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
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