Expat Forum For People Moving Overseas And Living Abroad banner

1 - 4 of 4 Posts

·
Registered
Joined
·
22 Posts
Discussion Starter · #1 ·
Hi guys,
My husband and I are considering immigration to South France (from US).

1) Could you please explain how my profit (it is it gross sales) from my business / partnership registered in USA will be taxed in France? Is taxable income calculated similarly? What cannot be expensed? What tax rate is expected for a business that generates, let's say, $150,000 in revenue and $50,000 in profit?

4) If I re-register the business in France and run it from there (it's a service business, so easy to relocate) how will it change my tax rate or taxable income?

3) Also, my husband is receiving pension (social security) in USA. Will it be considered income and taxed in France? If so, at what rate is it taxed?

Thank you very much with this...
 

·
Administrator
Joined
·
50,465 Posts
OK - one question at a time:

1. It really depends on how you're set up and what role you play in the business. If you are an "employee" of the business (probably, but not necessarily, it means you're incorporated in the US), you would have to establish a French branch, which would be registered with the appropriate entities - primarily tax (including VAT) and social insurances (called "cotisations" here).

Basically, taxable income is calculated more or less the same here in France, however there are all sorts of rules and regulations about how you keep your books and report for tax purposes. Plus, there are a couple of "special" taxes on businesses.

2) (or 4, following your numbering <g>). In essence, this would be the way you'd have to go - whether you simply re-established your business here or set up a French branch of the US business. Depending on what sort of business entity you choose (and there are lots to choose amongst), you then have other options, including whether the business itself pays its own taxes and thus only pays you a "salary" or "draw" (as the owner/managing director), or whether you simply take the net profit onto your personal income tax declaration each year.

3) Social Security from the US is not subject to income tax in France (thanks to the tax treaty between the US and France), although I believe it is still supposed to be reported (in a particular manner) on your tax declarations.

OTOH, don't forget that, as US citizens, you continue to be subject to US taxes and reporting requirements. You may want to cast a glance at the Expat Tax section here on the forum, as there are a number of issues under discussion there for Americans living overseas.
Cheers,
Bev
 

·
Registered
Joined
·
22 Posts
Discussion Starter · #3 ·
Thank you, Bev.
So, what is the tax % on the specified revenue bracket?
Let's say, $150,000 in revenue and $50,000 in profit after expensing what's possible to expense? :)
I will not have employees, it will be something equivalent to solo proprietorship, partnership if we register together with my husband...
As per US taxes... if I will not be making nor spending $ in US, I assume I have no tax obligations? Just filling zeros in my forms... ?
 

·
Administrator
Joined
·
50,465 Posts
OK, first regarding the US taxes - no. You must always report your international income on your US tax forms, and you never lose the need to file. "Earned" income from abroad can be "excluded" (using form 2555) and there are some hairy reporting requirements for US persons owning a foreign business. See IRS publication 54 for details.

Depending on the type of business entity you set up (EIRL, EURL, SARL or possibly other options depending on what business you're in exactly) and the elections you make (i.e. the business pays its own taxes or you take the business' income onto your personal declaration), the actual tax rate can vary greatly.

The usual business income tax is 33 1/3% on profits reported by the business. There is a lower rate of 15% which is applicable to certain businesses set up in specified areas, and (I think) only during the first few years of doing business. Not sure how the cut rate works at the moment. With that level of revenue, you will be subject to VAT and VAT reporting - currently 20% here.

As far as your personal taxes go, there are differing rates for income and capital gains and you must file a "joint" return with your spouse if you're married. If your business pays its own taxes, then you can take a salary (subject to all the usual cotisations, most of which are deductible in calculating your "taxable income" on your personal declaration) or just report your "draw" and treat it like a salary.

This publication from the French Fisc (i.e. IRS) explains the taxation system in English: http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptive_1006/fichedescriptive_1006.pdf The rates and brackets are somewhat out of date, but the overall description of how taxation works here should give you an idea. It's a pretty complicated system - at least at first.
Cheers,
Bev
 
1 - 4 of 4 Posts
Top