appealing:

The great advantage of affiliation to MDA or AGESSA is that you will pay a reduced rate of (circa) 15% in social security contributions on of net earnings, the lowest rate payable under any self-employed regime in France.

My understanding of this scenario is that we would both individually need to be registered as micro-entrepreneurs nonetheless which I find tricky given that we work together though…so perhaps this is a question for the Maison des Artistes.

I’m not sure we’re ready yet to jump ship and close the UK LTD, then shift the entire business to France; we’re in our twenties, and so while this move is something we are both set on we don’t yet know how long for. There is also zero VAT on books in the UK compared to 5.5% I believe in France?

And to answer your no deal question - yes I should have mentioned that Sarah is a French citizen!

You will need to get professional expert advice on this I think.

I’ll just throw out a few reactions to your post, for you to follow up:

It sounds as if you think you register both as a micro entrepreneur and with MDA, but MDA is not compatible with micro entreprise, it’s one or the other.

TBH, working to client brief and invoicing for at the end of the job sounds more like a micro entreprise activity than MDA. As I understand it, MDA is more for actual artists who produce/exhibit/sell works of art if you see what I mean. But I’m no expert.

Yes working as MEs would avoid the salariat déguisé issue. But it wouldn’t solve the issue of how to undertake work in France for your book company. If that is a separate activity it needs to be declared separately, and one person cannot set up / run two separate business in France. You could however be salariés of that company, and set up separate MEs or whatever for your design activities.

Have a chat with your CCI.

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Have you considered your UK ltd company VAT registration in all of this big upheaval for your business, best if you talk with them before you start making any decisions, going on our past experience of moving a UK registered Ltd company to a domiciled French Address was extremely difficult unless you are thinking of having a UK registered address for your company VAT returns.

oh and I meant to pick up on this too - maybe unnecessary in your case, but, it’s important to get clear in your head the difference between a business as a separate entity in its own right, ie a personne morale, and you as the personne physique as an employee or director of that company. Or in the case of a micro entreprise there is no personne morale and you as a personne physique are also the business, ie one and the same entity.
I’m just mentioning this because being clear on this difference is quite fundamental to understanding how the various types of business structure work in France, and it’s surprising how often Brits on forums tend to not appreciate the distinction between personne morale and personne physique. I assume that the difference is not as significant in the UK.
So for clarity’s sake: the UK Ltd Co as a personne morale would pay the employer contributions. You the employees, as personnes physiques, would pay the employee contributions.

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Hello everyone very sorry for my slow reply, the new year got the better of me, happy 2019!

So thank you all for this advice.

I decided to ring around to a few French graphic designer/book publisher friends who all confirmed that MDA is the way to go and is completely suited to graphic designers as well as artists, so that’s good news.

It seems to us that most likely we will keep a UK Ltd to run all our publishing activities through which is also advantageous for VAT as you mentioned Mick, and then invoice clients directly as MDA status in France.
Next hurdle is to understand about how MDA deals with the fact that we undertake most of our paid design work together rather than as individuals as there appears to be no clear guidance on this online, but I can’t imagine we are the first creative couple to make an earn from an artistic endeavour in France…
If anyone is interested in hearing the results of those enquiries (we will go to the Maison des Artistes itself in Paris next March hopefully) then I’m happy to keep the forum updated.

In the meantime thanks everyone for the helpful replies it has been very useful in clarifying our position.