[Bevdeforges]

Hi and welcome to the forum.

There isn't really a home office deduction in the way you are thinking of it. Depending on how your business is set up (i.e. auto-entrepreneur, SARL, EURL, some other combinations of letters), your business expenses are either covered through a "forfait" (i.e. a standard deduction sort of thing that may or may not be baked into the tax rates) or simply deducted as normal business costs of the business itself.

Just as an example, we run a business out of our home that is set up as an SARL. You're allowed for the first two years of a formal business to run it out of your home - after that, you must get a professional lease. We've set up a lease between the company and my husband (who is the owner of the house) for a fixed rent and utilities charge each month. In order to do this, we've had to declare a certain part of our house as "business property" through the préfecture. (It was pretty easy to do - plenty of paperwork, but nothing too onerous other than that.)

If you're an auto-entrepreneur, you can't take any actual expenses. The nominal tax rate on your gross revenue (i.e. intake) "assumes" a certain level of expense and you're stuck with that.

Anyhow, the short answer is that it depends entirely on the form under which you set up your business in France.
Cheers,
Bev

 

[Bevdeforges]

Actually, it's not all that difficult to manage, even with 3 countries - at least if two of those countries are the US and France.

1. Because you are a US citizen, you always have to file with the US. But as long as you are resident outside the US, your "earned income" (which includes anything you make from your auto-entrepreneur business) can be excluded using the overseas earned income exclusion on form 2555.

The only catch is that to take the OEIE, you have to have established your residence outside the US for a period of 12 months. You don't need to establish 12 months in France, just 12 months outside the US - either 12 consecutive months or a calendar year, depending on which test you use to qualify. But as long as you qualify, any "earned income" (i.e. salary) you draw from your Hong Kong company can also be excluded - up to the limit, which is something north of $90,000 these days.

2. For French income taxes, there is a separate form you file to explain any income from foreign sources. You declare your foreign income on this form - and then carry the amount to the appropriate boxes on the regular tax form and they should give you the appropriate credits or other consideration.

The caveat on the French tax forms is that if you're receiving a real "salary" from Hong Kong while resident in France, there is some legitimate question as to whether you should be taxed on that by France or by Hong Kong. What normally counts is where you are when you are doing whatever it is to "earn" that salary - which means that residing in France may make it subject to French taxation. However, there is a part of the French declaration where you can report what taxes you have already paid to other countries - and I suspect this is going to be where you get your adjustment for any taxes due in Hong Kong.

3. Hong Kong - unfortunately I know nothing about taxes in Hong Kong so I can't really help you there.

The one big catch is that if whatever income you're drawing from Hong Kong is actually in the form of dividends or ownership benefits rather than "salary" things will get a bit more complicated - at least for your US taxes. (Dividends and interest are handled on the same foreign income form for French taxes.) Anything other than salary isn't eligible for the US exclusion, though you can claim a tax credit on your US taxes for any taxes you wind up paying to Hong Kong.
Cheers,
Bev