Care is needed when registering as an individual holiday
lettings business in France.
Some "bar stool" advisers even believe that the "wheeze" of
getting the VAT back by so doing, can be achieved without French
administrative repercussions.
Registration as an individual trader at the one stop
facility does provide a registration facility for VAT, on furnished
lettings, but it also effectively registers the non-resident
individual at the one-stop business register, used also for social
security purposes. It is at that point that the issue gets
out of control.
Whilst EU subjects technically should only pay Social Security
in one EU state alone, and not in several states, the catch-all
French Social Security organism going under the epithet RSI, or
Régime Social des Indépendants, will seek to ignore this and
issue social security assessment notices of €10,000 per annum, on
the basis that no social security declaration has been made.
Overseas Chambers has successfully required RSI to deregister
clients from this unlawful administrative "poacher's" trap. The
outcome has been that the UK NI contributor merely has to file an
annual form with the RSI confirming that he is still registered for
UK NI.
The position of UK NI payers is one thing. They are still
harassed illegally by the RSI for payment, and it does take a
considerable amount of time to bring this rogue organism to EU heel
successfully on the basis of the directly applicable and effective
EU regulations. Those unwashed EU non-believers rapidly
change their tune when they realise that Europe does work, if made
to work.
The position of Channel Island residents is less regulated,
given that the EU social Security Regulations do not at face value
"apply" in the Island. Each case however depends upon nationality,
not residence. For "Channel Islanders" as defined in the Third
Protocol, there is some assistance given by the social security
Convention in force with France which covers medical emergencies,
and which is debited to Jersey Health.
Firstly, anyone believing that they can register for French VAT
alone needs to take this into consideration, and any accountant
dealing with the registration needs to be thoroughly briefed as to
the existence of this RSI organism, and the likelihood that it will
intervene immediately upon the registration taking place. As a
starting point the activity may need to be registered from a
Channel Islands address rather than from the French property.
Any individual seeking to register their holiday letting
activity as a business, over a valuable property needs to take
advice from Overseas Chambers as to how to go about this and avoid
the extremely frustrating and expensive process involved in freeing
the business from this, and other complications rarely mentioned on
the websites recommending this type of VAT saving and income
stream.
A detailed knowledge and experience of EU legislation and
principles is required to obtain non-registration, and it is
possible to use a valid UK National Insurance Number where there is
a UK employment or business involved. Otherwise a suitably
prepared documentation to the RSI prior to registration will be
needed to invoke the Jersey Social Security agreement with
France.
However, registration as a business implies that the individual
has also become a "commerçant", which opens up potential minefields
of legal responsibility. It is very important to seek advice as,
whilst French individuals are aware of these traps as part of their
civic education, that basic information is not readily available to
non-French incomers.
Contact Peter Harris for details.