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Paying tax in a country other than that in which you live
Thread poster: Jeremy Smith

Jeremy Smith  Identity Verified
United Kingdom
Local time: 22:12
French to English
+ ...
Jul 29, 2002

I\'m currently taking a long, hard look at the possibilities of going freelance later on this year. Living in France, if I did take the plunge, I would end up paying a frankly terrifying amount of money in taxes and assorted social charges (France is one of the most expensive countries to go freelance). Is it possible (ie: legal) to tell the authorities that my HQ is in the UK (I am a British citizen), and thereby pay (much lower) taxes to the British government, whilst all the while working in France.

Thanks in advance for struggling through my meandering explanation/question, and thanks also for any light you may be able to shed on the issue.



Jeremy


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Parrot  Identity Verified
Spain
Local time: 23:12
Member (2002)
Spanish to English
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Do you hold an EU residence card from France? Jul 29, 2002

You may not be able to avoid it if you do. But British passport holders without foreign EU residence are still British residents as far as I know.

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xxxwilliamson
Local time: 23:12
Dutch to English
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Off-shore Jul 29, 2002

Go to google and type : Off-shore.

No further comment.



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Jeremy Smith  Identity Verified
United Kingdom
Local time: 22:12
French to English
+ ...
TOPIC STARTER
yep Jul 29, 2002

Yes, I\'ve got the Carte de Séjour (residency card). I was thinking of using a family member\'s address as an HQ in the UK, although I actually live here in France. But yeah, it does look like I\'m grasping at straws a bit - I\'ll probably have to bite the bullet and do everything here in France, in spite of the extortionate tax levels.

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Gillian Searl  Identity Verified
United Kingdom
Local time: 22:12
Member (2004)
German to English
When I lived in Germany ... Jul 29, 2002

... I was also resident there and had to pay German taxes. For UK tax purposes I was considered non-resident. I think the limit is 6 months a year, i.e. you have to live in the UK for 6 months of the year to be resident here. Sorry, but unless you\'re 6 months UK I think you\'ll have to pay French ones. Find a good accountant !

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Derek Smith  Identity Verified
Local time: 23:12
Italian to English
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comparison with Italy Jul 29, 2002

The situation should really be identical, since we are both in the EU. Several of my colleagues are tax registered in the UK and some of them run all their invoices through their UK company. This can save you a lot of money because you can offset all your overseas expenses against your taxable income, although you must expect to pay at the very least 1K sterling in accountant\'s fees. Others have opted for a dual system, with tax positions both in Italy and in the UK. This is helpful, because it clears up problems with residency status in Italy.

I believe the law states (in the UK at least) that you must pay tax in the country in which you reside for six months and one day, however, because of the unrestricted circulation of EU citizens within the community, I think that where you are for six months of your time is a mere technicality and cannot be easily proven. In short, imo you can do it and it\'s almost totally legal, or at least it certainly should be legal given the stated aims of EU member countries (and the fact that taxes you pay in Britain will very probably be used to subsidise French farmers anyway).

HTH

Derek


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Rod Darby  Identity Verified
Ghana
Local time: 22:12
German to English
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the legal position Jul 29, 2002

Jeremy,

I\'m in tax consulting in Germany and frequently get asked this kind of question. The official position is that the country in which you conduct your business has the right to tax you - in German this is called the \'Betriebsstaettenprinzip\'. There is a further doctrine that says you are liable to tax on all income world-wide in the country of residence. I think it might be hard to keep up the pretence of being non-resident. In Germany, you wouldn\'t have to pay tax at a higher rate than other people, just for being self-employed, and of course you would be taxed on your profit after business expenses, not on your turnover.

I don\'t know much about social security in France. In Germany self-employed people are not required by law to insure themselves, although there was a scare recently about \'apparent self-employment\', i.e. if you had one steady principal you worked for, that could be deemed to be dependant employment, making you liable at least for compulsory pension insurance.

There are ways of getting round this using tricks you may well find if you hunt the \'off-shore\' site suggested.

HTH - Rod


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xxxwilliamson
Local time: 23:12
Dutch to English
+ ...
Cost-Calculation. Jul 29, 2002

Not if you have a weekendjob which pays a full salary (at that moment you declare something and pay taxes) and if your name does not appear on any invoice.

What if that relative in Hong Kong writes the invoice and sends it montly by courier-so you can trace it online. How fast can money be transferred from one place on earth to the other. Do a cost-calculation: what is cheapest: paying a person in a place on earth with a cheap tax-system for writing invoices and sending them worldwide by courier, paying a collection agency or paying tax-autorities.

The disadvantage of this system is that you cannot decduce any costs. Nobody is going to sit behind your back to check whether you are writing a text for yourself or for a customer. Work as much as you can for customers outside France and outside Europe (export of services outside the E.U. is free of VAT).

This has its advantages too. Don\'t know about tax-advancements and advance payments of V.A.T. and other \"pleasant\" surprises when you are independent in a high-taxed country. Up to you. Good luck



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xxxwilliamson
Local time: 23:12
Dutch to English
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Correction... Jul 29, 2002

Oeps, read Hong-Kong instead of HQ.

Anyway translation is a globalized business. Before you start applying, sit down and think it over how to get highest profits and lowest taxes.



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Parrot  Identity Verified
Spain
Local time: 23:12
Member (2002)
Spanish to English
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Is there not an income limit in France Jul 29, 2002

before you reach what you call \"biting the bullet\"? 27,000 eu p.a. or some such condition, we in Spain have long envied French legislation for the incentives it gives starting self-employed professionals. Recently, our tax levels were reduced to 9% for the first few years, but that arrived too late for some (me, for one).

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xxxLia Fail  Identity Verified
Spain
Local time: 23:12
Spanish to English
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Physical and fiscal residence Jul 29, 2002

The law says that you must be physically resident at least 180 days (I believe) in a country in order to be fiscally resident. That said I know someone living here in Spain who pays tax in the UK and has done so for the last 8 years or so, but teachnically it\'s not legal.



See these:

Ireland is one of the few countries where the concept of domicile still comes into play in calculating tax liability. Domicile is taken to mean the country in which an individual has his permanent place of residence, and feels that he belongs; it is usually acquired by having an Irish domiciled father, and for this reason, most resident foreign nationals are not Irish domiciled. However, an individual is assumed to be resident if he/she is present in the country for more than half of the tax year, or 280 days over two consecutive tax years. An individual both domiciled and resident in Ireland is taxed on world-wide income, whereas an individual resident but not domiciled is liable to pay taxes on their foreign income only if remitted to Ireland.



Residence in terms of taxation applies to those who are present for six months in any given tax year, or are present for more than an average of three months each year for four or more consecutive years. There is, however, a concession which allows property owners to be resident on the island for up to four months in any two consecutive years without becoming liable for Manx income tax of 15-20%.



Domicile, ordinary residence and residence are the main determinants of liability to UK tax. The issues are complex.





A person’s domicile is the country that the individual regards as his or her natural home. Each person has only one domicile which is normally but not always the country of birth; it can be changed.

Ordinary residence is the country where a person normally lives or makes habitual visits, ie visits of three months or more a year over four consecutive years.

Residence in the UK is normally established by someone who visits the UK for at least six months in any one tax year, or three months a year over four consecutive years.

Non-UK income is taxed broadly as follows:



UK residents pay tax under Sch D Cases IV and V on income from overseas trades, professions, property and investments. Income is calculated similarly to UK income. UK residents who are non-UK domiciled or are UK or Eire citizens not ordinarily resident in the UK, pay tax only on income brought into the UK (remittance basis).

Employees who are UK resident and ordinarily resident pay tax under Sch E on remuneration from non-UK duties of their employment, in addition to their UK remuneration. Employees who are not ordinarily resident in the UK, and UK resident non-domiciled employees working wholly abroad for a non-resident employer, pay tax on their overseas remuneration on the remittance basis.

Non-UK residents are not normally liable to UK tax on overseas income.

Non-UK residents generally pay tax on their UK income. Tax may be deducted at source from property income. Only certain non-residents are entitled to personal allowances. They include all Commonwealth citizens, all nationals of European Union states, Norway, Iceland and Liechtenstein and all residents of the Channel Islands and Isle of Man. The UK income tax liability of a non-resident is subject to an upper limit. The calculation is complex but the broad effect is that no tax is charged on UK bank and building society interest and state pensions paid to non-residents provided they do not claim any personal allowances.



Just some data taken from Google as illustratiions of the issues involved



Slot in UK + residence + tax for info



See also



http://www.taxationweb.co.uk/forum/


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xxxwilliamson
Local time: 23:12
Dutch to English
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S.à.r.l. Jul 29, 2002

\"Une société à responsabilité limitée (sàrl)\"is completely legal construction to deduce just about every cost you have and pay less taxes than a self-employed. That way, you pay a lot, but you deduce a lot too.

Why do you think the Grand-Duchy of Luxemburg (nice little idyllic country) has about 200 banks of different origin.

What about a Luxembourg \"fiduciaire\"? Google the word \"fiduciaire\".

Luxembourg has the most linient fiscal legislation in the entire E.U. Why do you think a well-known translation agency has its seat in Luxembourg while the owner (at the time I applied there) lived in Germany and had to drive 100 km daily to reach his office?





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xxxLia Fail  Identity Verified
Spain
Local time: 23:12
Spanish to English
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9%??? Jul 29, 2002

Cecilia



That\'s what you may DEDUCT, instead of 18% as before. BUT you still pay taxes in accordance with your income, so it\'s actually not that much use.





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xxxwilliamson
Local time: 23:12
Dutch to English
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WWW.TAXHAVENCO.COM Jul 29, 2002

Gibraltaris going to get back into Spanish hands after 300 years. The inhabitants on the rock are against it and for a good reason.

Have a peek at www.TAXHAVENCO.COM. If that does not help, you can always move to the Jebel Ali Free Zone in Dubai (but it is a bit hot there ).


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Parrot  Identity Verified
Spain
Local time: 23:12
Member (2002)
Spanish to English
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Sure, Ailish Jul 29, 2002

Quote:


On 2002-07-29 18:18, SIULACH wrote:

Cecilia



That\'s what you may DEDUCT, instead of 18% as before. BUT you still pay taxes in accordance with your income, so it\'s actually not that much use.







But it was a big dock in circulating cash while you were getting things started, considering that the SS also wanted its fees starting from the first day, with no excuses. In the end, if you\'re able to balance deductions with the operating fund, it\'s not so bad.

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