Employee for Limited Company

Employee for Limited Company

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I have a UK Limited Company (I live in France). I will be taking on a French employee who will declare her income in France. What implications does this have on my Company and what taxes will I have to pay for this employee?

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Euan's picture
By Euan MacLennan
02nd Apr 2014 10:56

But where will she be working?

If it is in France (with any trips to UK only being incidental), she will not be subject to UK income tax under PAYE or UK NI contributions on her salary, but you will have to comply with French social security requirements.  Her salary and the cost to the employer of her social security contributions will be deductible from the company's profits for UK corporation taxes.

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By alberto1969
02nd Apr 2014 11:12

Hi, thanks for your reply. Sorry I should have included that she will work in the UK

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Euan's picture
By Euan MacLennan
02nd Apr 2014 11:26

Working in the UK

Yes - it would have saved my time if you had mentioned this crucial fact.

Anyone working in the UK, even if a foreign national or resident, is subject to UK income tax on their earnings. The company will have to apply for a PAYE scheme and operate PAYE on the salary paid to the employee.  You can apply for a PAYE scheme online.

If she is already paying social security contributions in France, she may be able to obtain exemption for paying UK NI contributions, but it is more likely that as she will be living in the UK to do her job, she will become liable to pay UK Class 1 NI contributions and the company to pay the employer's NI contribution.

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By Chipette
02nd Apr 2014 11:46

But why would she declare her UK income in France?

 

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By Chris08
02nd Apr 2014 11:53

Possibly both

From the information stated, it sounds like the UK have primary taxing rights, and will deduct tax under PAYE.  As with any other UK taxpayer, HMRC can issue a UK tax return if it is needed to properly assess the tax.

As a French resident she will also have to comply with French tax obligations. My guess would mean that involves filing a French return with this income and claiming a credit for the UK taxes paid - but I would suggest you confirm that with a local French accountant.

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Stepurhan
By stepurhan
02nd Apr 2014 11:54

French national

US nationals pay tax on their world-wide income no matter where it is earned. The same may be true of French nationals leading to her having to declare her UK income in France. That is more likely to be her issue than yours.

I don't know the position on the taxation of French nationals earning in other countries. I do know a UK accountant who specialises in the area though. If you would like, PM me some contact details and I will pass them on.

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