Freelancers' Questions: How best to work for a Paris firm from London?
Freelancer’s Question: I plan to work for a French firm in Paris remotely from my home in London for six months. The nature of this work will be mainly consultancy, including doing analysis on my computer and delivering the results via email to them every month.
Firstly, can I invoice them for my services every month without setting up a company? If I must form a structure, is a limited company or sole trader option best? Lastly, will I need to pay tax here in the UK or will the French firm pay it in France? I’m hopeful I can do everything alone, rather than enlist an accountant given that the income is just for six months.
Expert’s Answer: The answer to your first query about whether you can invoice your French client should be put to them. In fact, it is almost entirely dependent on the French firm. It could be that they require a company to invoice them to be able to make payment, in which case you would need to set up a limited company ('Ltd'). If they are happy to receive an invoice from you as an individual, then you will not need to set up a company.
In terms of the best structure for your situation, working as a sole trader is the same as working as an individual. So in the event that the French firm requires you to invoice them from a Ltd, the sole trader route would not be an option .
Your taxation issue is more clear-cut -- you should always look to pay tax in the country in which you are physically working. In this case that is the UK and so the UK is where tax should be paid. The French firm should not be paying taxes in France for you.
Whether you can take care of the tax and accounting requirements of your six-month stint by yourself depends on the answer you get from the client about your first query. So if it was possible to send the invoice as an individual, then you should be able to do everything yourself via a self-assessment tax return. If you are required to set up as a Ltd, then using an accountant would be advisable .
Finally, some background on that issue before you broach it with them. One reason the French company may want you to set up as a Ltd is so that they are not considered as your deemed employer. If they make payment to you as an individual or even as a sole trader, the French authorities could decide that you are their employee and then they become liable for paying tax, social security and employers’ social security on the money they have sent you back in France. By having a contract with you as a limited company, it becomes a company-to-company transaction for them and they are protected against being considered your employer and any additional tax and social security liability. Good luck!
was Charles Daw, a director at 6CATS
International, a services specialist for UK professionals who freelance overseas.
20th June 2017