Running A Business In France - A Tax Nightmare?

One of the most common complaints I hear from expats in France (and there are an estimated half a million British expats alone living there) is that although France is a wonderful place to live, it is one of the worst places on earth to try and run a business. Many foreigners in France call the country ‘business hostile’ due partly to the vast and largely pointless bureaucracy that many businesses find themselves bogged down in, and partly due to taxes.

I don’t personally own a business in France so I’m not sure I fully understand all the ins-and-outs but essentially it seems to boil down to the fact that French taxes are some of the highest on the planet. Apparently the French tax system is divided into two – taxes proper such as VAT/TVA, income tax, property taxes and so on, then come the much dreaded ‘social charges’.

The social charges are mandatory payments made to the state to cover things such as health contributions, retirement benefits, invalidity cover etc. They are the rough equivalent of DSS contributions in the UK but about 5 times higher as a minimum. These are of course all taxes but are called ‘social contributions’ in France as the semantics of this sound warmer and cosier than ‘tax’.

Historically it has been the social charges that have crippled and destroyed many expat (and French) businesses. There are many different issues and legal ways of setting up a company and paying them, but it doesn’t seem to matter how you do it, you can be sure that around 40% of your turnover or profit (depending upon how you set up your business) will be taken by the state in social charges. Income and other taxes could be payable in addition to this huge percentage.

I know of many expats in France who have given up their small businesses claiming that the state was just bleeding them dry – several telling me that it was a complete waste of time trying to make a living there.

There may be some good news. Finally the French government have created a system to simplify the process of starting a company (in the past even that could be a nightmare I’m told) and much of it can be done online. More importantly, the payment of taxes and social charges for small businesses has been simplified at a lower flat rate. If I understand it, the new rate is 12-13% of your turnover and provides all income tax and social charges cover.

This may be a lifeline for those thinking of starting a business.

I believe the French state site at www.auto-entrepreneur.fr has all the details and also it has an outline of the new system in English. It may be worth having a look though be aware that the site has been unavailable a lot recently due to traffic ‘overloading’.

Keep an eye on Expat Focus for a more in-depth article about running a French business – it’ll be available shortly.

Nasty Nudies

More controversy in the forums surrounding Portuguese beaches:

"Whats do you folks think about horrid naked adults on local beaches? Mainly Clerigo - as this is the beach I most often visit.

Personally I hate seeing rotten old wrinklies in their birthday suits, when I am taking a stroll along the beach taking in the wonderful sights and smells of nature - suddenly, there they are, jiggling willies and flabby bums ugh! I just wish these people would go to remote beaches where they cant offend anyone - or perhaps they are exhibitionists. In that case, they should be arrested. Its gainst the law to walk around the streets naked, so why are the beaches any different?"

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To be and yet not to be

by guest blogger Karen Monesi

I am a Dutch Citizen, holder of a Dutch passport since 1985 when the Feminists got their way and offspring of a Dutch Mother became entitled to receive their citizenship, something which had been an XY chromosome privilege up to that time.

I still remember my parents’ joy (my father is Brazilian) when we received the unexpected letter from the Dutch Consulate in Sao Paulo, Brazil. At that time, even though the European Community was still in its cradle, we knew that having a passport from any of its countries would give us free transit in Europe. So, off we went to the Consulate and had our passports done.

Actually my parents weren’t wrong – these passports did open doors for us. My brother has been on a 2 years assignment in Luxembourg and one of the reasons why he was chosen was because he was a European citizen. He afterwards lived in Wales (some people might find this is not really an advantage but, hey, it was good for his career! [Ed. - no Welsh jokes please, it's not the Weakest Link you know!]) Life is easy when you have one: no queues at the airport, no time constraints about how long you can stay in Europe. No struggle. You’re just one of the gang. Period.

In 2003 I decided to honor my Dutch genes and roots. I packed 2 suitcases, sold my car, rented my apartment and landed in Amsterdam. Absolutely decided to learn Dutch and after 3 months I was able to do some small talk. A year later I decided to enroll for a language course – NATT (in Dutch, it means “Dutch as Second Language”) – at the University of Amsterdam.

When you enroll for these they request you to rate yourself from 1 to 6, 1 being absolute beginners and 6 the most advanced level you can reach. I considered myself a level 4. After this, you have to take a written test and have an interview with the Principal. According to her, after correcting my test and speaking the whole time in Dutch with me, I was definitely on level 6.

After attending the classes and having my Certificate, you’d assume that my Dutch skills were very good – so did I. However, every time I say something in Dutch to a Dutch person in the Netherlands they answer me in English. Very few exceptions allowed me to practice and I am very grateful to them. It has always been beyond my capacity to understand how come my language skills were good enough to have a conversation with a University Professor but not with a waiter or shop attendant (which, most of the time, are also University students). Really. The part that hurts is to hear many Dutch people saying that “so many foreigners have been living here forever and can’t say a word of Dutch”. Maybe they can, if you give them a chance?!

Every time I meet a Dutch person abroad they say: “But you are not Dutch” – and I have then to flash them my passport – which they return to me afterwards with a bitter grin, saying: “Yes, you are”. Hearing that I am not Dutch used to hurt me – nowadays, I just reply with a large grin – “No, I am not, I’m just a passport holder”. Or, if I am in a different mood: “No, fortunately not”, never knowing if they got the sarcasm in my voice.

I still treasure my European citizenship and wouldn’t change my papers for gold. Moving back to the Netherlands, however, is out of question. To be and yet not to be – sometimes it’s not even funny…

Karen can be contacted by email on karen_monesi@hotmail.com

Expat economics - is opportunity knocking?

It’s interesting how economics can change people’s behaviour very quickly and how those that are ‘fleet of foot’ can benefit.

For a long time the euro was very weak against the US dollar and Sterling. The halcyon days for many were when the pound Sterling was at 1.45 euros and many things in Europe, notably property, seemed very cheap.

Now that’s all changed of course. At some levels the euro and pound touched parity and as I write it’s sitting at about 1 pound to 1.16 euros. That’s been bad news for many British expats who get their income such as pensions in Sterling but are now living in Europe in the Eurozone. Suddenly prices in continental Europe don’t look so cheap and I know many are struggling to survive on their old income.

Even so, some dynamics are already swinging into action. Suddenly Brits in Europe are starting to buy more and more over the Internet from the UK as a lot of stuff ‘back home’ suddenly looks much better priced than the same items being sold in the local town. The ferries are suddenly full of vans going over to the UK to ‘stock up’ on various items - notably DIY, Electrical Goods, Clothes and, wait for it, alcohol! The clinks of mass bottles can now be heard on ferries docking at the channel ports coming FROM the UK!

How times have changed!

Perhaps one of the biggest growth areas in this respect are the new and second hand car markets. There are now a number of specialist UK based car suppliers of left-hand drive vehicles based in the UK and they are selling their vehicles in Sterling not Euros. I know someone that recently purchased a LHD car from the UK in Sterling and saved approximately 4500 euros on the same car if purchased locally.

It’s also noticeable how small businesses, predominantly Internet based, are now springing up in many Euro countries and they are all targeting locally resident British expats that want to stretch their pounds further. Many of these include delivery services to a range of specified European countries.

As they say, “It’s an ill wind that blows no man any good”.

Of course this isn’t quite so good for those British expats living outside of Europe. The idea of running a white transit van from Calais to Sydney filled up with light bulbs and DIY kits isn’t perhaps a terribly sensible one, though then again Sterling’s decline has been less marked against many other currencies that it has been against the Euro.

So, for those expats in continental Europe, it may be worth looking on the Internet for the prices of at least some of the things you need if purchased in Britain and in Sterling. You never know, you could save yourself a lot of money!

This Marriage Thing - Navigating Love Abroad

by guest blogger Suzer from Suzer's Expat Adventures

Since meeting on a backpacker tour of Ireland, my husband and I have lived and loved in four different countries, before we were finally able to settle down in his home country of Australia. Along the way, we have faced challenges particular to a marriage on the move.

Starting on the Road

As I said, my husband and I met in Ireland. At the time we were both living in different parts of England, myself while studying and himself on a working holiday. For 8 months, we met up every 2 or 3 weeks on weekends, and for our last 4 months in the country, after my degree was complete, I moved into his London flat. This involved my husband staying in the UK longer than originally planned. In fact, he was away from home for a couple of years longer than he’d expected to be as a result of meeting me and I ended up permanently moving to a country I had intentionally left off my list of places to ever even visit. We found ourselves talking about marriage 4 months into the relationship, much sooner than we would have if we didn’t have to think about how to avoid living 10,000 miles apart. We went from the UK to a long visit to the US, then on to Australia where I got a working holiday visa for a few months, simply because he wanted me to suss it out before he felt ok with my decision to move there permanently. After that, we were off to New Zealand, where we got married and spent the better part of our time there waiting out a spousal visa. Almost 3 years later, we’ve now been back in Australia for about 9 months, where we are being patient with settling back into our home and marriage...

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