BREXIT: New ways of business for representative offices

BREXIT: New ways of business for representative offices

BREXIT: New ways of business for representative offices 1500 981 Exponens International

BREXIT: New ways of business for representative offices

Published on 02/08/2021

Since 1st February 2020, the United Kingdom (UK) has withdrawn from the European Union (EU) and has become a “third country”. The Withdrawal Agreement provided a transition period until the 31st December 2020. In 2020, nothing changed.
The EU and the UK came to a last-minute trade deal on Christmas Eve, avoiding the hardest of all potential Brexits. But major tax uncertainty remains, waiting comments from French tax authorities. For now, French authorities answer some of our questions via a FAQ updated following the trade deal of December 2020.
Our concern about UK companies with no permanent establishment in France (e.g. RFE or Representative Office) is that they might may face social issues for the employees’ withholding tax (WHT) payment.

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FRENCH WHT: NO NEED OF A TAX REPRESENTATIVE FOR UK COMPANIES

On 1st January 2019, France introduced the WHT (“PAS” in French) to modernise the payment of the employees’ personal income tax. Since then employers collect income tax on the monthly wages of employees based on the tax rate calculated and communicated by the tax authorities. The amount of tax paid is shown on the payslips.
Today, companies established outside the EU must generally appoint a tax representative. This tax representative will guarantee the payment of income tax to the French tax authorities. EU companies were so far exempted from this obligation of making the appointment of a tax representative optional (art. 1671 of the French tax code).
As the last release in the FAQ indicates: the UK has legal instruments for tax recovery and the fight against tax fraud similar to those existing between EU member states, UK operators will be exempt from appointing a tax representative.

The information related to the practical consequences of the Brexit given by French tax authorities are very parsimonious. Thus, we are still monitoring the announcements by France and EU authorities. In the meanwhile, we are available to discuss any issues you may face at this stage of the Brexit.

Related insights:

Brexit – New ways of business for UK company with no PE in France – Read article
Brexit – UK R&D expenses and French R&D tax credit – Read article
Brexit – New ways of business for intragroup relationship – Read article
Brexit – New ways of business with UK for flow of goods – Read article

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