First time contracting in France
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    Default First time contracting in France

    Hi all,

    I have just started my first contract in France, probe period of 2 Months for Big IT company. After that I am expecting to receive 6-12 Months offer for 2018.

    I am EU citizen (Croatian) and I was offered this contract in France which I have accepted. Unfortunately my UK agency and payroll company did not gave me correct information regarding net retention in France. I was told it will be around 67% on full year basis now I see this is impossible and they have only scammed me to sign the contract.

    I have insisted on full compliance solution (registered as self-employed here) and now I see that because of high French Social security charges and TAX normal take home for self-employed is around 53% and with mgmt fee is around 50%. Which is quite big difference to 67% as my gross to will be quite high (600e/day).

    Now I am not sure should I extend the contract for 2018 after all as it give me less money then expected and now my agency just to "correct" things regarding money is offering me split solution scheme which will result in 76% retention.

    So I have 3 options:

    1. To stay fully compliant and accept less net and get agency get away with it. ( I like the city and job but I will
    earn less then promised )
    2. To terminate the contract end of 2017 and go back home
    3. To accept split solution and take a risk ( dont know how risky this is in France).


    I am not fan of TAX evasion and that is the reason I have asked for for compliance, in other hand I would like to stay but dont like the thing that agency lied to me and now I need to earn like 2k less per month because of them.

    For third option I know from Germany that you can go to jail for this kind of setup and I dont know how are the things in France, information from mgmt/payroll company I can not take for granted because its there business.

    Any comments are helpful!

    Thank

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    Quote Originally Posted by nothingtoulouse View Post
    Hi all,

    I have just started my first contract in France, probe period of 2 Months for Big IT company. After that I am expecting to receive 6-12 Months offer for 2018.

    I am EU citizen (Croatian) and I was offered this contract in France which I have accepted. Unfortunately my UK agency and payroll company did not gave me correct information regarding net retention in France. I was told it will be around 67% on full year basis now I see this is impossible and they have only scammed me to sign the contract.

    I have insisted on full compliance solution (registered as self-employed here) and now I see that because of high French Social security charges and TAX normal take home for self-employed is around 53% and with mgmt fee is around 50%. Which is quite big difference to 67% as my gross to will be quite high (600e/day).

    Now I am not sure should I extend the contract for 2018 after all as it give me less money then expected and now my agency just to "correct" things regarding money is offering me split solution scheme which will result in 76% retention.

    So I have 3 options:

    1. To stay fully compliant and accept less net and get agency get away with it. ( I like the city and job but I will
    earn less then promised )
    2. To terminate the contract end of 2017 and go back home
    3. To accept split solution and take a risk ( dont know how risky this is in France).


    I am not fan of TAX evasion and that is the reason I have asked for for compliance, in other hand I would like to stay but dont like the thing that agency lied to me and now I need to earn like 2k less per month because of them.

    For third option I know from Germany that you can go to jail for this kind of setup and I dont know how are the things in France, information from mgmt/payroll company I can not take for granted because its there business.

    Any comments are helpful!

    Thank
    Don't do anything daft around 76%. Why not offer to stay on at an increased rate or leave?
    Where there's muck there's brass.

  3. #3

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    Default ask

    your end client to pay for your accommodation/travel directly as a compromise.

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    From a social security point of view, its quite straight forward, by default you pay this where you work, unless you are a posted worker, in which case your employer can look to obtain an A1 Certificate, meaning you would continue to pay social security in your home country.

    Without an A1 Certificate French social security falls due, from day 1. Unfortunately, French social security is extremely high.

    Taxation is a bit more complex. You become resident in France from the outset for tax purposes either:-

    a) Because you receive remuneration from a company who has a permanent establishment in France, or,
    b) Because you spend more than 183 days there. In which case you will have been considered to be resident from day 1, not from day 184.

    So as someone who is subject to French Tax and Social security, then if I were you I would be very concerned about any split deals.

    And if its your UK Agency / payroll company offering you a split deal, then this is even more worrying.

    Firstly, The French tax authority will seek to collect the french tax and social security due. Whilst the tax is a personal liability, there is a chain through which this liability can be passed, and it would include you, the UK intermediary / agency and the French client.

    Secondly, the Agency clearly haven't read / understood / accepted the Criminal Finance Act 2017, specifically, part 3 (Corporate Criminal Offence of failure to prevent tax evasion) Section 46, Foreign Tax.

    If any arrangement they make removes/disguises any part of your income from the French tax authorities then this is tax evasion, and both you and they would be held accountable. The French Tax authority will seek to collect the taxation (and social security).

    Additionally, whilst tax evasion by an individual was already a criminal offence, now failure on behalf of a UK intermediary to prevent the offence from taking place is also a criminal offence, which carries unlimited fines.

    Either, you leave France and work in a country where the tax and social burdens are lower, or accept that working in France compliantly will bring your net income down considerably.

    I know this is not necessarily good news, but its important to know the risks.

    HTH

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    Quote Originally Posted by Sue at IPAYE View Post
    From a social security point of view, its quite straight forward, by default you pay this where you work, unless you are a posted worker, in which case your employer can look to obtain an A1 Certificate, meaning you would continue to pay social security in your home country.

    Without an A1 Certificate French social security falls due, from day 1. Unfortunately, French social security is extremely high.

    Taxation is a bit more complex. You become resident in France from the outset for tax purposes either:-

    a) Because you receive remuneration from a company who has a permanent establishment in France, or,
    b) Because you spend more than 183 days there. In which case you will have been considered to be resident from day 1, not from day 184.

    So as someone who is subject to French Tax and Social security, then if I were you I would be very concerned about any split deals.

    And if its your UK Agency / payroll company offering you a split deal, then this is even more worrying.

    Firstly, The French tax authority will seek to collect the french tax and social security due. Whilst the tax is a personal liability, there is a chain through which this liability can be passed, and it would include you, the UK intermediary / agency and the French client.

    Secondly, the Agency clearly haven't read / understood / accepted the Criminal Finance Act 2017, specifically, part 3 (Corporate Criminal Offence of failure to prevent tax evasion) Section 46, Foreign Tax.

    If any arrangement they make removes/disguises any part of your income from the French tax authorities then this is tax evasion, and both you and they would be held accountable. The French Tax authority will seek to collect the taxation (and social security).

    Additionally, whilst tax evasion by an individual was already a criminal offence, now failure on behalf of a UK intermediary to prevent the offence from taking place is also a criminal offence, which carries unlimited fines.

    Either, you leave France and work in a country where the tax and social burdens are lower, or accept that working in France compliantly will bring your net income down considerably.

    I know this is not necessarily good news, but its important to know the risks.

    HTH
    Thanks for the reply. I will start asking a rate increase.

    Regarding posting It was my original idea for first 6 months to invoice from Croatia, as I have Ltd company in Croatia (local income TAX 20%) and was thinking to post my self up to 6 Months , generate A1 certificate (valid for 24m) and thats it. But as my agency was convincing me to go for French registration and convincing me about net retention in the end I went for that solution.

    Now I am registered in France for 2 weeks as self-employed ( Enterprise-individuale) but would like to post myself
    at least for 6 Months in 2018 but don know can I deregister now and continue as a posted worker?

    Thanks!!

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    Quote Originally Posted by nothingtoulouse View Post
    Thanks for the reply. I will start asking a rate increase.

    Regarding posting It was my original idea for first 6 months to invoice from Croatia, as I have Ltd company in Croatia (local income TAX 20%) and was thinking to post my self up to 6 Months , generate A1 certificate (valid for 24m) and thats it. But as my agency was convincing me to go for French registration and convincing me about net retention in the end I went for that solution.

    Now I am registered in France for 2 weeks as self-employed ( Enterprise-individuale) but would like to post myself
    at least for 6 Months in 2018 but don know can I deregister now and continue as a posted worker?

    Thanks!!
    You can't be a posted worker if you are the only person in the company, in these cases the company moves with the person.

    Posted worker applies to the likes of IBM and HP et al.....

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    Quote Originally Posted by stek View Post
    You can't be a posted worker if you are the only person in the company, in these cases the company moves with the person.

    Posted worker applies to the likes of IBM and HP et al.....
    Unless you work through a brolly which posts you there and you elect to pay UK (Croatia?) social taxes? I think that is possible with IPAYE who posted earlier in the thread?
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    Quote Originally Posted by stek View Post
    You can't be a posted worker if you are the only person in the company, in these cases the company moves with the person.

    Posted worker applies to the likes of IBM and HP et al.....
    I can easily regulate that in Croatia, Ltd with my wife as director and me as worker, then I can pay my self a salary and daily allowances here in France plus initiate A1 and pay social in CRO. But I think in that case I need to terminate French self-employed status and believe i can run this only up to 6 months. . Dont know... confused...

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    Quote Originally Posted by nothingtoulouse View Post
    I can easily regulate that in Croatia, Ltd with my wife as director and me as worker, then I can pay my self a salary and daily allowances here in France plus initiate A1 and pay social in CRO. But I think in that case I need to terminate French self-employed status and believe i can run this only up to 6 months. . Dont know... confused...
    Generally you pay your tax where you work. There is a myth that you can work in a country for 6 months without registering or paying tax. This can only be done if the client (not your company) is from your home country. i.e. if your client was in Croatia and needed you to help out on a French project you could do this. This is clearly not the case and your income is therefore considered to be French income.

    The myth revolves around residency, i.e. you only pay tax if you're resident. The fact is non-residents also pay tax. Many contractors have been caught by this, they work in a country for 4 or 5 months and think they don't have to pay tax; this can turn out be a very costly mistake.

    So register in France and pay your taxes locally.
    Author of the best seller "How to get Poor quickly"

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    As Stek said, it is difficult for a Limited company to obtain an A1 Certificate, although not impossible. The company itself would be deemed to have a permanent establishment in France, unless it has a significant trading presence in Croatia too.

    Additionally, the Employer who applies for the A1 on behalf of its employee has to meet certain criteria and one of these is also that the business has a significant trading presence in its home country.

    This is expected to be around 25% of the company's business to be generated in Croatia concurrently with the work you do in France. So, just have a Director remain in Croatia is not sufficient.

    Whilst we do operate a model in France for UK residents, we cannot obtain Croatian A1 Certificates as we do not have such a significant trading presence in Croatia. I think you need a Croatia payroll company to obtain the A1.

    The A1 would remove the French social liability but you would still be liable to French tax. Deregistering in France is a little tricky if you plan to stay there to work, and I would suggest you need a french accountant to assist.

    HTH

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