Contractor’s Question: I’m an app developer although I no longer carry out contract/freelance work, but recently I have moved from the UK to France, facilitated by the fact that I’m an Irish/EU passport-holder.
In the UK, I have operated for the last ten years via a limited company that I wholly own, and I paid myself salary and dividends.
What sort of adviser do I now need given my move to France? Do I just need an accountant familiar with both the UK and France from a company formation, tax and social security perspective?
It has been put to me that I might not need to bother at all with any expert to help with my transition to being fully set up as a French resident, although financially, I should be able to afford to enlist one. Please advise!
Expert’s Answer: My recommendation is that you seek guidance from a French ‘Expert-Comptable’ who is familiar with UK tax and speaks good English – unless, of course, you are fluent in French.
Beware the fisc
A Google web search will reveal suitable firms of individual tax consultants who would suit you. So I would not attempt to make this transfer to French residency without professional support, as this is the sort of activity where the small initial cost for competent advice will quickly pay for itself, and quickly forgotten. By contrast, the grief which you may potentially receive if you put a foot wrong from the French ‘fisc’ (and HMRC), will remain long in your memory!
Consider, you will need the accountant you choose to register you for French tax and social security. They will advise you on the most efficient structure for you and your business.
But be prepared that you may be told that self-employment, whether as a micro-entrepreneur or under the régime du réel simplifié, could suit you better than continuing to operate through your UK company. You can find more details here, albeit in French.
The reason for your possible shift in structure is that as the director-shareholder of a UK company, you will create a ‘permanent establishment’ in France. That status will subject your company to French corporate income tax — currently standing at a hefty 25%. The comparable rate in the UK is currently 19%.
Be aware that you will have to convince HMRC that your company has a permanent establishment in France if you want no longer be liable for UK corporation tax. This is not massively hard to achieve, but it is another complexity. You will also have to register your company for French VAT.
Dividends, but not as you know them
An additional burden is that in France, dividends are subject to social charges, which is not the case in the UK. And these charges apply no matter the source of those dividends.
Even at a glance, you should be able to spot that just with these considerations alone, you need help both on the French side and on the UK side.
But first off, you should inform HMRC (if you have not already done so) that you are leaving the UK and will become a non-tax resident in the UK. Fortunately, this procedure is straightforward and you simply submit Form P85 to HMRC. This submission can be made yourself unless you request a UK accountant to do make the submission on your behalf.
Except perhaps for this single activity, it seems eminently sensible and proportionate to your situation for you to seek competent advice, to avoid unnecessary complexity in your life, keep professional and tax-related fees/costs in check, and moderate your tax and social security by paying no more than you are required to lawfully — while not paying taxes where it is no longer necessary.
Do keep in mind, though, where you pay your tax and social security is not a choice or a preference from allegiance to any jurisdiction, but instead is based on fact and legislation. The only way to really be sure of your position and liabilities is to ask an adviser qualified in the fields covering your circumstances.
However, if you choose not to follow this advice, you can find an excellent (and official) French tax website here, and this time it is available in English. Bonne chance!
Monday 23rd May 2022