Tax on foreign income, in France

[zeeoffshore]

Hello. I'm setting up a business in Fujairah (UAE) and might relocate soon to France. Should I pay taxes in France, on the foreign income that will be generated from the company of UAE? What's the income tax percentage?

 

[Sols]

Generally speaking, offshore companies for those living in non-tax havens are useless nowadays. If you live in France, the company will qualify as tax resident in France and your company owes the full 28% corporate income tax (going down to 25% by 2022).

France operates a territorial tax system, similar to Hong Kong and Panama (though not quite as simple as those two), which you may be able to benefit from.

So sit down with a French tax adviser to discuss how to structure your business and if your UAE company is worth keeping.

 

[clemens]

So sit down with a French tax adviser to discuss how to structure your business and if your UAE company is worth keeping.

best advise so far, really! It may be worthless if you go for a 0% tax solution but you may be able to safe some percentage in taxes using your current entity.

 

[zeeoffshore]

Generally speaking, offshore companies for those living in non-tax havens are useless nowadays. If you live in France, the company will qualify as tax resident in France and your company owes the full 28% corporate income tax (going down to 25% by 2022).

France operates a territorial tax system, similar to Hong Kong and Panama (though not quite as simple as those two), which you may be able to benefit from.

So sit down with a French tax adviser to discuss how to structure your business and if your UAE company is worth keeping.

many thanks for your feedback. 28% on the net profit right? is it the same percentage regardless of the income amount? is there any tax treaty between uae and france? what if i open a company in france, i will also pay the same tax percentage on the foreign income?

 

[anotherone]

Hello. I'm setting up a business in Fujairah (UAE) and might relocate soon to France. Should I pay taxes in France, on the foreign income that will be generated from the company of UAE? What's the income tax percentage?

France has a different system than other countries.
If one of the 3 following criteria, you must pay income tax from any sources.

1. Do you have your main bank account in France
2. You work in France
3. You live in France for 6 months and 1 day every year.

https://www.service-public.fr/particuliers/vosdroits/F62
Income tax brackets:

Income Share	Tax Rate
Up to €10,064	0%
Between €10,065 - €27,794	14%
Between €27,795 - €74,517	30%
Between €74,518 - €157,806	41%
Above €157,807	45%

Then, social contribution. If you get your money from overseas, I don't know how it works.

At last, don't buy an old house in France, they are going to raise real estate tax

 

[zeeoffshore]

thanks for your feedback. The above figures are for the annual net profit right?

 

[anotherone]

thanks for your feedback. The above figures are for the annual net profit right?

net profit yes

 

[nomad999]

France operates a territorial tax system, similar to Hong Kong and Panama (though not quite as simple as those two), which you may be able to benefit from.

why do you mean by that ? they do tax on worldwide income don't they ? I thought this was the opposite of a territorial taxation system.

 

[Sols]

why do you mean by that ? they do tax on worldwide income don't they ? I thought this was the opposite of a territorial taxation system.

http://www.taxsummaries.pwc.com/ID/France-Corporate-Taxes-on-corporate-income

A resident company is subject to CIT in France on its French-source income. In that respect, income attributable to foreign business activity (if there is no treaty in force between France and the relevant foreign country) or to a foreign PE (if a tax treaty applies) is excluded from the French tax basis.

https://www2.deloitte.com/content/d...uments/Tax/dttl-tax-francehighlights-2019.pdf

France operates a territorial tax system. Residents and nonresidents are taxable in France on profits allocable to a French business and on French-source income. Foreign-source income of French residents generally is not subject to French tax (and foreign-source losses may not be deducted)

https://home.kpmg/xx/en/home/insights/2018/07/european-tax-france-country-profile.html

Test of residence of a company: official registered head office and/or effective place of business and management. French resident companies are taxed on French source income only (territorial system). Specific rules for partnerships.

 

[nomad999]

Residence –Individuals domiciled in France are considered resident. An individual normally is considered domiciled in France if his/her principal residence, main place of business or professional activity or center of financial interests is located in France

ok thx for the details interesting, didn't you know that.
they will try to catch you with the above though, pretty wide net there for small fish.

 

[Sols]

That's about tax residence. Tax residence is different from determining taxable income.

In a territorial taxation system, tax is applied only on revenue derived from within the jurisdiction. The exact definitions vary by jurisdictions. In places like Hong Kong, Panama, and Costa Rica, it's very generous. In France, it's stricter. But the principle is there.

 

[Loisir]

Hello I'm French.

If you simply open a company in UAE and then return to France and control it in France .. Say Hello to CFC rules, your company will be taxed in France.

If you open a company in UAE and get residence there you need to Be there each 6 month to be considered as resident and then be able to not share information with France, that is why UAE is always delete and then re aded to black list of UAE they do not share information about resident , whenever they came from.

If you open a company in FUJI i will not recommend you that , because it would be complicated to have a bank account , to Avoid this , spend a little more and get SHAMS DUBAI OR OTHER

 

[nomad999]

That's about tax residence. Tax residence is different from determining taxable income.

In a territorial taxation system, tax is applied only on revenue derived from within the jurisdiction. The exact definitions vary by jurisdictions. In places like Hong Kong, Panama, and Costa Rica, it's very generous. In France, it's stricter. But the principle is there.

ok so no corporate tax on worlwide income as in a territorial taxation system, got it.
but they have a bit of room to define you as a tax resident because of your company located in France and then tax the income you would get from it.
although each tax treaty should be studied in details, wonder what country would be best for tax resident in this context ...

 

[zeeoffshore]

Hello I'm French.

If you simply open a company in UAE and then return to France and control it in France .. Say Hello to CFC rules, your company will be taxed in France.

If you open a company in UAE and get residence there you need to Be there each 6 month to be considered as resident and then be able to not share information with France, that is why UAE is always delete and then re aded to black list of UAE they do not share information about resident , whenever they came from.

If you open a company in FUJI i will not recommend you that , because it would be complicated to have a bank account , to Avoid this , spend a little more and get SHAMS DUBAI OR OTHER

Thanks for your feedback. What if you're Italian who owns a company in UAE and resides in France? Do you pay taxes on the foreign income that is generated from the company of UAE? What if you live in France as an Italian and set up a non resident company in Cyprus (with 0% tax on foreign income). Should you pay any taxes on the income that is generated from this company? Or for example if you set up a company in a low tax European country that has a double taxation agreement with France. If you pay the income tax in this country, should you also pay taxes on your foreign income in France? I.e. The corporate income tax in hungary is 9% and the one in France is 28%. In that case, you should pay both taxes (9% + 28%) or only the 9% in hungary, or 9% + the difference in France (19%)? To make it short, how can a European who lives in France pay the lowest taxes on his foreign income?

 

[nomad999]

Quite frankly I wouldn't try to play smart with the French tax authorities ... but maybe that's just me.

 

[zeeoffshore]

Quite frankly I wouldn't try to play smart with the French tax authorities ... but maybe that's just me.

thanks for your feedback. i'm tying to play smart. i'm just asking what's the best legal way to pay less taxes on foreign income. that's all.

 

[Loisir]

Thanks for your feedback. What if you're Italian who owns a company in UAE and resides in France? Do you pay taxes on the foreign income that is generated from the company of UAE? What if you live in France as an Italian and set up a non resident company in Cyprus (with 0% tax on foreign income). Should you pay any taxes on the income that is generated from this company? Or for example if you set up a company in a low tax European country that has a double taxation agreement with France. If you pay the income tax in this country, should you also pay taxes on your foreign income in France? I.e. The corporate income tax in hungary is 9% and the one in France is 28%. In that case, you should pay both taxes (9% + 28%) or only the 9% in hungary, or 9% + the difference in France (19%)? To make it short, how can a European who lives in France pay the lowest taxes on his foreign income?

If you live in France for a certain period , or have your centers of interest in france , you will be taxed in france.
The really most best advice is tax is not about nationality is about residence and where you take decision

 

[zeeoffshore]

thanks for your reply Loisir. even if there is a double taxation agreement between both countries (france where i reside and the 2nd country where my company is based)? i need to pay taxes in both countries? please check the example in my previous post and advise.

 

[nomad999]

thanks for your reply Loisir. even if there is a double taxation agreement between both countries (france where i reside and the 2nd country where my company is based)? i need to pay taxes in both countries? please check the example in my previous post and advise.

you have to check what is the DTA between the 2 countries, and CFC rules if I am not mistaken.
If there is no DTA then yes you pay in both countriez.

 

[Loisir]

France i TOP 3 country in term of Tax collection...
It will be taxed in France if you dont get your Residence in UAE