Advice on which solution to go with whilst abroad - Sanzar/Garraway Consultants

[skywalker76]

Hi All,

I'm new here on this forum and have just finished a 6mth assignment in France. I'm due to start another contract in France that will last a year but I am aware of the 183 days rule. Unfortunately there is not enough work for me in the UK in my domain of expertise and there is plenty here.

I'm currently with Sanzar/Garraway and I have to say that they have been excellent the entire time, always paid on time and generally a good service. However, I am worried that this scheme cannot last and that the law will change once again. I was assured by Sanzar at the beginning of the new year that their new solution is 100% compliant.

I am now facing a dilemma and have been looking at a few different solutions:

1) Continue with Sanzar and wonder what will happen if the Inland Revenue make changes once again?
2) SJD Accounting proposed to set me up as an employee on a secondment and that I could take home 75% by submitting enough expenses; doesn't sound right to me? They said that a Ltd company is not legal as I'll be working out in France on a 'perm' basis. Any advice people?
3) Access Financial have some sort of setup in France that lets me take home 75% (Using an Impatriation allowance I've been told that 30% of my taxable salary will be exempt from tax)

Does anyone know if the French tax system is known for clamping down on foreigners who don't declare themselves after the initial 183 days? The only way I can see this happening is if the french taxman does an audit on my French agency. I am not registered in the French system yet as I still pay my taxes/Nat Ins in the UK.

I'm not sure how long I'll be here and my intention is to come back to the UK once the market picks up a little so If I declare myself in France, i'll just get raped by their crazy taxes! My French colleagues have told me not to bother and to keep on using the current UK solution!

Any advice appreciated.

Many thanks

[northernladuk]

I was assured by Sanzar at the beginning of the new year that their new solution is 100% compliant.

They are hardly going to say it is 50/50 and will lose your house and everything when HMRC apply retrospective taxation on it are they.

Try doing a search on here for Sanzar. Not much good news to read I am afraid.

[skywalker76]

Fair enough, but if HMRC were going to do anything about it why have they not clamped down already? Why has this been dragging on for years? I've seen posts on this forum dating back 3 years that warn people about this retrospective tax.

What do you think of the other solutions that I proposed?

[LisaContractorUmbrella]

Fair enough, but if HMRC were going to do anything about it why have they not clamped down already? Why has this been dragging on for years? I've seen posts on this forum dating back 3 years that warn people about this retrospective tax.

What do you think of the other solutions that I proposed?

They have clamped down - new legislation came into force end of last year and the BN66 appeal was dismissed this week. If you are working and living in France for 18 months+ then there will be a liability for French tax and social security contributions; I am not an expert on French tax law but I would guess that they are no more open to the idea of 'schemes' that reduce tax liability than the UK Government.

[mooshld]

I am in a similar situation coming to the end of a gig and looking at others that would take me over 183 days in France. The option I am leaning towards is to make my ltd dormant and go through a payroll with my accountant. Its that or setup through an umbrella in France, anything else to me is to good to be true.

We all have to evaluate our own level of risk, but I draw the line at anything that could have me fined and paying back taxes well in excess of what I would have had to pay, had I just been by the book to start with.

Finally if the rate doesn't cover it negotiate one that does, or don't take the gig.

[PhilBreeze]

OP - the French system is not known for being excessively relaxed, that is for sure. If you are there for more than 183 days you should register in France. There are ways and means of them catching up with you. Also I guess if you're going to be there for a year you might want to set up with a French doctor, get a mobile phone contract and various other things that could flag you to the authorities as being there.

Once you are resident in France any payments from a trust may be treated very differently than in the UK. France uses civil law which doesn't recognise the concept of a trust (see Trust law in Civil law jurisdictions - Wikipedia, the free encyclopedia). It's therefore possible that payments from a trust would be treated as income payments. The only way to be certain of where you would stand is to ask a French international tax expert which may be cost prohibitive.

One thing worth considering is the Form A1/E101 which could allow you to continue to pay National Insurance in the UK rather than pay French social security. This would increase your overall % but also would continue your contributions towards the state pension and other state benefits here.

It is legal to use a UK limited company in France but you may need a labour leasing licence to send employees of the company (ie you) to work at another company. Your company would also become French resident as you would be moving the management and control of the company (you) to France, so your company would be liable for French corporation tax. It may not be worth the cost and red tape.

If you've been offered 75% using a solution that is compliant and puts you on French income tax, that's a very decent return for France IMO.

[skywalker76]

Hello Lisa,

Are you saying that I should get out of this scheme now due to this ruling?

[LisaContractorUmbrella]

Hello Lisa,

Are you saying that I should get out of this scheme now due to this ruling?

Hi Skywalker

I cannot advise you to use a scheme or not but you should be aware of the risk and make provision for any tax that may become due at a later date (see BN66 thread)

[SueEllen]

Your company would also become French resident as you would be moving the management and control of the company (you) to France, so your company would be liable for French corporation tax. It may not be worth the cost and red tape.

If the company has 3 directors, two of whom are permanently resident in the UK, board meetings and other management decisions take place in the UK how can the company be French resident?

[BlasterBates]

Generally you should be taxing yourself from day 1, not day 183. Be aware of that. The 183 day rule applies to your personal tax status, not the business. You can't open a factory for 3 months and shut it again all tax free.

When you work in any country on a contract, it would be exceptional that the tax authorites wouldn't tax you regardless of how many directors you have back home. Of course let us say you did a 1 or 2 month contract, it probably be wouldn't worth their while.

If the French authorities find out, they'll be down on you like a ton of bricks, particularly the VAT people.

Contractors that just continue as if they're in the UK often get into serious trouble with the relevant authorities. The one saving grace in France is that there isn't a flourishing contractor market, so unlike Germany or Belgium where there is, the tax authorities probably won't be actively looking for you, as they would in those countries.

In your position I would go and see a local French tax advisor and get your affairs straightened out.
Follow his advice and don't take advice from so called "International Tax" experts. There is no such thing. These experts sit in tax havens and are not accountable, so they'll sell you all sorts BS schemes.

You can sit quiet and hope they don't find out, but it will be deemed to be tax evasion, and they could find out any time in the next few years. Some contractors have got nasty letters a couple of years after they left the country.