Return from expatriation to France: Anticipating future issues with Tax office

[thomasparra]

I came back to France my home country after having lived overseas. I have never filed any taxes or made money in France before. I am starting a business in France and I would like to avoid issues with the tax office.

I have bank accounts in at least 5 countries including Jersey (HSBC), HK, US, France, UK. French tax office will ask me if I have international bank accounts when I file soon. If they found out and I failed to report it could cost me at least €1,500 by account and I have 5-10 of them. It does offset the 0% capital gain tax from being a resident of HK by a large amount unless the stock market goes up 20% YoY.

I was thinking of closing my HK accounts (or keep them? I have no use for them, but I guess it's always best to keep accounts especially in a juridiction like HK, could be useful in the future?).

I will definitely keep my HSBC Jersey account as I might move overseas again in the next year or two and it's the only way to move from juridiction to juridiction without any hassles, but I will probably need to report it as Jersey is part of CRS? What if they do not send me the CRS form, as legally I am still a resident of HK? Tax authorities outside of HK would probably not know it. Either way I think it is not worth it for me to lie or hide anything from the tax authority.

I do not know if I will stay in France for more than a year or two, but I would like to keep my ETF investments in Jersey as it is convenient and a good long term solution. I hope the French tax office does not use evidence to overtax me when I leave. This is the second concern of mine.

 

[Martin Everson]

I remember your last post below on moving to France.

Start a company in France instead of Ireland/Hong Kong?

I am French but never worked or paid any taxes in France as I mostly lived overseas. I am back in France and plan to start a company advising/consulting business. It can all be done remotely and the clients would be in Europe (France, Spain maybe) and maybe some in Asia as well. The suppliers...

www.offshorecorptalk.com

Since you decided to move back to France you would be wise to declare all accounts required by French taxman. There is no point thinking along lines that you don't know how long your stay is hence some stuff you may not want to mention. You must declare all accounts that are required by law.

Whether they load you with a huge tax burden or take special interest in you because you have so many accounts in so many great places and yet have no tax history with them is down to you.

P.S If I was taxman in France and guy turned up with accounts in HK, JSY, US, UK and has never filed before in France I would give you the tax equivalent of a deep cavity search without rubber gloves.

 

[thomasparra]

I remember your last post below on moving to France.

Start a company in France instead of Ireland/Hong Kong?

I am French but never worked or paid any taxes in France as I mostly lived overseas. I am back in France and plan to start a company advising/consulting business. It can all be done remotely and the clients would be in Europe (France, Spain maybe) and maybe some in Asia as well. The suppliers...

www.offshorecorptalk.com

Since you decided to move back to France you would be wise to declare all accounts required by French taxman. There is no point thinking along lines that you don't know how long your stay is hence some stuff you may not want to mention. You must declare all accounts that are required by law.

Whether they load you with a huge tax burden or take special interest in you because you have so many accounts in so many great places and yet have no tax history with them is down to you.

P.S If I was taxman in France and guy turned up with accounts in HK, JSY, US, UK and has never filed before in France I would give you the tax equivalent of a deep cavity search without rubber gloves.

France is not that bad after all. I am not a millionaire nor currently make 6 figure as I am starting a business. If I become like you surely I will escape one day, if it makes sense. The effective corporate tax rate is not that high. But I can always move back overseas in the 1 or 2 years if it does not make sense anymore, right?

 

[Martin Everson]

France is not that bad after all. I am not a millionaire nor currently make 6 figure as I am starting a business. If I become like you surely I will escape one day, if it makes sense. The effective corporate tax rate is not that high. But I can always move back overseas in the 1 or 2 years if it does not make sense anymore, right?

I am not sure why you bothered to start the thread then. Declare what needs to be legally declared to taxman and be done .

 

[thomasparra]

I am not sure why you bothered to start the thread then. Declare what needs to be legally declared to taxman and be done .

Trust me I would not be in France if my net worth was 7 digit and I knew my business would be pulling hundreds of thousands/millions on my first year lol.

You think it's fine to start the business and reside in France for a year or two, pay associated taxes and move overseas again in the future?

Should I keep all these accounts?

 

[scooterguy]

Should I keep all these accounts?

If you were not a tax resident of France during all these years, you don't owe any taxes to France.

Just make sure you were actually a nonresident. For example, how many days a year did you spend in France while living overseas? Did you keep an unoccupied house in France? Did you have any business in France? That sort of thing...

 

[algotrader]

Trust me I would not be in France if my net worth was 7 digit and I knew my business would be pulling hundreds of thousands/millions on my first year lol.

You think it's fine to start the business and reside in France for a year or two, pay associated taxes and move overseas again in the future?

Should I keep all these accounts?

There are millions of households having a 6 figure financial wealth in France. You think that the French taxman has the capacity and is keen to count peas with each of them? They will bother only if you receive large amounts transferred onto your offshore account or from your offshore to your French accounts and then their CRS algorithms will alert them. Since France doesn't have a wealth tax anymore (apart from real estate) they don't bother how much you keep on your accounts as long as you declare the account itself and new income such as interest, dividends or capital gains. And you only need to declare the account not the amount kept with that account.

 

[thomasparra]

There are millions of households having a 6 figure financial wealth in France. You think that the French taxman has the capacity and is keen to count peas with each of them? They will bother only if you receive large amounts transferred onto your offshore account or from your offshore to your French accounts and then their CRS algorithms will alert them. Since France doesn't have a wealth tax anymore (apart from real estate) they don't bother how much you keep on your accounts as long as you declare the account itself and new income such as interest, dividends or capital gains. And you only need to declare the account not the amount kept with that account.

I just hope they won't investigate me too much as this would be my first tax filing. Hence I was thinking of closing some accounts that I have overseas and keep the minimum.

Also, I came back in October 2022, should I file for 2022? or 2023? Since I did not receive any income in 2022.

 

[JackAlabama]

I just hope they won't investigate me too much as this would be my first tax filing. Hence I was thinking of closing some accounts that I have overseas and keep the minimum.

Also, I came back in October 2022, should I file for 2022? or 2023? Since I did not receive any income in 2022.

I'd close them all down. Makes live easier and removes potential target.

If you have enough cash, its easy to open such things. And if you do not have it, you can use Bitcoin as your offshore bank.
It is also easy to open an account if you have residence visa in the future, if you move.

 

[thomasparra]

I'd close them all down. Makes live easier and removes potential target.

If you have enough cash, its easy to open such things. And if you do not have it, you can use Bitcoin as your offshore bank.
It is also easy to open an account if you have residence visa in the future, if you move.

Thanks, I thought of keeping the HK account though as they are hard to open when not a resident. Are there any benefits to keeping such accounts in the future?

What do you think?

 

[scooterguy]

I wouldn't close them, it's easier to just declare them. Bank accounts are always useful.

Plus if in the future you want to create a company in HK, having an existing relationship with a bank will make things easier.

 

[sriracha]

It’s funny how people ask about starting a company anywhere in Europe and everybody says “you have low entrepreneurial spirit, you will regret it forever” etc and now that this guy has decided to jump into the sea with a large rock tied to his foot, people say nothing…France is country #2 in the world for taxes and the Fisc shoots first and asks questions later…please go to your local Hotel des Impots and LOOK at the employees…yes, they are the ones who decide how much you owe…please reconsider.

 

[thomasparra]

It’s funny how people ask about starting a company anywhere in Europe and everybody says “you have low entrepreneurial spirit, you will regret it forever” etc and now that this guy has decided to jump into the sea with a large rock tied to his foot, people say nothing…France is country #2 in the world for taxes and the Fisc shoots first and asks questions later…please go to your local Hotel des Impots and LOOK at the employees…yes, they are the ones who decide how much you owe…please reconsider.

The effective corporate tax rate is 15% for a net income below 43 000€. On top of that, you can always create a holding company to deduct advisory fees from your SASU and deduct charges. There are different way to optimise taxation and decent tax attorneys are rather affordable once you make this type of revenue/income.

Yes when you start to hire a lot of people and have a large revenue it gets more complicated because of charges sociales (even though a regular tax attorney could advise on this, also a French holding company does not tax international income.). I would probably hire most of the people overseas through a payroll company anyways so it does not really matter in my situation.

I am starting the company with no guarantee to hit mid to high 6 figure revenue especially on my first two years. Additionally, my current living costs in France are under 1000 per month. Sure I could go to Dubai and brag about my FTZ 0% tax rate but surely the tax benefits would be largely and negatively offset by the costs of living (3000 per month at the very least to survive there).

How is that a bad option for someone in my situation?

 

[sriracha]

Please understand I want to help you when you read my answer.
It appears that this is the first company you run. On paper, everything is as you say, SASU, holding company, 43k all that jazz.

In practice,

1 the system is rigged against you - France runs very large budget deficits and they can get only so much money from low income salaried people - small and medium companies are the cash cow of the Fisc.

2 A large percent of the people SUPPORT the state bossing small companies around, “rich people are evil”, “all rich people got rich by stealing “, and that legitimizes whatever treatment you will experience.

Because of the above points, the state has created a net around enterprises where they basically choke you financially.
A lot of taxes, however small, are to be paid in advance. Accountant are criminally responsible for underpayments of taxes, so they err on the safe side and don’t want to hear about any complications. The tax office shoots volleys of papers at you so that you get tired and pay everything- they make a lot of mistakes. Tax laws change very often, so you are always behind and spend an inordinate amount of time trying to catch up.

All of the above is called “business climate”, and in France it’s terrible.

43k is the turnover of a very small kebab shop. How long will you stay under 43k? At 43001 euro the above nightmare starts.

If you decide to leave, you will owe tax for 3 more years.

Please do your due diligence and ask around.

 

[thomasparra]

Please understand I want to help you when you read my answer.
It appears that this is the first company you run. On paper, everything is as you say, SASU, holding company, 43k all that jazz.

In practice,

1 the system is rigged against you - France runs very large budget deficits and they can get only so much money from low income salaried people - small and medium companies are the cash cow of the Fisc.

2 A large percent of the people SUPPORT the state bossing small companies around, “rich people are evil”, “all rich people got rich by stealing “, and that legitimizes whatever treatment you will experience.

Because of the above points, the state has created a net around enterprises where they basically choke you financially.
A lot of taxes, however small, are to be paid in advance. Accountant are criminally responsible for underpayments of taxes, so they err on the safe side and don’t want to hear about any complications. The tax office shoots volleys of papers at you so that you get tired and pay everything- they make a lot of mistakes. Tax laws change very often, so you are always behind and spend an inordinate amount of time trying to catch up.

All of the above is called “business climate”, and in France it’s terrible.

43k is the turnover of a very small kebab shop. How long will you stay under 43k? At 43001 euro the above nightmare starts.

If you decide to leave, you will owe tax for 3 more years.

Please do your due diligence and ask around.

I understand your advice and I thank you for it. I am solely trying to understand what I could be doing wrong with the strategy of starting out in France.

43k is the net income threshold, not the turnover/revenue for which the rate taxer is 15%. I understand it still is low but it sounds ok for me at this point given my revenue forecast. Typically as my operating margin would be around 50% this gives me some room before I hit this threshold (more or less 100k in revenue)

I know how the system and the people think here. As much as I am the first one to throw jests and hate on the social system and the mentality in France, I think what you said is a bit exaggerated. I did the math and it's more reasonable and cost effective for me to live in France for 1-2 years, especially as I generate less than 200k in revenue/80k in profit. If the business doesn't work, and I make no income -- I would incur a 10-15k loss by staying in France versus 40k in Dubai, just out of living + settling expenses (let alone the cost to set up a company/structure in FTZ). I am trying to understand how not starting the business in France is a bad idea.

Where did you get the "tax for 3 more years" after you leave? If you are referring to the exit tax this is a different thing (and only applies if I stay in France for at least 6 years + have made more than 800k in capital gains).

 

[sriracha]

I love your attitude and I must say that is the right one to start a business. Numbers are numbers and laws are clear. The law says tax is such percent of that number and so I will pay X money. Cartesian I would say.

However that makes an assumption- that the state is not out there trying to get you - in other words, that the state is the state and it does not cheat - which is false, for entrepreneurs, in France.

As stated in my previous post, France is DESPERATE for money to maintain social peace (current events are showing that) and the only people who don’t set things afire when their rights are trampled are entrepreneurs, so the government takes money from them by playing dirty. People know that but you got the money by stealing, remember? So when you go to the brassserie and complain with your friends about the crazy Fisc, you will be confronted with a wall of “if you pay that much tax it means that you have money” faces.

How do you play dirty when you are the government?
- you change or amend the tax laws every year. When you read French tax laws, they are full of dates, sub-sub-sub categories of application, they grow by accretion.
- a simple law becomes a 1000 page law so you will either not take advantage of it or make a mistake
- for laws that don’t change, you change percentages, thresholds and application dates so companies will inevitably have to pay more
- you add 1% laws every year for “the environment “, “solidarity with X”, “reconstruction of wooden shacks in the Pyrenees” etc and they never go away


And most importantly, you play on the actual application of otherwise fair laws. It’s not the same things to owe 12 euros by December 31st as owing one euro every month at the end of the month, or to send a letter saying pay immediately 12 euros because you didn’t pay last year when you know it’s false, or to send a letter asking you to prove how that deduction you took last year is actually applicable when you have already proved it is. To make this s**t fly, they make sure that the employees at your local offices are hard core SJWs, especially in recent times they are hiring from the lowest rungs of society so that they plainly hate you and your money. Please stand in line at your local tax office and see who’s manning the offices, see how entrepreneurs are treated.

About those 3 years…ask around “combien de temps il faut pour fermer une SASU ».

I think you will open your SASU anyway, but at least you will know what’s happening to you in real time.

 

[thomasparra]

I love your attitude and I must say that is the right one to start a business. Numbers are numbers and laws are clear. The law says tax is such percent of that number and so I will pay X money. Cartesian I would say.

However that makes an assumption- that the state is not out there trying to get you - in other words, that the state is the state and it does not cheat - which is false, for entrepreneurs, in France.

As stated in my previous post, France is DESPERATE for money to maintain social peace (current events are showing that) and the only people who don’t set things afire when their rights are trampled are entrepreneurs, so the government takes money from them by playing dirty. People know that but you got the money by stealing, remember? So when you go to the brassserie and complain with your friends about the crazy Fisc, you will be confronted with a wall of “if you pay that much tax it means that you have money” faces.

How do you play dirty when you are the government?
- you change or amend the tax laws every year. When you read French tax laws, they are full of dates, sub-sub-sub categories of application, they grow by accretion.
- a simple law becomes a 1000 page law so you will either not take advantage of it or make a mistake
- for laws that don’t change, you change percentages, thresholds and application dates so companies will inevitably have to pay more
- you add 1% laws every year for “the environment “, “solidarity with X”, “reconstruction of wooden shacks in the Pyrenees” etc and they never go away


And most importantly, you play on the actual application of otherwise fair laws. It’s not the same things to owe 12 euros by December 31st as owing one euro every month at the end of the month, or to send a letter saying pay immediately 12 euros because you didn’t pay last year when you know it’s false, or to send a letter asking you to prove how that deduction you took last year is actually applicable when you have already proved it is. To make this s**t fly, they make sure that the employees at your local offices are hard core SJWs, especially in recent times they are hiring from the lowest rungs of society so that they plainly hate you and your money. Please stand in line at your local tax office and see who’s manning the offices, see how entrepreneurs are treated.

About those 3 years…ask around “combien de temps il faut pour fermer une SASU ».

I think you will open your SASU anyway, but at least you will know what’s happening to you in real time.

I know it's fucked up, but what other/better option do I have to be honest?

 

[sriracha]

I think a lot depends on your priorities- living in France, being an entrepreneur, investing…probably there is a good country for each of these.

Maybe a good option would be an auto entrepreneur AND staying within the low-formality threshold (I think it’s 60k/year and when you really take off, you get one more year of low taxes. Almost no papers to file, no accountant needed, low (for France) tax.

At that point you can decide what is really important to you, without having the government put a ball and chain to your foot.

If you go that route, I advise that you DON’T get an accountant. You don’t have to get one (as opposed to the SASU) and most of them are useless leeches anyway (personal experience with 3 Parisian accountants, also 2 of them forgot to file 2 times in a row).

Closing down an auto entrepreneur is also quick and painless.

 

[Marzio]

without having the government put a ball and chain to your foot.

Wise words, if for some inexplicable reason i would want to start a business in France i would follow this advice and stay below the radar.

 

[TheCryptoAnt]

I know it's fucked up, but what other/better option do I have to be honest?

None G like if you gonna be there 2 years tops just dont declare s**t, dont say s**t, dont know s**t I no hablo french cause the amount of bs you are gonna have to deal with is of biblical proportions.

chances of they knowing what u up to are very slim if you keep it low, and even if they do, Id rather pay some fines than having to deal with the French IRS.