WE ARE French-resident, but are originally from the United Kingdom. My husband has taken work in Saudi Arabia for six to nine months. This work has been sourced and contracted through a British limited company.
We are considering using a service provided by a company called File Travel. This acts as an umbrella company for individuals who are in effect self-employed, removing their need to create their own company. They will invoice the UK company that secured the contract, on our behalf. They will then pass the gross income, minus their fees, directly into a bank account of our choice.
We know we need to declare this income, but is it acceptable to the French system to use this umbrella company? If so, will this mechanism reduce or remove our liability for social contributions in France? What will our tax liability be when we declare the income? C .M.
There is no problem in using an umbrella company and you would only declare your income received after their fees.
However, it is still your income, irrespective of how you arrange to have it paid to you, so you will still be assessable to the relevant social charges in France.
However, from what we have seen, the aim of this company is to pay income by way of dividends.
This means that your income will be assessable to the French social charges, but, more importantly, also means that you will not be able to claim any expenses as deductions against this income.
Further details about French income tax declarations of dividends can be found in Connexion’s income tax helpguide (which will be updated before next year’s income tax declaration date, available via our website, priced €5).
Ideally, you should do a comparative assessment between receiving dividends from this firm and not being able to claim expenses and setting up a limited company.
The other point is that you did not state what activity you were looking to take up, and so the question arises as to whether there really is a need for a limited company.
In your question, you refer to setting up a company, but I am not sure whether you mean a full limited company or a self-employed business. Also, depending on the activity and the amount of income, as you will only be working for six to nine months, there might be better options open to you.
I suggest you contact an appropriately qualified international adviser who could better inform you of your options and of the consequences of what you propose to do.