Contractors' Questions: How best to freelance in France via my UK ‘Ltd’?

Contractor’s Question: I own a UK PSC from which I have been contracted to go and do a bit of project work on the side in France, for just under three months.

I won't be there permanently and will not have a residency there, but I'm being asked by the organisation I am being contracted by how I plan on paying tax.

They say that even though I have my own UK company and will be paid by that company and pay tax back home on those earnings, that I also must pay tax in France as well; is this correct? Is there a way round this double liability? It appears to make the assignment unviable.

Expert’s Answer: Firstly, it is worth stating that working in France and putting money through a UK limited company is not compliant with French tax laws. As you will be completing work in France you are required to pay tax in France. If you need to put the money you earn through your company, then an option could be to register your UK limited company in France right away. If you do invoice and get paid through the limited company without registering it locally, you will only pay tax in the UK, meaning your French tax liability will not be satisfied.

For guaranteed compliance and cost-effectiveness, I would recommend instead using the services of a payroll company that can offer an employment structure in France. This will ensure your tax and social security is managed on your behalf and paid to the relevant authorities for the duration of your contract in the country.

You are right in that, as a UK tax resident, you are also liable for tax paid in the UK. However, you do not need to worry about a double tax burden thanks to the double taxation treaty in effect between the UK and France. This means that your UK tax bill will be reduced by the amount of tax paid in France. In order to make sure this happens though, you will need to present the UK authorities with evidence of the tax you’ve paid in France.

Do remember that tax is always paid in the country where the money is earned, no exceptions. If you need further advice on any issues surrounding taxation in France I would recommend you seek advice from an in-country specialist who will ensure that you are complying with local tax legislation from day one.

The expert was Nick Broughton, payroll and contractor tax expert at Capital GES.

Editor’s Note: Related –

Contractors’ Questions: Where to pay tax while on UK-France project?

Contractors’ Questions: Will I owe UK tax when contracting in France?

Contractors’ Questions: Can I claim travel expenses from home in France to the UK?