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TAXES

‘A €70k tax bill arrived out of the blue’ – How accountant errors impact foreigners in France

The French tax system is a complicated one, especially if you're freelance or running your own business - but there is one extra element that can lead to foreigners in France getting a very unwelcome surprise, as one Australian in Paris discovered.

Published: 17 April 2024 11:14 CEST
'A €70k tax bill arrived out of the blue' - How accountant errors impact foreigners in France
Unexpected bills for taxes and social charges can come as a huge shock to foreigners in France. Photo by PHILIPPE HUGUEN / AFP

When Australian Marie set up as a freelancer in France she did the responsible thing and got an accountant who said they specialised in advising expats.

However repeated errors and neglect on the part of her accountant plus a lack of correct registration with URSSAF led to her receiving a bill out of the blue for an additional €70,000 in social charges – something that she is still making payments to clear more than two years later. 

She joins a long list of foreigners who feel let down by accountants who either make mistakes, fail to fully explain the French system or register people in incorrect regimes. 

Paris-based Marie told The Local: “The first firm I went to set me up as a SASU business (société par actions simplifiée unipersonnelle). I was set up as a business with myself as president and paid myself a salary – which they had recommended – but that put me on a really high rate of tax.

“I moved to a different firm after that and they moved me onto a SARL business status, which was better suited to my business, but they forgot to notify URSSAF of the change so I was being incorrectly billed for months.

“It was only because I had alerted them several times to the final demands I was receiving, over the course of two years, that this was rectified.

“They also made a mistake with my invoices, and put through invoices for work done in India for 40,000 rupees (about €400) as €40,000 which put me into a higher tax bracket. It was only much later that another accountant told me that all invoices – no matter what country they come from – must be in euros.

“For example, one month they just forwarded me a €20,000 bill for URSSAF contributions that I wasn’t expecting and simply asked how I wanted to pay it – like I had that kind of money just lying around.

“I’ve spoken to so many people who work as freelancers or set up small businesses in France and I seem to hear the same stories over and over again of accountants who don’t explain the system, don’t register people correctly and just make endless mistakes. It also seems impossible to make a complaint to an ombudsman when your accountant has comprehensively messed up.

“I’m still paying extra contributions to pay off URSSAF charges which the accountants didn’t inform me about.

“I went to two firms that specifically advertised themselves as having expertise with expats who do work in multiple countries, but neither of them seemed to know what they were doing.”

Marie’s story is thankfully an extreme case, but it’s true that many foreigners in France end up with unexpected bills due to unhelpful, poorly explained or simply incorrect advice from their accountants.

We’ve put together a list of tips to help people when setting up a business and choosing an accountant;

Setting up as a freelancer/ contractor/ small business

Understand different status options – France has several different regimes for people who are running a small business or working as a freelancer and your status can make a big difference. 

For many freelancers, the best option will be the micro-entrepreneur status (formerly known as auto-entrepreneur), as this is designed to be as simple as possible for people who are starting out their business. It has an upper earnings limit – €77,000 a year for services or working in a liberal profession such as journalism or €188,000 a year for commercial or property-related activity. However if you pass the threshold after a couple of years in business you can switch to another status without attracting a penalty.

READ ALSO How to set up as an micro-entrepreneur

Understand the difference between tax and social charges – For those in work, there are two kinds of income deductions – tax (impôts) and social charges (prélèvements sociaux). Many people just look at tax rates, but actually social charges are likely to make up the bulk of deductions from your earnings. For salaried employees, social charges are deducted at source in the same way as taxes but freelancers and the self-employed pay their charges through URSSAF.

Charges are billed either annually or quarterly but are usually based on the income you declared in previous years – so you can end up with an extra bill if you have had several months where you earned more than previously. This is particularly difficult for freelancers whose income tends to fluctuate and often end up getting extra bills from URSSAF. 

Understand how URSSAF works – URSSAF is, notoriously, among the trickiest government agencies in France to deal with and things tend to take a long time. It helps to spend a bit of time swotting up so you understand the outlines of the system and therefore have an idea of what to expect and when a mistake might have been made. 

Understand any other charges – if you are setting up as a business you need to fully understand both your personal and business tax liabilities, plus social charges so you can understand and budget for roughly how much you will be paying.

Ask the tax office – they can’t give you financial advice but if you have a question about how the tax system works or you are confused about a bill you have received, employees at the tax office can help you. You can either call the helpline or visit your local tax office in person – no appointment needed – and employees are often surprisingly friendly and helpful. They will even flag up if you are entitled to tax credits that you haven’t claimed.

7 tips for dealing with the French tax office

Finding an accountant

When finding an accountant, personal recommendations are often best – but this can be hard for new arrivals who don’t know many people.

Here are some tips on finding the right person;

Check their speciality – plenty of accountants advertise themselves as ‘expat specialists’ or simply as ‘English speaking’ but that doesn’t necessarily mean they have any expertise with the area that you need. If you’re working in more than one country, you need someone who understands the tax systems in both countries.

Hopefully this goes without saying, but also check that they are qualified and registered in France. Only a registered ‘expert-comptable‘ can help you file tax declarations for businesses – you can check that they are correctly registered HERE

READ ALSO How to find English-speaking accountants in France

Get multiple opinions – ‘shop around’ is generally good advice and this goes for accountants too. It’s definitely worth asking for several opinions about how to correctly register yourself and your businesses and what the best options are for you. As Marie’s experience shows, ending up with the wrong accountant can cost you money and cause you endless hassle, so it’s definitely worth taking some time to find the right person.

Be clear about your earnings – a lot of accountants, especially those who advertise as ‘expat services’ are used to dealing with high net worth individuals. If this isn’t the case for you, you need to be clear with them about what you expect to earn and ask them to tailor their advice accordingly. If they start recommending complicated arrangements to minimise your tax liability, ask them exactly how much you can expect to save and whether it’s worth the hassle – often it won’t be worth it if you’re a single individual earning a medium income.

Ask them to explain – the French tax and business registration system is complicated and as a foreigner it will be strange to you. It’s not unreasonable for you not to understand it and to need things spelled out to you. If an accountant is unable or unwilling to explain the tax or business registration system to a foreigner in simple terms then count that as a red flag.

Expat forums are unregulated – many foreigners in France turn to expat forums or Facebook pages to ask for help, but there is no system of regulation for these types of forums and just because a particular firm is recommended it doesn’t mean that it’s any good. It may just be run by a friend of the person who set up the site.

If possible, follow personal recommendations from people who you know.

And finally – check immigration rules. Accountants advise about money and tax law, but you do need to double check that anything they advise is compatible with your immigration status. For example, if you’re advised to set yourself up as a business to minimise tax but you’re in France on a visitor visa (which doesn’t allow you to work), this will create a conflict.

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TRAVEL NEWS

What’s the deal with passport stamping in France?

There are clear guidelines in place about who should have their passport stamped when they enter or leave France - but the letter of the law doesn't always seem to be applied on the ground. Here's what you need to know.

Published: 17 May 2024 14:24 CEST
What's the deal with passport stamping in France?

When you pass through a French border control post, officers will check your passport and – in some cases – stamp the date of your entry or exit of the country onto one of the blank pages in the booklet.

Although the system should be clear and simple, it becomes complicated when conflicting information is given on the ground.

Here’s what the rules say, and whether it’s really a problem if your passport is incorrectly stamped.

Who should be stamped?

The purpose of the date stamps for entry and exit is to calculate how long you have been in France, and therefore whether you have overstayed your allowed time – whether that is the time allowed by a short-stay Schengen visa or the visa-free 90-day allowance that certain non-EU nationals benefit from. 

Those people who are exempt from 90-day restrictions should therefore not have their passports stamped.

EU passport – people who have an EU passport should not have it stamped, because they have the right to unlimited stays due to EU freedom of movement.

Dual nationals – people who have passports of both EU and non-EU countries should not be stamped when they are travelling on their EU passport. However, because the passports of dual nationals are not ‘linked’, those travelling on their non-EU passports will be stamped, unless they have other proof of residency.

READ ALSO What are the rules for dual-nationals travelling in France?

French residents – the passports of non-EU citizens who have a residency permit in France (carte de séjour) should not be stamped, because they have the right to stay in France for as long as their permit is valid.

Visa holders – people who have a long-stay visa or a short-stay visitor visa should not be stamped, because they have the right to stay in France for as long as their visa is valid. 

Tourists/visitors – people making short visits to France who do not have a visa should be stamped, with the stamps keeping track of their 90-day allowance. Visitors from nationalities who do not benefit from the 90-day rule (eg Indians) are also stamped.

Travel practicalities

When crossing a French border, you should present your passport along with other documents – visa or carte de séjour – if relevant. Don’t wait for border guards to ask whether you are a resident.

It should be noted that the carte de séjour is not a travel document and cannot be used to cross borders, not even internal Schengen zone borders. The only valid travel documents for entering France are a passport or national ID card. Any other forms of ID – driving licence, residency card etc – cannot be used for travel purposes.

Border problems

While the rules on stamping are simple in theory, many readers of The Local have reported having their passports incorrectly stamped at the border, and this seems to be a particular problem for non-EU nationals who are resident in France.

Travellers are also often given incorrect information by border guards – for example being told that only holders of the post-Brexit Article 50 TUE carte de séjour are exempt from stamping, that all non-EU nationals must have their passports stamped or that only being married to a French national exempts you from stamping.

None of these are correct.

It’s also sometimes the case that people whose passports should be stamped – tourists, visitors and second-home owners who don’t have a visa – do not receive the stamp. For frequent visitors this can be a problem because it looks as though they have had a long stay in France, due to their exit not being recorded.

The system of stamping itself is also a bit haphazard with stamps scattered throughout the passport book in random order, so border guards sometimes make mistakes and miss an entry or exit stamp and therefore think that people have overstayed when they haven’t.

So how much of a problem actually is it if your passport is wrongly stamped?

It’s one thing to know the rules yourself, it’s quite another to have an argument with a border guard, in French, when a long queue is building behind you. Numerous Local readers have reported feeling that they had no choice but to accept a stamp when an implacable guard insisted upon it.

But is this really a problem?

One thing is clear – if you are a resident of France then you have the right to re-enter, and your proof of residency (visa or carte de séjour) takes precedence over any passport stamps. So it’s not a question of being barred from the country – it can, however, be inconvenient as it might lead to delays at the border while your passport record is queried.

Meanwhile people who did not receive correct exit stamps can be incorrectly told that they have over-stayed and even be liable for a fine. 

Will the new EES passport control system improve this?

Theoretically, the EU’s new Entry & Exit System – which does away with the manual stamping of passports – should get rid of these problems.

However, as we have seen, theory and what actually happens on the ground are two different things.

The EES system, due to come into effect later this year, brings in two main changes – it makes passport checks more secure by adding diometric data such as fingerprints and facial scans and it does away with manual stamping of passports and replaces it with scans which automatically calculate how long people have been in France.

You can read full details of how it works HERE. 

So that should eliminate the problems of unclear stamps, stamps being read wrongly or passports not getting the stamps they need.

Residents in France – carte de séjour and visa holders – are not required to complete EES checks and should have a separate system at ports, airports and railway terminals.

However, at present it’s pretty common for border guards to give incorrect information to non-EU residents who are resident in the EU – let’s hope that they are properly briefed before EES is deployed.

Have you had problems with passports being incorrectly stamped? Please share your experiences in the comments section below

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