Contractor’s Question: I retired to France in 2020 having been an IT contractor for several years. However I am now being invited to work for a UK company remotely. I am registered for French tax but am not yet up to speed on the post Brexit situation.
I’m not intending to set up companies to handle this – just act as an independent contractor on a day rate. What’s the easiest way to get up and running, and what’s the most tax-efficient way?
Expert’s Answer: There is nothing to stop you from providing services to a UK company, and there are no UK tax implications to you for doing so. And sales that you make to your clients in the UK should not attract VAT.
B2B Vs B2C
The supply of services between businesses (so-called ‘B2B’ services) is, in principle, taxed at the customer’s place of establishment. In contrast, services supplied to private individuals (‘B2C’ services) are taxed at the supplier’s place of establishment. This is according to Article 44 of the VAT Directive.
You should not charge VAT to your UK client, and they will account for the notional value of VAT when they receive your input.
Err on the side of caution
That said, we would advise that you check with the French TVA (Taxe sur la Valeur Ajoutee) authority to make sure that they agree, so that you need not register for French TVA. The very last thing that you want is a TVA assessment based on your outputs, so err on the side of caution!
The simplest method of operation will be for you to register in France as a self-employed person. You can register as a ‘Micro-Enterprise’ if your level of professional services is less than €32,900 (£28, 410) per annum. If the turnover exceeds this level, then you will have to register as a typical business enterprise.
Registration, declaration and proof
You register in one of three ways with the Centre de Formalités des Entreprises (CFE). There are different CFE for each type of business activity. URSSAF is likely to be the appropriate one for you. You can visit URSSAF, write to them or complete an online form.
After you have registered and your declaration processed, you will receive a nine-digit identification SIREN number. This business number is proof that your business is registered and used by all government and official agencies when referring to your company.
You’ll also get a SIRET number that consists of a SIREN number plus a five-digit number identifying the location of your business.
Furthermore, you’ll also receive an APE (Activité Principale de l’Entreprise) or NAF code that identifies the main activity of your business. Each business in France uses these codes, which consist of four digits and a letter.
You will report your income and expenses with your annual tax return when the ‘fisc’ (the French for ‘taxman’) will tell you what you must pay to him. I hope this helps and good luck with moving from retirement to semi-retirement!
The expert was chartered accountant Kevin Austin, managing director of overseas contracting advisory Access Financial.