How can an Umbrella Company Help with Contracting in France?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in France. Even better, most are experts in French and expat tax law, meaning they’ll also help you optimize your earnings in France.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for France.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in France, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in France and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in France
One of the most consistently challenging aspects of contracting in France is complying with the country’s tax system. As well as paying tax in France, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in France
There is currently no PAYE (pay-as-you-earn) withholding system in France for resident taxpayers. Non-residents are subject to a withholding tax. However the French government is preparing to implement a pay-as-you-go withholding system in 2018. This means that your employer can calculate and process your taxes in France for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in France, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in France through PAYE is left with the prospect doing everything themselves.
Do you know much about French Tax Law? Does France have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in France can range from 0 to 45 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in France
| When Do You Need to Lodge Your Tax Return? | 1 March |
| Tax Filing Deadline | 1 March (with extended deadlines for online filing) |
| Can you file it online? | Yes |
How to File Taxes in France as a Contractor
Step 1: If you have paid French taxes before, you can expect to receive Form 2042 in the mail. If not, you can obtain the form at your local tax office or online(link is external). Form 2042 will include pre-printed information. If it is incorrect, you should cross out the erroneous figures and write the correct ones.
Step 2: File your tax return online here(link is external). Exact deadlines vary according to location. Late submissions incur a fine amounting to 10% of your tax bill. You do not need to pay any amount when you do this.
Married couples are required to file their income jointly. Single, divorced, and widowed taxpayers are also required to file jointly with their dependent children (under 21 years of age or less than 25 years of age and are students).
Non-residents need to file an income tax return if their employment income reaches the 20% tax bracket.
Step 3: Once the French tax authorities have received your declaration, they will calculate your tax and send you a bill (avis d’imposition), usually around mid-late August. You may even receive the bill during November or December if it is your first time filing taxes.
Step 4: Make payments here, through a SEPA bank account.
Once you are in the system, the French tax authorities will use the previous year’s income as a basis to calculate the following year’s taxes. If 2016 was the first year you filed, you will be paying your 2017 French tax liability on the basis of your 2016 income.
Tax is generally paid in 3 instalments on 15 February, 15 May, and 15 September, but you can also put in place a monthly withholding tax arrangement via an express request at your local tax office or by going online.
You may also opt, before October, to make 10 equal monthly payments by bank transfer, beginning in January of the follow year, totalling the full amount of previous year’s income tax liability, and any additional tax is payable when assessed. Any excess payment is automatically refunded.
Tax Figures in France
| Currency | Euro (EUR) | ||||||||||||||||||||||
| Tax-free Threshold in France | EUR6,011 | ||||||||||||||||||||||
| Income Tax Rates |
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| Notes | France has a joint taxation regime for married couples and individuals who have contracted a civil union (Pacte Civil de Solidarité, or PACs). Income tax is assessed on the combined income of the household members (including dependents). There is no option to file separately. Income brackets are determined by dividing taxable income by the number of allowances.
Nonresidents are subject to a withholding tax on French-source remuneration.
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Tax Residency in France
When do you become a tax resident in France
You become a tax resident in France when:
You become a tax resident in France if:
- France is your home or main place of residence;
- You are resident in France for more than 183 days in a calendar year (not necessarily consecutively);
- Your occupation is in France; or
- Your most substantial assets are in France.
Does the 183 day rule apply in France
Yes
Am I taxed on my global income in France
Yes, subject to treaty exemptions.
Can you set up your own Limited Company in France?
| How long does it take to set up | 5 days |
| How much does it cost | EUR206.5 |
| Is it easy? | Starting a Business Rank: 25/190 |
Tax Calculator in France
If you are a contractor and want a calculation on your tax and net retention in France, we can supply it to you free of charge.
A Contractor’s Guide to Work Permits in France
Immigration is one of the primary concerns for any contractor hoping to start working in France. Permanent employees will find it easy to get their French work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The French work permit, known more commonly as the convention d’accueil, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in France is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
Work Permit Processing Time
Approximately 3 months
Can Work Permit be Processed in Country?
The work permit cannot be processed in France.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in France (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in France. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout France and match contractors with the right company for them. If you’ve already secured a contract in France, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).