France continues to be a popular country for international contractors seeking new clients and projects. EU citizens will find that there are several options for setting up their work contracts. Non-EU citizens are more limited to working independently, but there are solutions available to work in France.
One thing to note is that the combination of social charges and taxes will mean that you will likely net only 50% of your contract value after payments, which may affect how you set your contract rate and project parameters.
This guide will outline the basic steps involved with contracting in France, including getting paid, tax rules and more.
Your Options Getting Paid While Contracting In France
The first thing to think about is how you will get paid. This will depend on the structure of your work contract and preferences. Non-EU citizens cannot be self-employed in France. This means you will need to be hired as an employee or use an umbrella company. In each case, your social security and tax withholding will be taken care of by your employer, and you will receive a net salary paid in France.
EU citizens have the option of direct self-employment or through the use of their own limited company. You will bill client B2B for services and set up payment either to your foreign account or to a French account if you have one. You will make your social security and tax contributions and file them to the French authorities.
For both of these, you have to demonstrate that you are not subordinate to the client, and meet French rules on self-employment. Failure to do so could mean that your client will be charged for employer social contributions. Keep in mind when you set your rates as self-employed, you are responsible for both the employer and employee contributions to social security, which can become a real expense.
Social Security in France
Social security rates are high in France and can be a burden for foreign contractors that don’t avail of the French social services and pension programs. Employer contribution rates are 29% and employee rates are 15%, and self-employed rates are 38%. These may be offset for non-French contractors or employees where there is a tax treaty with your home country.
Self-employed may also need to provide for their unemployment coverage, another good reason to look into employee-based work relationships.
Do you need a visa to work in France?
Every contractor is worried about work visas and having the correct documents to stay in the country long term, and as in most EU countries it will depend on your home citizenship, either EU or non-EU.
Does a UK citizen need a visa to work in France?
All EU citizens can work in France without a work permit, and for the time being that includes those from the UK. Once Brexit is finalized that could change, which would limit your options for contracting in France. If you want to work in France as self-employed you should set it up before 2019, although it is not clear that existing UK workers would have a grace period or exemption from changes to immigration laws.
Non-EU citizens do need a work permit, and that requires a French corporate sponsor which is why you can’t work as a self-employed or limited company. This means that your client will need to take you on as a French employee, or you can have an umbrella company step into the role and sponsor your visa.
Are you a tax resident in France?
Taxation is another issue to think about when structuring your French contracts. Tax residency will be applied to anyone who stays over 183 days in France. This means you will pay French tax rates on all of your income for the year. This applies even if it is foreign-sourced. You would have to look to a double taxation treaty to offset these payments if you pay taxes at home.
How to File Taxes in France
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. 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. 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 based on 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 following year, totalling the full amount of the previous year’s income tax liability, and any additional tax is payable when assessed. Any excess payment is automatically refunded.
How do I stay compliant while contracting in France?
As a foreign contractor, you will be concerned about compliance with French law and regulations. Your primary compliance risks are:
- First, meeting tax and social contribution requirements
- Then, business registration and residency for limited companies
- Finally, work visa validity and sponsorship
That is a lot to overcome, especially for new contractors, and you might need the help of an umbrella company. Contractor Taxation has licensed, verified umbrella companies in France who are ready to assist you with setting up your contract and making sure that your payments are secure. Here are some of the benefits you get as a result of using an umbrella company:
- Handles all client payments, tax withholding and any social contributions
- Issues you a payslip each month, to a French or foreign account
- Can sponsor work permits
- Helps set up the French contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
Unless you are prepared to handle all of this on your own, you may find that an umbrella company is a valuable partner as you embark on a contract in France. Please contact Contractor Taxation with your questions about how an umbrella company can work for you.