Archives des Brexit - FBA - French Business Advice

Brexit: the Impacts on personal taxation & Some consequences for companies

FBA team — Sat, 15 May 2021 08:56:00 +0000

To follow up on our article published at the beginning of the year, entitled “The tax consequences of Brexit on international trade”, we indicate here in the first part the consequences of BREXIT on the taxation of persons and we will give in the second part, some current information of interest to companies and groups of companies.

I – The effects of Brexit on personal taxation

Taxation of financial investments

> Stock savings plans (P.E.A.)

To be eligible for the PEA or PEA-PME, the securities must be issued by a company which has its registered office in France or in another EU or EEE State and which is subject to corporate tax or to an equivalent tax.

As a result, securities listed in a PEA or PEA-PME issued by companies headquartered in the United Kingdom become ineligible as of January 1^st 2021.

It should be noted, however, that financial services have been the subject of specific negotiations, but this agreement has not yet been signed. The measures set out below are therefore likely to change.

Transitional measures are however provided for by the ordinance of December 16^th 2020 which extends the PEA eligibility of these securities acquired before December 31^st 2020, until September 30^th 2021. This concerns:

Securities subscribed or acquired before December 31^st 2020 whose issuer is headquartered in the United Kingdom;
Securities whose issuer is headquartered in the United Kingdom and which are held by undertakings for collective investment which employ more than 75% of their eligible assets in companies established in the EU or the EEE on December 17^th 2020;
Units or shares of undertakings for collective investment in transferable securities established in the United Kingdom subscribed before December 31^th 2020 which employ more than 75% of their assets in securities issued by SMEs, of which at least 2/3 in stocks and bonds.

> Risky Mutual Funds (F.C.P.R.) and Local Investment Funds (F.I.P.)

Under certain conditions, distributions and gains relating to securities of certain structures (FCPR and FIP) are exempt from income tax. In addition, the subscription of this type of unit may give rise to the right to a tax reduction. These benefits are, however, subject to a condition of holding shares for five years and the achievement of investment quotas (70% or 50% or 20%) in certain securities of European companies by the body.

As of January 1^st 2021, securities issued by companies headquartered in the United Kingdom are in principle no longer included in investment quotas. Thus, in the event of non-compliance with these quotas for this reason, the new subscriptions will no longer give entitlement to the preferential tax regime.

On the other hand, such FCPIs and FIPs acquired or subscribed no later than December 31^st 2020 remain eligible for investment quotas for a temporary period of 12 months.

> Life insurance

In principle, Brexit results in the ineligibility of certain British securities offered in life insurance contracts in France.

However, a decree ensures the continuity, without time limit, of the units or shares of UCITS governed by United Kingdom regulations and subscribed before January 1^st 2021 as assets constituting units of account. However, the securities concerned can no longer be the subject of new subscriptions.

Income tax and related contributions

> Exemption from C.S.G. and C.R.D.S. on income from property

Since the 2018 income tax, the CSG and the CRDS on income from assets are not due by people who:

Come under the legislation of another EU state in the EEE or in Switzerland in health insurance;
And are not the responsibility of a compulsory French social security scheme.

Consequently, since January 1^st 2021, income from assets acquired by British residents is subject to social security contributions at the rate of 17.2%, for income received or realized from that date (the United Kingdom not being no longer subject to European regulations).

> Tax reduction for donations

Foreign non-profit organizations eligible for a 75% or 66% income tax reduction for donations must in principle be headquartered in an EU or EEE member state.

As a result, donations to UK non-profits are no longer eligible for the donation reduction as of January 1^st 2021.

> Reporting obligations in the event of transfer of domicile outside France

Since January 1^st 2019, in the event of a transfer of tax domicile outside France, the deferral of payment of the tax relating to capital gains and debts is granted automatically, without constitution of guarantees, in the event of the taxpayer’s departure to an UE State or to any other State which has concluded an administrative assistance agreement with France in order to combat tax fraud and tax evasion as well as a mutual assistance agreement in matters of debt recovery.

As the United Kingdom has legal instruments for assistance in recovery and the fight against tax fraud similar to those existing between EU Member States, British operators will be exempt from appointing a tax representative and will benefit from the automatic suspension of payment without constitution of guarantees.

II – Certain effects of Brexit on companies in customs matter and on corporate groups

VAT and customs duties

As we saw in our previous article, mentioned above, Brexit involves the concepts of imports and exports instead of intra-community trade for all trade in goods or services between France and the United Kingdom.

However, we mention here the specific VAT regimes implemented in the United Kingdom.

> UK VAT reverse charge

The UK Revenue Service (HMRC) has set up a reverse charge mechanism for import VAT in the UK. This mechanism can be applied to all imports of goods into UK territory by a UK VAT registered business holding a UK EORI number.

> Goods located outside UK territory at the time of sale with an aggregate consignment value not exceeding £ 135

For those sales made by foreign sellers to UK customers, taxable or non-taxable, and whose consignment value is less than or equal to £ 135, the event triggering the VAT liability is amended as follows. UK VAT is due at the time of UK local sale which is deemed to occur after import into UK.

> Sales made through an online platform of goods located on UK territory after importation

Customs duties and VAT are due by the non-established seller at the time of importation. However, the subsequent sale is now deemed to take place directly between the platform and the UK customer. Regarding VAT, the foreign seller is therefore no longer deemed to make a sale to the UK customer, and it is the online platform that becomes liable for the VAT due on the local sale.

In addition, the non-established seller is deemed to make a taxable sale at 0% rate to the platform, so that he can register for VAT in the UK and recover the VAT paid on importation.

This new treatment applies regardless of the value of the shipment in question in the following cases:

The goods are held by a seller not established in the United Kingdom;
The goods are located in the United Kingdom at the time of their sale;
The seller sells his goods to a particular UK customer (B to C) via an online sales platform;
The sale is not made to a UK VAT registered customer.

Corporate groups

> Consequences in terms of tax consolidation

After the closing date of the financial years open before December 31^th 2020, if a UK company of an integrated group is a non-resident parent entity, the group will cease, entailing all the consequences of the ceasing of a group, except if a foreign company (within the meaning of the tax group regime and which fulfills the conditions) replaces itself as a new non-resident parent entity.

> Share of costs and charges equal to 1% during intra-group distributions giving rise to the right to the mother-daughter plan

From the financial years ending on or after December 31^st 2020, the share of fees and charges corresponding to distributions from these companies should apply at the rate of 5% if the mother-daughter regime is applied and, otherwise, the distribution should remain included in its total amount in the profit of the beneficiary company.

However, the administration admits that the products received by the beneficiary company of the distribution at the rate of participations in companies established in the United Kingdom until the end of the financial year ended on December 31^st 2020 or in progress on that date, will be deemed to come from companies established in the EU.

> Withholding tax rate applied to dividends from French sources paid to a British company

The distribution of dividends between a French subsidiary company and a parent company which has its registered office in an EU or EEE state is exempt from withholding tax.

Due to Brexit, British companies will no longer be able to benefit from this exemption, subject to the possible application of the tax treaty between France and the United Kingdom. However, it is accepted that this exemption from withholding tax applies to all distributions made in payment during financial years beginning before December 31^st 2020 by French companies for the benefit of British parent companies.

As usual, we remain at your disposal if your need more information, so feel free to contact us!

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L’article Brexit: the Impacts on personal taxation & Some consequences for companies est apparu en premier sur FBA - French Business Advice.

The tax consequences of Brexit on international trade

FBA team — Fri, 15 Jan 2021 11:00:03 +0000

The effective divorce between the European Union and the United Kingdom that occurred on December 31st 2020 at midnight was already effective since January 31st 2020, the start of the transition period. However, it is from January 1st 2021 that all the rules set by the recent agreement enter into force.

We present below some rules applicable to the import and export of goods and services as well as the new principles of taxation of dividends distributed between French and British companies.

I – Purchases of goods, services and VAT

Purchases of goods

Since the United Kingdom left the European Union, European companies no longer carry out intra-Community acquisitions or sales, but imports/exports from or to a third country.

Unlike intra-community operations, import and export operations require the filing of specific declarations with the customs administration and indirect duties at the time of import or export of goods.

On exportation, the exemption from the tax must be justified in accordance with the provisions of Article 74 of Annex III to the General Tax Code.
On importation, the tax must be calculated in accordance with the provisions of Article 292 of the General Tax Code and paid to the public treasury.

However, companies can obtain authorization to “autoloquide” VAT on importation provided they have already made at least 4 imports during the previous year.

Services

The United Kingdom also becomes a third country with regard to services, and thus the taxation rules provided for in Articles 259 to 259C of the General Tax Code must be observed.

These articles consider the methods of taxation within the framework of the general regime then of the derogatory regimes according to the service rendered. They also take into account the country where the service is located and the taxable status or not of the service provider and the beneficiary.

For example, we will observe the rules provided for in article 259C relating to the following services:

Transport of goods or passengers,
Expertise or work on movable properties,
Services provided by intermediaries,
Short-term transport rentals,
Services connected with immovable property,
Cultural, artistic, sporting services, etc. as well as trade fairs,
Sales to consume on site,
Unique service from travel agencies,
Electronic services.

French VAT is applied when the service provider is located in France and the beneficiary is British (not subject to VAT).

Otherwise (British service provider and French customer), VAT will be now due in France only if the service is used in France.

II – BREXIT and customs

As of January 1^st 2021, customs formalities will have to be completed during any trade with the United Kingdom. It is no longer necessary to complete the declaration of exchange of goods or services (D.E.B. or D.E.S.) but to file a customs declaration. This 54-box declaration can be completed either by a customs clearance professional or by the company. It must be lodged with the customs office where the goods are presented:

Either when the goods are presented to customs,
Either within 30 days preceding the presentation of the goods to customs.

As a result, companies importing or exporting goods from or to the UK should prepare now by taking a few steps:

Obtain an EORI number: to trade with a third country, it is necessary to have a community identifier, also called an EORI number (Economic Operator Registration and Identification). In France, the EORI number follows the structure of the SIRET number preceded by FR.
This number can be obtained on the website https://douane.gouv.fr.
Decide who will complete customs formalities: if the company wishes to carry out customs clearance formalities itself, it must enter into an agreement with customs in order to be able to submit its declarations in the online customs clearance tool “DELTA”, accessible at https://douane.gouv.fr.
Otherwise the company will have to use the services of a “registered customs representative” (R.D.E.).
Check that the goods you want to import are not subject to specific regulations: if this is the case, you will need to request a specific authorization.
Prepare for export customs clearance: goods exported to the UK must undergo export formalities at a customs office known as the “export office” as well as exit formalities at the European Union “customs office of exit”.

It is possible to benefit from an export VAT exemption under certain conditions. It is then necessary to be able to justify the physical exit of the goods from the customs territory of the European Union. ECS is used for this. This is a European system which makes it possible to justify the exit of goods from the customs territory of the European Union regardless of the place where the export declaration formalities were carried out (in France or in another Member State).

Anticipate import customs clearance: it is possible to lodge an advance declaration in the “DELTA G customs clearance system” within 30 days of the physical arrival of the goods in the EU. Advance customs clearance makes it possible to ease customs formalities and therefore speed up the passage of goods.

III – BREXIT and dividends

Payment of dividends by a UK company to its French parent company

The French parent company receiving income from a British subsidiary will not be deprived of the benefit of the exemption regime for these dividends as a result of Brexit. However, the share of costs and charges (which remains included in the profit of the company benefiting from the exempt participation income) is calculated at the reduced rate of 1% when the distributing subsidiary is subject to a tax equivalent to the tax on companies in a Member State of the European Union and that it fulfills, with the company which receives this distribution, the conditions which would allow them to be a member of the same tax group if this subsidiary were established in France. Consequently, the income received during the financial years beginning after December 31st 2020, at the rate of an eligible participation in the parent-daughter scheme from subsidiaries established in the United Kingdom will give rise to the application of a share of fees and charges calculated at the rate of 5%.

Dividends paid by a French company to a British company and withholding tax

British companies can no longer benefit from the exemption from withholding tax on dividends from French sources provided for particularly under the condition of a minimum holding threshold of 10% or 5%.

When the dividends are paid by a French company to a British company which owns, directly or indirectly, less than 10% of the capital of the French company, the rate of withholding tax may not exceed 15% in application of the agreement tax between France and the United Kingdom of June 19^th 2008. When the dividends are paid by a French company to a British company holding, directly or indirectly, at least 10% of the capital of the French company, no withholding tax will be due in France in application of said agreement.

Business managers still ask themselves many questions that we have not dealt with in this article. You can contact us if you want to clarify another issue related to Brexit.

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L’article The tax consequences of Brexit on international trade est apparu en premier sur FBA - French Business Advice.

Residence cards in France and Brexit

FBA team — Mon, 30 Nov 2020 14:46:28 +0000

The “Brexit” refers to the United Kingdom’s exit from the European Union (EU).

On June 23^th 2016, in a referendum organised by former Prime Minister David Cameron, 51.9% of Britons chose to leave the EU. Following the triggering of Article 50 of the Treaty on European Union on March 29^th 2017, the UK and the 27 other EU member countries have given themselves two years to prepare for the actual exit of the country. However, Brexit has been postponed several times, until January 31^rst 2020.

On October 17^th 2019, a new exit agreement was concluded between the UK and the Europeans. It was definitively adopted by the British Parliament and then by the European Parliament.

On January 31^rst 2020 at midnight (Brussels time), the United Kingdom left the European Union.

I – The main stages of Brexit

The transition period

During this period, which began on January 31^st 2020 and will end on December 31^st 2020, the United Kingdom is no longer a Member State of the European Union and the European Energy Community but continues to comply with European Union law.

These 11 months are being used to prepare for the implementation of the withdrawal agreement and to anticipate the future relationship between the EU and the UK.

The end of the transition period will bring important changes for citizens and businesses.

Until December 31^st 2020 nothing changes for people, consumers and businesses in both the EU and the UK. The withdrawal agreement provides that the UK will continue to comply with the full acquis of the Union (including all EU directives, norms and standards) during the transition period.

The relationship between the EU and the UK at the end of the transition period

The final agreement should include an economic partnership as well as a security partnership. Principles will have to be respected (balance of rights and obligations, fair competition, decision-making autonomy of the Union, etc.).

However, points of agreement are essential to ensure a level playing field that respects the common standards that will be in force at the end of the transition period in the following areas:

State aid,
Competition,
Social and employment standards,
The environment,
Relevant tax issues.

The rules laid down will be designed to avoid undue competitive advantages for the EU or the UK.

The withdrawal agreement

The withdrawal agreement covers the following areas:

Citizens’ rights: this part of the withdrawal agreement aims to preserve the rights of British and European citizens in their State of residence,
The transition period,
A protocol on Ireland and Northern Ireland, as well as Gibraltar and the Sovereign Base Areas in Cyprus,
The Financial Regulation, which guarantees that the UK will meet all financial obligations entered into when it was a member of the Union,
The overall management of the withdrawal agreement, the monitoring of its application and the settlement of disputes.

II – The impact of Brexit on people

French citizens

The right to reside in the United Kingdom

The UK authorities have now introduced settled status for EU nationals and their family members after the UK’s exit from the EU.

There are two different resident statuses:

Settled status: EU nationals who have been continuously resident in the UK for at least 5 years (with no absence from the territory for more than 6 consecutive months a year) can apply for permanent residence status. It allows the holder to stay for up to 5 consecutive years outside the UK without losing permanent resident status.
Pre-settled status: EU nationals who have been resident in the UK for less than 5 years will be eligible for pre-settled status, pending fulfilment of the residence requirement.

They will be able to apply for permanent resident status free of charge as soon as they have fulfilled the condition of residence in the UK: at least 6 months a year for 5 years.

Pre-Permanent Residence Status allows the holder to stay for up to 2 consecutive years outside the UK without losing the rights attached to the Pre-Permanent Residence Status.

The persons concerned and their family members will have until June 30^th 2021 to make the request.

Both residency statuses will allow after December 31^st 2020:

To work in the United Kingdom,
To benefit from the services of the National Health Service (NHS),
To continue their studies in the United Kingdom,
To benefit from public aid (allowances, benefits, retirement pensions, etc.),
To travel to and from the UK freely.

Applicants must submit their application only online and their status will be fully digital. Holders of the status will be able to consult it online but will not be issued with a card attesting to their status. To do this, you will need to visit the UK government website.

The right to work in the UK

With the entry into force of the withdrawal agreement, the rights and obligations already applicable in the European Union are guaranteed. Employment contracts or promises of employment remain and cannot be called into question. The rights and obligations relating to the employment contract also remain during this period.

British citizens

The right to reside in France

During the transition period, British nationals and their family members already settled in France or wishing to settle there before December 31^st 2020 will not be required to hold a residence permit.

British nationals and their family members present in France before December 31^st 2020 must apply online before July 1^st 2021. They will be issued with a residence permit stating «Accord de retrait du Royaume-Uni de l’Union Européenne ».

British nationals arriving in France after December 31^st 2020 must apply for a common law residence permit at the prefecture. As an exception, British citizens who are family members of British citizens already settled in France before December 31^st 2020 will benefit from a free visa and access to a residence permit once they have arrived in France as provided for in the agreement.

British nationals, regardless of their date of arrival in France, will need to hold a residence permit from October 1^st 2021.

Residence permits marked “European Union citizen” obtained before the end of the transitional period will continue to be valid until October 1^st 2021 but will lose their validity after that date.

The right to work in France

For British employees working in France, the transition period ensures the same rights and obligations applicable in the European Union. The conditions that will be implemented after the end of the transition period are still under negotiation.

As regards employment contracts, the rights acquired before and during the transitional period will continue to apply beyond January 1^st 2021. Employment contracts or promises of employment remain. However, it will be necessary to observe the new measures taken with regard to the right of residence and work permits, some of which will come into force as of January 1^st 2021.

For British self-employed workers who started their professional activity in France before December 31^st 2020, they will not need a work permit. Only those who moved to France on or after January 1^st 2021 will be required to apply for a work permit.

III – Residence permits in France

The criteria for obtaining

British nationals already residing in France who wish to apply for a residence permit will in principle have to justify that they are in one of the following situations:

Engaged in an employed or self-employed activity or registered as a jobseeker,
Having sufficient resources for oneself and one’s family, as well as health insurance,
Studying or undergoing vocational training, and having health insurance,
Be a family member of a British national settled in France before December 31^st 2020 who has a right of residence.

British nationals residing legally in France before the end of the transition period and who have been present in France for more than 5 years will have access to a permanent residence permit for a period of 10 years.

British nationals residing legally in France before the end of the transition period and who have been present for less than 5 years will obtain a 5-year permit depending on their situation.

British nationals arriving in France from January 1^rst 2020 who have no family ties with a British national benefiting from the agreement will be able to obtain a residence permit only on the basis of the provisions of ordinary law.

Persons already holding a permanent residence card issued in their former capacity as EU citizens will automatically benefit from the exchange of this document for a permanent residence card “withdrawal agreement”.

The agreement also provides for specific arrangements for access to this card in certain situations (pensioners, incapacity for work, etc.).

For British nationals seeking employment two situations should be considered:

If the job seeker has already worked in France, he will be issued a residence permit valid for 5 years,
If he enters France to look for work and has never worked in France, he will be issued an APS (temporary residence permit), valid for 6 months and renewable once (if he can prove that he is actually looking for work and that he has a real chance of being hired within a reasonable period of time).

Residence permit applications

All the steps must be carried out on the Internet, by means of tele-procedures. It is also possible to contact the public service houses (maisons de service au public) that are available throughout France. To make an application it is necessary to send a photographed or scanned copy of the passport as well as one or more other additional documents depending on your situation (follow this link).

When the online request is validated, a confirmation is sent by email with a registration acknowledgement number. Once the file has been processed, an e-mail is sent by the Prefecture’s services to fix an appointment at the Prefecture to finalise the application (receipt of the photograph and taking of biometric fingerprints). The residence permit will then be sent to the applicant’s home by post.

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L’article Residence cards in France and Brexit est apparu en premier sur FBA - French Business Advice.

Archives des Brexit - FBA - French Business Advice

Brexit: the Impacts on personal taxation & Some consequences for companies

I – The effects of Brexit on personal taxation

Taxation of financial investments

> Stock savings plans (P.E.A.)

> Risky Mutual Funds (F.C.P.R.) and Local Investment Funds (F.I.P.)

> Life insurance

Income tax and related contributions

> Exemption from C.S.G. and C.R.D.S. on income from property

> Tax reduction for donations

> Reporting obligations in the event of transfer of domicile outside France

II – Certain effects of Brexit on companies in customs matter and on corporate groups

VAT and customs duties

> UK VAT reverse charge

> Goods located outside UK territory at the time of sale with an aggregate consignment value not exceeding £ 135

> Sales made through an online platform of goods located on UK territory after importation

Corporate groups

> Consequences in terms of tax consolidation

> Share of costs and charges equal to 1% during intra-group distributions giving rise to the right to the mother-daughter plan

> Withholding tax rate applied to dividends from French sources paid to a British company

The tax consequences of Brexit on international trade

I – Purchases of goods, services and VAT

Purchases of goods

Services

II – BREXIT and customs

III – BREXIT and dividends

Payment of dividends by a UK company to its French parent company

Dividends paid by a French company to a British company and withholding tax

Residence cards in France and Brexit

I – The main stages of Brexit

The transition period

The relationship between the EU and the UK at the end of the transition period

The withdrawal agreement

II – The impact of Brexit on people

French citizens

British citizens

III – Residence permits in France

The criteria for obtaining

Residence permit applications