UK resident teacher in France

UK resident teacher in France

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UK res/ord res teacher offered 2 yr contract to teach in France.

Told cannot be an employee but can decide whether to be sole trader or work through a limited co.

Article 20 of DTA says IF an employee then could be paid tax free in France but pay UK IT.  But struggling with conflicting theories about tax position if sole trader or UK res co receiving income.

All work done in France, but UK residence retained as returning to UK every other weekend and all non school periods, etc.

Being told conflicting opinions on where tax base is!  1 opinion - taxed in France (either as S/T or limited company) and UK tax relief - limited to Frace tax paid as higher rate.

Opinion 2 - if Limited co - taxed in UK only as UK res company and no permanent establishment in France.

Thoughts/opinions appreciated. 

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By kdauda
30th Jul 2012 13:28

I believe it is Opinion 1 that is valid.

If you set up a UK Limited Co, and you work at the school (or other establishment offering the contract) through your company, it seems to me that the school itself is a permanent establishment (even if it does not belong to your company, it is still a fixed place where your company is carrying on its business). At any rate you can obtain confirmation from the French authorities on whether they agree that it is not a permanent establishment  - no reply from them within 3 months implies their tacit agreement that it is not a permanent establishment.

Assuming the school is a permanent establishment then the UK limited co profits are taxable in France (and UK) and you get double tax relief in UK.

 

Regarding your individual status (as opposed to your company), as an employee (teacher) of the limited company working in France, I'm not sure if Article 20 applies because

(i) on the one hand you are a teacher and presumably any (or at least most) remuneration from your company will be for teaching at the school, which suggests Article 20 applies (at least for whatever remuneration your company pays you for that teaching job) and;

(ii) on the other hand the remuneration is not directly from the school, but from your UK limited company.

Supposing Article 20 does not apply, you would be resident in France (as well as UK) because your main professional activity - teaching - is being carried out in France (French residency test). You would then have to look at DTA tests to determine in which country you would be deemed resident. Whichever country taxes your income, there would be some form of double tax relief available.

If you set up as a sole trader, I think the same issues apply - the school is probably a permanent establishment.  Again, not 100% sure if Article 20 applies as you are not an employee of the school.

 

Hope that helps.

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