France or UK?

[houba]

Hi,

I have a company in the UK and also one in France. I travel quite a bit and do not work nor live in either country (due to my contracting assignments, which are mainly in other EU countries).

What I'd like to know is which country would you suggest I submit my tax filings? France or the UK?

How/Where can I find out the best deals?

Now that we have a Conservative government in the UK, how does that impact tax filings for small businesses?

Not only do I do contracting, I also sell software products also.

I have to admit, although I am half French and my French is just as good as my English, i must say that the from what I've seen, the UK tax papers are much much easier to read and go through than their French equivalents.

But what about rates? I'm confused about this. What is the corporate tax rate for a limited company in the UK? In some places, I've read it is 20% , and in others it seems to be 28%?? Which is it?

My revenue (Corporate) is less than 300,000 a year.

Thanks for any advice you can offer.

Houba

[Dearnla]

Hi,

I have a company in the UK and also one in France. I travel quite a bit and do not work nor live in either country (due to my contracting assignments, which are mainly in other EU countries).

What I'd like to know is which country would you suggest I submit my tax filings? France or the UK?

How/Where can I find out the best deals?

Now that we have a Conservative government in the UK, how does that impact tax filings for small businesses?

Not only do I do contracting, I also sell software products also.

I have to admit, although I am half French and my French is just as good as my English, i must say that the from what I've seen, the UK tax papers are much much easier to read and go through than their French equivalents.

But what about rates? I'm confused about this. What is the corporate tax rate for a limited company in the UK? In some places, I've read it is 20% , and in others it seems to be 28%?? Which is it?

My revenue (Corporate) is less than 300,000 a year.

Thanks for any advice you can offer.

Houba

Knowing how the French love bureaucracy, red tape and forms, I would have thought it easier to do it in the UK.

The Corp tax rate is 21% for under £300K.

Err, don't you have to be registered as a UK Ltd co to be able to file in the UK?? Oh and VAT registered if your turnover is over the £68k-ish mark?

[ASB]

It's not a matter of choice. It's a matter of where you do business and where your companies are resident. Your UK company is not necessarily subject to UK taxation, it may not strictly be resident here.

It is perfectly possible to be tax resident (individual and corporate) in any number of different jurisdictions simultaneously (though the actual affect of this will be determined by any relevant DTA's.)

[houba]

Many thanks first and foremost for you responses.

I do business in most European Countries, but I live (am a resident of) France and the UK.

On top of all that, remarkably, I seem to find contracts outside both of these two countries. That is the only issue.

I just came back from France to see the Hotel des Impots (Local Tax Office equivalent), and I can tell you now that it is the difference between night and day compared with the Uk.

You are so right, the UK is easier.

However, I am aware that with this new coalition government, corporation tax may rise, so I wasn't sure if its worth to endure the extra hassle of tax filing in France for the added benefit of perhaps a lower tax rate?

So, from what I understand, my Corporation tax rate will be 21%.

Please correct me if I'm wrong, but isnt that 21% on profits? Its not on the full amount? is it?

So, after I have paid myself a salary etc, then I'm taxed.

But how do I do my income tax? How do I declare that if I earned the money whilst working overseas.

You see, in France, this changes: If you work more than 183 days a year overseas, your tax bracket becomes quite interesting (i.e. very low).

Is it the same in the UK?

[ASB]

Many thanks first and foremost for you responses.

I do business in most European Countries, but I live (am a resident of) France and the UK.

On top of all that, remarkably, I seem to find contracts outside both of these two countries. That is the only issue.

I just came back from France to see the Hotel des Impots (Local Tax Office equivalent), and I can tell you now that it is the difference between night and day compared with the Uk.

You are so right, the UK is easier.

However, I am aware that with this new coalition government, corporation tax may rise, so I wasn't sure if its worth to endure the extra hassle of tax filing in France for the added benefit of perhaps a lower tax rate?

So, from what I understand, my Corporation tax rate will be 21%.

Please correct me if I'm wrong, but isnt that 21% on profits? Its not on the full amount? is it?

So, after I have paid myself a salary etc, then I'm taxed.

But how do I do my income tax? How do I declare that if I earned the money whilst working overseas.

You see, in France, this changes: If you work more than 183 days a year overseas, your tax bracket becomes quite interesting (i.e. very low).

Is it the same in the UK?

Let us assume that you are doing all you billing through the UK company. Yes, the company is taxed on profit, you can find the current rate here:- HM Revenue & Customs: Rates and Allowances -Corporation Tax

So the likelihood is your co will pay taxes at 21% on it's profit.

However, given your residence in UK and France [and I have no idea whether you beleive you are tax resident in both in both which will be determined by the facts not by your opinion] you do need to consider where your company is in fact UK resident, French resident (which will be determined by French domestic law) or dual resident. The French rules may determine your company is French resident due to the location of its centre of economic interest (or it might not). It is also possible it is dual resident. [In any event with dual residence it is normallly the case that only one country has taxing rights and this is usually determined by the terms of the DTA].

It is also possible that your company is strictly resident in another country (or countries). Again it depends on what their rules are about company residence and this is often based upon the seat of control. [It is probably unlikely unless you physically spend a lot of time in a 3rd country - but it is possible; be specially careful of Belgium (there's a sticky for this).

Another possible thing to worry about is if the UK company does become treaty non resident then it may be liable for the CT exit charge on migration - it is unlikely because any assets are likely to be covered by the relevant DTA's, but it is not impossible.

Some info, not sure if it is still current: Company Residence

From personal taxation the above is also the case. If you are tax resident in the UK then you need to fill in and submit a tax return detailing your worldwide income and any treaty relief you are claiming. What you are actually taxed on (if anything) will depend upon your circumstances. There are also specific rules related to the use of foreign labour for > 30 days. Probably don't apply but the possibility again exists.

If you own property in France then you are (or at least would have been when I last know for sure) tax resident there. They also operate a Mondiale tax system and would seek to tax your worldwide income (though quite a lot of this is potentially at 0%); it is also likely that the income may be covered by the break clause. There are potential issues with types of income, France may take the view that the company income - if it happens to be resident in France should in fact be treated as your income and taxed accordingly. [An example of problems that can occur is like: Portugal apply a 15% withholding tax on all service performed within Portgual by individuals outside the Portuguese system, this is simply deducted from payments by the paying company and a certificate given on request. IT can be difficult for a UK company to offset this against its UK tax bill (though I think the DTA has been amended to address this)].

You can't just unilaterally decide to do everything in the UK. It is not as I said a matter of choice (it may well be that the outcome is this is what happens in practice). You are up for interesting discussions with the Hotel des Impots for sure. If you get it wrong it could turn out very expensive indeed.

One other thing too is to consider your NI position, your position might be that you can elect to pay NI in the UK. Getting out of the French social Security net can be useful in many cases.

This may be a useful read.

HM Revenue & Customs: International - Frequently Asked Questions