Dual Citizen making preparations to work remotely in France

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Dual Citizen making preparations to work remotely in France


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Old 15th February 2020, 05:03 AM
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Default Dual Citizen making preparations to work remotely in France

Hello all,

I posted a while ago when trying to make the transition to France with my previous employer and unfortunately my request was denied even though everyone here was very helpful. Since then, I have joined a new company and have managed to leverage my status to allow me to work remotely in France. The plan is to convert me to a contractor which I hope makes things easier and simplifies things on their end.

So here I am, once again asking for your guidance [insert Bernie Sanders meme]

Firstly, I know I will need to seek tax consultancy from a specialized professional for the advanced questions. And I'm open to recommendations for that as well.

However, I'd like to get some initial feedback from my "plan." Having looked into the different offshore payroll options, converting to be a contractor seemed like the path of least resistance when proposing this move to my employer. Was I right in thinking that? It seems to bypass the french payroll laws and allows them to employ me in France without having a place of business in the country.

Also, understanding that if I spend 183 days in France I will be considered a resident, at what point do I need to convert to contractor status. After being there for 3 months? 4? 5...? Or if my initial intention is to work there long-term, does it need to be right away. I'm mindful of this as it comes to when the french tax authority will start to recognize my income. I'm aware of the 41% tax bracket and it is probably something I want to avoid if possible.

Still trying to think of all the things, so I welcome any additional thoughts. If everything works, I'll surely be back with some more questions as I get situated. Y'all are awesome and appreciated. Thanks!

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Old 15th February 2020, 07:33 AM
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The oft cited "183 day" rule is (in France at least) only a guideline. It's not enshrined in the law. If you move to France with the intention of establishing residence and taking up employment of any sort, then you are "tax resident" from the day of arrival.

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Having looked into the different offshore payroll options, converting to be a contractor seemed like the path of least resistance when proposing this move to my employer. Was I right in thinking that? It seems to bypass the french payroll laws and allows them to employ me in France without having a place of business in the country.
This approach only avoids the French payroll contributions for your US based employer. You will be fully subject to French taxes, registration fees and cotisations as an "independent" depending on the type of business entity you set up (micro-entreprise, SARL, EARL or EURL or whatever).

Be advised, too, that "independents" pay a significantly higher rate in cotisations than an employee would. Something close to 40% of declared earnings. (Income taxes are over and above that.) You're considered to be working in France any time you do work for which you are being paid while physically located in France.

What type of business entity you'll be eligible to set up is related to how much you expect to be taking in. Over a certain limit, you'll be subject to VAT, which you will have to charge to your "employer" back in the US (because the work is being done in France).

There is no "contractor" status here in France. And you may run into problems if you are working exclusively for a single "customer" especially if you don't have the right to take on additional customers or if your single "customer" has too much control over your work (i.e. is actually your "employer").

And don't forget that as a dual national (I'm assuming US-French) you'll still be on the hook to the US for taxes. Yes there is a tax treaty meant to "avoid" double taxation but the mechanisms for doing that "correctly" are imperfect and complicated enough to require expensive tax advisers.

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Old 15th February 2020, 07:48 AM
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On a far grander scale but there are parallels here.

Ryanair loses appeal against 8.1-million-euro fine for breaking French labour law

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Old 15th February 2020, 09:13 AM
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https://corporate.ryanair.com/news/e...sport-workers/

I assume that's the Ryanair case which was overturned by the EUCJ.

But if the OP is working for an American company not sure how any of this is relevant.

For residency status you have to look at the treaty tie breakers. You than have to hope both countries agree with whatever you think.

Does the French government offer tax opinions? If they do that would be half the battle

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Old 15th February 2020, 09:58 AM
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Quote:
Originally Posted by NickZ View Post
But if the OP is working for an American company not sure how any of this is relevant.
What's relevant for anyone who works in France is the French Labour Code.
And the Code du Travail has very specific rules on what constitutes salaried employment and what the employers' obligations are.
The difference between salaried employment and non salaried work is basically the difference between an employer/employee relationship and a client/provider relationship. Not whether or not the employer wants to pay payroll taxes.

This seems quite a good article https://captainfreelance.com/blog/20...ariat-deguise/
Presumably the relationship will change by virtue of the OP moving countries. I think he needs to think carefully about how much more independence that will give him and whether he could justify the change of status.

But generally, if a person claiming to be self employed depends on one client to the extent that if that client's business closed down your business would also close down, it's difficult to argue that you are running an independent business, taking your own business decisions, investing in your own business and responsible for the success or failure of your own business. And it's liable to be considered salariat déguisé.

Also the OP should bear in mind that the reason for these rules is to protect the worker. As an employee you have a whole raft of social benefits and in particular are protected if you are ill or if you lose your job. As a self employed person you have no unemployment benefits, and depending on your setup you may have less sickness protection.

Maybe look into portage salarial?

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Old 15th February 2020, 10:07 AM
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Basically if you are doing the work in France you are liable for french taxes pension and health care charges and you need to set up the appropriate business entity in France As Bev has said there is no such thing as a contractor and if you are working for one company and one company only then you are employed by them and they too will be liable to pay french taxes etc
The best place to get advice about setting up a company is www.cci.fr
To be blunt your idea is a fraught with difficulties as the french impots will soon cotton on to what is happening and probably your contributions as Bev says will be financially onerous
In essence if you are not an employee you are a business entity and as such are expected to be "working" for different individuals/other "companies" I am not trying to be negative just pointing out what is possible in France

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Old 15th February 2020, 10:11 AM
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What's relevant for anyone who works in France is the French Labour Code.
You might want to explain that to the EU court of Justice that has ruled the exact opposite.

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Old 15th February 2020, 10:14 AM
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Quote:
Originally Posted by NickZ View Post
For residency status you have to look at the treaty tie breakers. You than have to hope both countries agree with whatever you think.

Does the French government offer tax opinions? If they do that would be half the battle
The problem is the "dual national" status of the OP if one of those nationalities is US. As a US citizen one is ALWAYS considered "tax resident" in the US even if tax resident elsewhere because that's where you live and work. So there are no "treaty tie breakers" - as a US citizen, if you live and work in France, you file taxes in both the US and France, using whatever mechanisms you can to reduce the chance of double taxation.

And, if you live and work in France, you (or you and your employer) pay the cotisations (social insurances) so that you are contributing to the health care, retirement and general benefits systems.

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Old 15th February 2020, 10:16 AM
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Quote:
Originally Posted by NickZ View Post
You might want to explain that to the EU court of Justice that has ruled the exact opposite.
I don't see the connection.
The case you cite is specifically about posted workers. France does have a history of being difficult over posted workers - it never liked the scheme because it sees it as a form of social dumping. (I've been personally involved in a similar dispute with DIRECCTE over posted workers between the UK and France, where France was trying to impose more of its own rules than it had any right to.)
But the OP isn't a posted worker is he? Posted workers is an EU scheme which involves getting a form A1 from your home social security system to cover you in the country where you work. All posted workers have to be notified to DIRECCTE prior to starting work in France. The EU directive specifies which of the labour rules of the host country apply (minimum wage, working hours etc) and which of the labour rules of the home country apply (can't think of any examples offhand but there are some). If you're unlucky, a labour inspector come to your place of work and puts all your paperwork under the microscope. As in Ryanair's case and as in my company's case, they are apt to find fault where there is none.
It's a very specific arrangement. The A1 is an EU form, the posted worker scheme is an EU scheme, the US isn't part of the scheme, and the OP isn't a posted worker.
https://ec.europa.eu/social/main.jsp?catId=471
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Old 15th February 2020, 12:42 PM
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I guess one bombproof way for the OP to do this would be to set up a company, ie a legal entity, (a SASU maybe?) of which he is the dirigeant salarié. That company would then meet all the employer obligations including paying the social taxes. So there would be no question of disguised employment and he would have full social protection. If the company chooses to do business with only one customer, that's its own business (literally) as long as it meets all its legal obligations.
But it would probably be significant hassle, as well as the expense. Portage salarial, if it's an option, would be far less hassle and the costs may be comparable, depending on the costs of setting up and operating whatever business structure is chosen.

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