Ask the ex­perts

Whether you’re plan­ning your move to France, or are al­ready liv­ing there, our panel of pro­fes­sion­als aims to keep you fully in­formed with the best ad­vice for ev­ery even­tu­al­ity

Living France - - LES PRATIQUES -

START­ING A BUSI­NESS

QI am hop­ing to set my­self up as an in­de­pen­dent proof­reader/copy ed­i­tor, and am there­fore look­ing to go down the auto-en­tre­pre­neur route. How­ever, I need to have a bet­ter un­der­stand­ing of how my fu­ture in­come will af­fect my hus­band’s tax sta­tus/bill. Will it push him into a dif­fer­ent tax bracket/in­crease his con­tri­bu­tions (he is em­ployed fully in the French sys­tem)? Will it be worth our while? SARAH HEATH The auto-en­tre­pre­neur regime is a great way to start a busi­ness in France. It is tax ef­fi­cient, sim­ple to set up and ad­min­is­ter, and very lit­tle record-keep­ing is re­quired. How­ever, do not forget to reg­is­ter be­fore start­ing the busi­ness!

Un­der this regime, the so­cial se­cu­rity con­tri­bu­tions and so­cial charges are cal­cu­lated by ref­er­ence to the gross turnover, and are gen­er­ally due at a fixed rate of 22.9%. Since so­cial se­cu­rity con­tri­bu­tions and so­cial charges are sub­ject to a fixed rate of tax, your auto-en­tre­pre­neur in­come will not in­crease your part­ner’s so­cial li­a­bil­i­ties.

Re­gard­ing the in­come tax treat­ment, pro­vided the busi­ness turnover does not ex­ceed €32,900 per an­num, au­toen­trepreneurs could ei­ther ap­ply the mi­cro regime, or the prélève­ment libéra­toire regime.

Where your gross an­nual in­come is be­low €32,900, you can be taxed un­der the sim­pli­fied Mi­cro-BNC regime which gives a flat 34% rate de­duc­tion from the gross

AROB KAY is se­nior part­ner at Blevins Franks, which advises re­tired ex­pats on tax and wealth man­age­ment. blevins­franks.com See Blevins Franks on stand P268 in­come in lieu of ac­tual ex­penses. The regime can never show a loss, and if you wish to deduct ac­tual ex­penses, you will have to opt out of the Mi­cro-BNC for more con­ven­tional ‘real’ ac­count­ing and tax­a­tion. The net in­come (in­clud­ing the 34% de­duc­tion) will then be added to your house­hold in­come (in France you are taxed as a house­hold, and not in­di­vid­u­ally like in the UK), which will then be sub­ject to the French in­come tax scale rates.

Al­ter­na­tively, if your house­hold in­come is be­low a cer­tain thresh­old (for in­stance €53,262 for a mar­ried couple), you can opt for the prélève­ment libéra­toire regime where the in­come is cal­cu­lated by ref­er­ence to the turnover (with no de­duc­tions) and taxed at source at a fixed rate of 1%, 1.7%, or 2.2% de­pend­ing on your ac­tiv­ity. Here the in­come will not be added to your house­hold in­come, and will not be sub­ject to the scale rates of tax; nev­er­the­less it will be taken into con­sid­er­a­tion to cal­cu­late the ef­fec­tive rate of tax on your other house­hold in­come (i.e it is likely to in­crease the rates of tax ap­ply­ing on your other house­hold in­come). ROB KAY

TAK­ING OUT A MORT­GAGE

QI’m plan­ning to buy a property in France and am in the process of look­ing into mort­gage op­tions. Could I raise the funds with a ster­ling mort­gage or would it be more sen­si­ble to bor­row in eu­ros? PETER GILCHRIST

AMany read­ers who are in­ter­ested in buy­ing a property in France will be look­ing at the dif­fer­ent ways in which such a pur­chase can be fi­nanced.

There is ac­tu­ally quite a sim­ple, prac­ti­cal re­sponse to the dilemma of bor­row­ing in eu­ros or in ster­ling. Banks will in­vari­ably only se­cure a mort­gage in the same cur­rency as that in which the property is val­ued. Put sim­ply, you may have the op­por­tu­nity to take a ster­ling mort­gage out against a UK property, in the form of an eq­uity release. How­ever, if you wish to se­cure a mort­gage di­rectly against the new French property, it will have to be a euro mort­gage pro­vided by a French bank. The lat­ter may seem like a daunt­ing prospect, but there are many ben­e­fits when tak­ing out a French mort­gage.

French mort­gages tend to be tied to the Euro­pean In­ter­bank Of­fered Rate (Euri­bor). This in­dex re­flects the rate at which Euro­pean banks are lend­ing to each other, and has dropped as a re­sult of the eco­nomic tur­moil over the last few years, lead­ing to MATTHEW HAR­RIS is head of pri­vate client ser­vices at Cam­bridge Global Pay­ments. cam­bridgefx.co.uk See Cam­bridge Global Pay­ments on stand P313

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