Double taxation - commuting to France

ryand75

My partner and I are in the very early stages of grappling with the idea of him taking a post based in France (but paid and presumably taxed at source in Swiss francs, as its within the province of Geneva - I hope this makes sense to someone, it doesn't particularly to us) and trying to work out whether its workable for him to commute for 3/4 nights a week or whether we upsticks completely and move, kids, dog, 'lock, stock and barrell' and all.

I wondered whether anyone had any experience of negotiating the Inland Revenue rules on 'double taxation', as being clobbered twice in tax terms would effectively rule out the commuting option straightaway - unless I've misunderstood the rules completely.

Would very much welcome any advice you guys may have.

Are we missing some kind of trick in the organisation being based in France, but being paid in CHF........

chrismac1

It's a strange place, getting into the right side of Geneva airport from France is Mission Impossible, the signs are designed so only someone with X-ray vision can read them!

Moving on, double taxation treaties mean that if you are a UK tax resident, there is a space on your tax return where you put the foreign tax sufferred and the country of origin. The UK has such a treaty in place with both countries you have mentioned.

The net result is that you'll pay the higher of the 2 countries' tax rates - if UK tax would be lower, bad luck. If UK tax would be higher than the tax you've paid in France, you'll pay the difference via your self-assessment return.

Good luck with the move.

John_Pierpoint

Where there are artificial borders between tax systems there will always be "angles".
http://geneva.angloinfo.com/forum/topic.asp?topic_id=404

shrinkydink

The province of Geneva is confusing me. Geneva is in Switzerland I thought. Will he be physically working in Switzerland or France? I'm going to assume France but as general rule of thumb - you are taxable in the country in which you perform your work duties. ie. he would be taxed in France. (you'd need to double check this, I only really know about the UK side of things)

Generally you will find the tax in France lower than in UK. So as chrismac1 explained, effectively you will pay tax at the UK rate - it will just be split between the the UK and France. This is assuming he remains resident in the UK which would be the case if he were commuting.

If he were to move with you (kids, dog and all) and were outside the UK working full time for a complete tax year he would likely break UK residency. In this case, no UK tax would be due and he would only need to pay tax in France (assuming he only worked in France)

He will definitely need to do a UK tax return for the tax year in which he begins working abroad and the subsequent tax years he work's abroad. I'm not sure what is required in France but I would guess a return is needed there too.

One thing to note is that you cannot complete the foreign pages on the HMRC online website. You will either need to submit a paper return or use third party software which you will likely need to pay a small fee for (or pay some to do your taxes of course)

There are lots of small points and "ifs and buts" when talking about moving to work outside the UK. The rules are very specific to your exact circumstance so it might be worthwhile getting professional tax advice if you're not completely sure.

John_Pierpoint

Get a job at CERN (it is more or less under Geneva Airport) or any of the other "international civil servant" employers and get all sorts of zero tax privileges?
Switzerland is a strange place of contrasts, despite being very late in giving votes to women, it is an icon of localism and democracy. The cantons and the citizens have powers to make local decisions and order their government about. Though full of guns, like USA, the citizens rarely shoot each other.
There are various grades of foreign "guest" workers; this arrangement allows Switzerland to keep its unemployment in other peoples countries.

ryand75

Thanks all for your advice and thoughts.

He/we would be technically in France - so really don't get the payment in CHF, unless is it just the more stable currency.

Just to add to the confusion - the new employer (a really small outfit) seem to be implying (obviously we'll get clarification) that they pay all their employee 'gross' salaries without making any deductions at source and its upto individuals to make their own tax arrangements.

Again I don't know whether this is them just copping out of their responsibilities and making their lives easier or possibly a benefit to make the most of some 'unknown to me' loophole.

John_Pierpoint

It sounds to me like the definition of being "self employed" - see HMRC's web site for "badges of self employment".
Switzerland is a very "commercially" run country. The rules are intended to make the federation, of once upon a time near starving mountain people, (*) richer - as long as what you are doing fills that basic category expect co-operation. If you will be free-loading or extracting the Michael, expect efficient retribution.

http://www.personalbusinesstaxguide.com/Switzerland/Switzerland_employment_vs_self-employment_tax_issues.asp

Other things being equal, I would prefer to be paid in CHF rather than EUR at the moment.

Potted economic history of Switzerland here:
http://www.gersterconsulting.ch/docs/switzerland_as_an_emerging_economy_final.pdf

[However I do remember the 1970's when foreigners had a capital levy imposed on their (short term) deposits in an attempt to cut hot money flows.
http://www.guardian.co.uk/business/2011/sep/06/european-shares-plunge-swiss-franc
]

If I remember correctly Switzerland has signed up to the concept of "withholding tax", following pressure from the EU to prevent what it sees as abuse of a state's rights to tax its population until the pips squeak.

True banking secrecy is no longer available?
http://www.bbc.co.uk/news/business-14649194
http://www.bbc.co.uk/news/business-17624364

(*) There tends to be a historical sympathy with the French, as its revolutionary government supported Switzerland when it was facing a centre of Europe situation, perhaps akin to the Irish potato famine. A French president on a visit to one of the cantons was given the outstanding invoice for Naploeon's last visit and it got paid:D

JasonLVC

I'm with Jon, much rather be paid in CHF than Euros.

Geneva is in Switzerland but the OP may be looking to reside/work in the Pays de Gex area. The most obvious French part being Ferney-Voltaire which is officially "in" Geneva but strictly a French town.

Its a bit like saying you work in London but you actually work out of Docklands or Ealing. Ealing isn't 'London' but is close enough to fall under the "metropolitan borough of" badge of Greater London, I trust you see what I mean.

So OP, you need to clarify exactly what currency the salary is based upon as this will make a massive difference to the choices you will ultimatley make. Where the job is less important, imho, than the salary. Certainly one would want to reside in the French part of Switzerland (as I do) as it is generally cheaper to buy/rent property and easier to buy property too (its near impossible to buy property in Geneva, regardless of cost).

It can be weird to get your head around working in Geneva, living in "France" but take a 6 mile bus trip and your in Switzerland!

Geneva airport is a doddle once you understand its layout, it has exits to the French and Swiss side (although both exits are actually in Switzerland!).