Can anybody help me? I own 50% of a UK company and currently take a small salary of about £8K and dividends of about £10K. I am tax resident in France. All my clients are in the UK and all the work is completed online.
Can someone please tell me , would I be better off regarding French social charges if my dividend was more and my salary less or visa versa. I have read somewhere that as I own 50% of the company social charges on my dividends will be a lot higher than normal around the 40% mark ? Any advice would be really welcome.
Many thanks
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I don’t know the answer. It’s hard to believe that you would pay more in social charges on dividends than you do on salary, or at least when I say “you pay”, I’m assuming that “you” means you and the company, i.e. employer+employee contributions (because aren’t French employer social charges on salary 45%+ these days? so total contributions must be over 50%, no?). If you’re only looking at the social charges that you yourself pay as an employee, then obviously that changes the equation hugely, but since you’re joint director I imagine you’re looking at the social contributions the company pays as well.
However, all that aside, my observation would simply be that depending on your circumstances there might be other considerations apart from the actual bottom-line figure, in particular, if you’re still young and if you’re planning on staying in France long term and eventually collecting your pension here, then higher salary=higher French state pension, it can make a very significant difference. Then there’s the UK tax angle - can you offset total French salary costs against profit to reduce the company tax liability to HMRC? So one way and another I suspect it might turn out to be a more involved question than appears at first sight and it would be worth getting professional advice, unless someone on here is in that situation and knows all the ins and outs.
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Thank you Anna. I knew there would not be a straight forward answer. This is giving me sleepless nights, not knowing. There must be somewhere where I can find out the rate of social charges I need to pay on a UK salary versus the social charges I need to pay on a uk dividend ? I take your point re the French pension entitlement though.
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Well when you pay a salary in France it becomes a French salary 
so yes there are loads of French websites that tell you all about that, although it’s not the simplest calculation in the world, eg Charges et cotisations sociales au 1er janvier 2022
Have you never seen a French payslip? It’s a thing to behold. It sounds as if you/the company haven’t got this organised yet but I imagine your company is going to register with URSSAF’s “CNFE” as an “employer with no place of business in France” - they recently set up a special service to simplify things for foreign employers, And they have produced a useful guide in English Charges et cotisations sociales au 1er janvier 2022 which tells you all you need to know about the salary side of things.
I imagine any French accountant will be able to explain about French tax on dividends, and I’ve no doubt there is lots of info online as well but make sure you get it from an official site.
Don’t lose sleep over i!, but if you’ve already made the move and you haven’t contacted the relevant authorities yet, I think you need to do this very soon because the longer you leave it, the messier it could get, and also, until your salary starts going through URSSAF you won’t enter the French social security system so you will have no entitlement to health cover.
The social charges on dividend payments (unearned income @ 15.5%) are roughly double that of employee salary payments (earned income @ 7.5% paid by employee) but you also need to take allowances, your nominal tax rates and double taxation into account to calculate an accurate overall figure. It may very well end up being six of one and half a dozen of the other on smaller amounts.
One ‘worrying’ thing from your post is that you state all your work is completed online. If by that you mean whilst you are located in France then technically this business activity should be registered in France under an appropriate regime. Online working is a can of worms and many fall foul of the legislation.
Hmm well that’s what I thought too, and that’s why I was trying to tactfully point Lynne towards the URSSAF booklet that explains all this. From what she’s said, the correct thing would be for her company to register with URSSAF, declare her as an employee and pay her salary through URSSAF’s new portal for foreign firms. I know it used to be a bit of a nightmare for UK companies with employees based in France to figure out what they had to do, but the new portal is supposed to make it a whole lot simpler and there is no longer any need so set up an actual business structure in France.
Arghhhh thanks guys. I think I need to register with URSAFF whatever that involves and advise what has been paid in the UK as a salary since I have been resident here in France and see what happens. I am already in the tax system here with a carte vitale as my husband is an auto entrepreneur… I have a feeling I am about to open a can of worms.
To be more acurate my work is received online but completed here in France (a service) and then sent back to the client electronically. All my clients are in the UK.
Thanks again
Regarding the dividend social charges of 15.5% on unearned income, I have read somewhere that if your dividend is more than 10% of your profits then social charges applied become more like 40%. This was to close up the loop hole of shareholders taking dividends instead of salaries from their own companies. But I cannot find anywhere if this relates to UK dividends or just French dividends ? Or if I have got this completely wrong !
Lynne… I suspect that Dividends are Dividends… (French, English or whatever)
'I am already in the tax system here with a carte vitale (sic) as my husband is an auto entrepreneur.'
I don’t understand this sentence. The two things re not linked.
Actually not Stella - it very much depends on the source of the dividends. Last year - those paid from the UK were liable to (broadly) 17.7% income tax and 15.5% CSG - but again, actual tax due will depend on nominal rates, tax paid at source etc etc…
What I mean is I have a Carte Vitale as a co-jointe as my husband is registered as an auto entrepreneur, so my worldwide income is declared on his tax return each year. This is all I thought I had to do, I didn’t realise my company had to register with URSAFF and deduct social charges each month on my UK salary taken.
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Hi Simon… yes, you are quite right… it does all depend where Geographically the Dividend comes from…and the French Info Table is clearly laid out as to the Tax applicable… I was meaning that a Dividend is just that… and should not to be confused with any other sort of Income…
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Lynne - under EU legislation - the country where the work is physically carried out has first dibs on any taxes due. So - as your working activity is performed in France, you should be registered as such. Any income tax paid (not social charges!) in France can of course be set against anything due in the UK (and vice versa).
As for registration - you need to take professional advice based on your circumstances. It;s important you take the most appropriate set-up route as it’s really difficult to unpick everything later on.
Yes, thank you for all your help …