Overseas Chambers of Peter Harris

Maison de la Boucterie
Rue de la Boucterie
Saint Saviour
Jersey, JE2 7ZW

The areas of the French loi de finances pour 2018 which affect non-residents and which few are addressing

January 28th 2018

The main issues addressed in the French loi de finances pour 2018 appear at first glance to be purely domestic.

Have you been working on the basis that the French have only introduced Pay As You Earn internally?

In fact the system introduced is far broader than that.  It is not limited to salaries and remuneration of that ilke.

It combines a form of flat rate tax on income, by a prélèvement paid up front, which is then balanced out by the following year's declaration.  It is not a régime with which the current leader of the British opposition would find himself at home in.

It is however possible to opt for the present régime of paying income tax in the following year at the current progressive rates, but that option has to be exercised in writing on a declaration.

The system is generalised payments in advance on income tax by way of withholding which are likely to distort the administration of payments made to non-residents, not only because the payers will be introducing the new systems, and taking taxes, but aso because the new income tax prélèvements are imbued with a facilty for taking prélèvements sociaux at the same time.  The prélèvement social is a hybrid which the Court of Justice of the European Union has held to be a social security or natonal insurance contribution. That should not be levied on EU residents contributing to a different European social security régime. The Social Security Regulations in force in the EU only admit one social security agency per person.

With Brexit only a year away, any  UK resident receiving income from France needs to consider their position very carefully, as the transitional measures leading to any form of separate agreement with the EU will have an impact upon such flows.

The same type of analysis needs to be made of income and payments from other EU states.