Legal news

• VISA:

Any non-UK resident wishing to set up a company is mostly required to have an Innovator Visa or a Start Up Visa.

There are, in fact, several types of visa allowing to open a company in the United Kingdom.

A)Innovator Visa:

• This is the appropriate visa for the creation of an innovative company.
• To obtain this visa, the applicant must be endorsed by an Innovator Endorsement Body.
• This visa can last for up to 3 years.
• The applicant needs to justify a minimum investment of £50,000 (GBP).
• The applicant must prove that they have a budget of £1270 Pound Sterling (GBP) per 28 days (to prove that they have the necessary funds to live in this country).
• Lastly, the visa fee is £1,021 GBP.

1. Start Up Visa:

• This is the appropriate visa for applicants who wish to bring a real added value to the British market by creating businesses which are different from anything else on the market.
• The business must be endorsed by an endorsing body.
• This visa can last for up to 2 years.
• The visa fee is £308 (GBP).

1. Other types of visa:

Otherwise, it is possible to opt for another types of visa.

1. If the applicant is a leader or potential leader in their field:

• The applicant must be eligible for the Global Talent visa if they are leaders or potential leaders in academia or research, arts or culture, or digital technology.
• With this visa, it is possible to:
  • Start a business;
  • Be an employee, self-employed, or directed of a company; and
  • Work in the United Kingdom without a job offer.

• Eligibility criteria: prove the status of leader or potential leader by applying for an ‘endorsement’.
• This visa can last for up to 5 years.

It can be extended as long as the applicant is still eligible.

• The applicant may be able to settle permanently in the United Kingdom after 3 years if they are leaders or after 5 years if they are potential leaders.

2. If the applicant is setting up their company’s first UK branch or subsidiary:

• The applicant must be eligible for a UK Expansion Worker visa (Global Business Mobility) if they work for an overseas company and are planning to set up their first UK branch or subsidiary.
• Eligibility criteria:
  • Working in an eligible job; and
  • Being paid a minimum salary (how much depends on the type of work).

• This visa can last for up to 1 year.

It can be extended as long as the applicant’s is still eligible.

3. If the applicant has a qualification from an eligible university:

• The applicant may be eligible for a High Potential Individual (HPI) visa.
• Eligibility criteria:
  • Having been awarded a qualification by an eligible university in the last 5 years; and
  • Proving that the applicant can read, write, speak, and understand English.

• This visa can last for 2 years.

If the applicant has a PhD or another doctoral qualification, this visa will last for 3 years.

If the applicant wants to stay longer, they must switch to another type of visa.

• STARTING A LLC (LIMITED LIABILITY COMPANY):

Several steps are necessary to start such a company:

• Choose the company’s name and its management staff (CEO and secretary);
• Appoint the shareholders and the guarantor;
• Choose the PSC (people with significant control) who will hold more than 25% of the shares;
• Draft the articles and memorandums of association;
• Register the company at Companies House (it is required to have an address and a SIC code that determines the scope of the company’s activity);

Registration costs £12 (GBP) and is usually done within 24 hours; and

• Register as a future payer of the Corporate Tax on the HMRC (Her Majesty’s    Revenue and Customs).

• TAXATION
• Business profits are taxed at 19%.
• Self-employed persons are subject to income tax.
• A business owner must pay social security contributions of 12% for employees paid less than £4,190 per month. Above that, the rate is 2%.

Lawfirm Cabinet BRAHIN

Nicolas BRAHINI Avocat

Master’s Degree in Banking and Financial Law

Email :  nicolas.brahin@brahin-avocats.com

1, Rue Louis Gassin

06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

www.brahin-avocats.com

Capital gains on the sale of real estate are subject to income tax and social security contributions.

However, there are many exemptions.

How is a capital gain calculated?

Capital gains are taxable when they result from a sale for valuable consideration: sale of a property or the rights attached to it, exchange, contribution to a company, etc.

It is calculated in two stages:

• the calculation of the gross capital gain (1), and
• the application of allowances (2)

• Calculation of the gross capital gain

The gross capital gain is the difference between the sale price and the purchase price.

The sale price is the price mentioned in the deed of sale added to the charges and indemnities paid by the buyer (e.g. eviction indemnity) and minus the costs incurred by the seller (e.g. the cost of real estate diagnostics or the costs of mortgage release).

As for the acquisition price, it corresponds to the purchase price or the value appearing in the declaration of inheritance or in the donation.

It is increased by:

• acquisition costs (notary’s fees, registration fees, etc.) for a fixed amount of 7.5% of the purchase price or actual costs based on receipts; and
• works for a fixed amount of 15% of the purchase price for a property that has been held for more than five years or at actual costs based on receipts.

Example: for a purchase price of €200,000, the flat-rate valuations allow the price to be increased by €15,000 for the acquisition costs and €30,000 for the works.

• Application of allowances

Allowances for holding periods are applied to this capital gain.

For example, for a property that has been held for 15 years or more, the seller benefits from an allowance of :

– 60% for income tax,

– 16.5% for social security contributions.

For a capital gain of 40,000 €, only 16,000 € will be subject to income tax and 33,400 € to social security contributions.

Please note

For properties located in certain “tight” areas between supply and demand, an additional allowance of 70% is applicable if the sale allows the construction of multi-family residential buildings and 85% if the majority are social and/or intermediate properties.

In practice, this exceptional allowance applies to sales made until the 31st of December 2022 (provided that the preliminary contract has acquired a specific date between 1 January 2018 and 31 December 2020).

The taxation rate of the capital gain: after the allowance, the capital gain is taxed at a rate of 19% and social security contributions are taxed at a rate of 17.2%.

An additional tax is due for capital gains superior to 50,000 €, after the allowance.

It is 2% to 6% depending on the amount of the capital gain.

What are the exemptions?

There are many exemptions for capital gains on property, each of which is subject to specific conditions such as sales of principal residences, those with a price of less than 15,000 € or sales to social housing organisations.

The capital gain is also exempt when the seller does not own his main residence and uses the money from the sale price to acquire one or when a non-resident sells a home located in France.

In addition, pensioners and people living in social, medico-social or nursing homes for the elderly or disabled adults can benefit from an exemption subject to income conditions.

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

Email :  contact@brahin-avocats.com

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

www.brahin-avocats.com

Capital gains on the sale of real estate are subject to income tax and social security contributions.

However, there are many exemptions.

How is a capital gain calculated?

Capital gains are taxable when they result from a sale for valuable consideration: sale of a property or the rights attached to it, exchange, contribution to a company, etc.

It is calculated in two stages:

• the calculation of the gross capital gain (1), and
• the application of allowances (2)

• Calculation of the gross capital gain

The gross capital gain is the difference between the sale price and the purchase price.

The sale price is the price mentioned in the deed of sale added to the charges and indemnities paid by the buyer (e.g. eviction indemnity) and minus the costs incurred by the seller (e.g. the cost of real estate diagnostics or the costs of mortgage release).

As for the acquisition price, it corresponds to the purchase price or the value appearing in the declaration of inheritance or in the donation.

It is increased by:

• acquisition costs (notary’s fees, registration fees, etc.) for a fixed amount of 7.5% of the purchase price or actual costs based on receipts; and
• works for a fixed amount of 15% of the purchase price for a property that has been held for more than five years or at actual costs based on receipts.

Example: for a purchase price of €200,000, the flat-rate valuations allow the price to be increased by €15,000 for the acquisition costs and €30,000 for the works.

• Application of allowances

Allowances for holding periods are applied to this capital gain.

For example, for a property that has been held for 15 years or more, the seller benefits from an allowance of :

– 60% for income tax,

– 16.5% for social security contributions.

For a capital gain of 40,000 €, only 16,000 € will be subject to income tax and 33,400 € to social security contributions.

Please note

For properties located in certain “tight” areas between supply and demand, an additional allowance of 70% is applicable if the sale allows the construction of multi-family residential buildings and 85% if the majority are social and/or intermediate properties.

In practice, this exceptional allowance applies to sales made until the 31st of December 2022 (provided that the preliminary contract has acquired a specific date between 1 January 2018 and 31 December 2020).

The taxation rate of the capital gain: after the allowance, the capital gain is taxed at a rate of 19% and social security contributions are taxed at a rate of 17.2%.

An additional tax is due for capital gains superior to 50,000 €, after the allowance.

It is 2% to 6% depending on the amount of the capital gain.

What are the exemptions?

There are many exemptions for capital gains on property, each of which is subject to specific conditions such as sales of principal residences, those with a price of less than 15,000 € or sales to social housing organisations.

The capital gain is also exempt when the seller does not own his main residence and uses the money from the sale price to acquire one or when a non-resident sells a home located in France.

In addition, pensioners and people living in social, medico-social or nursing homes for the elderly or disabled adults can benefit from an exemption subject to income conditions.

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

Email :  contact@brahin-avocats.com

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

www.brahin-avocats.com

The VAT applicable to imports must now be declared to the General Management of Public Finance (Direction générale des Finances publiques – DGFiP) on the VAT return, not to the General Management of Customs and Indirect Taxation (Direction Générale des Douanes et Droits Indirects – DGDDI) during customs clearance.

Several information, in order to facilitate your VAT return:

• the online declaration is pre-filled with the amount of import VAT to be collected (excluding suspensive tax regimes – RFS), based on the elements that you or your registered customs representatives (RDE) have previously declared to the DGDDI.

The pre-filling is effective from the 14th day of each month for operations carried out during the previous month;

• the details of the pre-filled amount are accessible in the “DONEES ATVAI” tab of your professional account on the douane.gouv.fr website; in addition to the declaration numbers and, for each of them, the taxable base by rate and nomenclature, it also includes information identifying the RDEs (Name and EORI number); and
• for all import VAT payers, the deadline for filing the VAT return is the 24th of each month.

The pre-filled VAT amounts must be checked by you and corrected if necessary.

To do this, you should ensure that you have the necessary information, especially if you use a registered customs representative (RDE) to validate the import VAT amount.

If there is a discrepancy between the pre-filled amount and the amount you believe you should declare, you will need to correct the pre-filled output VAT amount and you could contact the RDE to keep him informed.

Before validating your VAT return, it is also your responsibility to complete it with the data not pre-filled such as the taxable import VAT bases when you use an RFS, the non-taxable bases and the related input VAT amount.

Clarification of the importer population

The collection of import VAT on the VAT return concerns all taxable persons and non-taxable persons who have a valid intra-European VAT number in France.

We remind you that the intra-European VAT number must now be entered on your customs declarations.

There are several details depending on your situation:

• If you are placed under the simplified taxation regime (RSI) for VAT and you intend to carry out imports, you will no longer be able to benefit from the RSI and will have to file a VAT return according to the normal taxation regime after having informed your tax department.
• If you are under a basic VAT exemption scheme, you will have to declare the VAT relating to the imports on the VAT return n° 3310-CA3 for the month in which the VAT became payable.

If you do not have a French intra-European VAT number even though you are importing goods into France, we invite you to contact your Tax office to obtain one.

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

Email :  contact@brahin-avocats.com

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

www.brahin-avocats.com

The VAT applicable to imports must now be declared to the General Management of Public Finance (Direction générale des Finances publiques – DGFiP) on the VAT return, not to the General Management of Customs and Indirect Taxation (Direction Générale des Douanes et Droits Indirects – DGDDI) during customs clearance.

Several information, in order to facilitate your VAT return:

• the online declaration is pre-filled with the amount of import VAT to be collected (excluding suspensive tax regimes – RFS), based on the elements that you or your registered customs representatives (RDE) have previously declared to the DGDDI.

The pre-filling is effective from the 14th day of each month for operations carried out during the previous month;

• the details of the pre-filled amount are accessible in the “DONEES ATVAI” tab of your professional account on the douane.gouv.fr website; in addition to the declaration numbers and, for each of them, the taxable base by rate and nomenclature, it also includes information identifying the RDEs (Name and EORI number); and
• for all import VAT payers, the deadline for filing the VAT return is the 24th of each month.

The pre-filled VAT amounts must be checked by you and corrected if necessary.

To do this, you should ensure that you have the necessary information, especially if you use a registered customs representative (RDE) to validate the import VAT amount.

If there is a discrepancy between the pre-filled amount and the amount you believe you should declare, you will need to correct the pre-filled output VAT amount and you could contact the RDE to keep him informed.

Before validating your VAT return, it is also your responsibility to complete it with the data not pre-filled such as the taxable import VAT bases when you use an RFS, the non-taxable bases and the related input VAT amount.

Clarification of the importer population

The collection of import VAT on the VAT return concerns all taxable persons and non-taxable persons who have a valid intra-European VAT number in France.

We remind you that the intra-European VAT number must now be entered on your customs declarations.

There are several details depending on your situation:

• If you are placed under the simplified taxation regime (RSI) for VAT and you intend to carry out imports, you will no longer be able to benefit from the RSI and will have to file a VAT return according to the normal taxation regime after having informed your tax department.
• If you are under a basic VAT exemption scheme, you will have to declare the VAT relating to the imports on the VAT return n° 3310-CA3 for the month in which the VAT became payable.

If you do not have a French intra-European VAT number even though you are importing goods into France, we invite you to contact your Tax office to obtain one.

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

Email :  contact@brahin-avocats.com

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

www.brahin-avocats.com

Giving part of your assets in your life remains the most effective way to reduce the inheritance tax due by heirs.

With an allowance currently set at 100,000 € between each parent and each child (200,000 € for a couple, per child), which is replenished every 15 years, the sums passed on without paying donation tax climb quickly.

Especially if you add the deduction of 31,8865 € which applies to family donations of money made by a donor under 80 years old to an adult beneficiary, which is also renewed every 15 years.

Today, a 50 years old person who gives 131 865 € (a “classic” donation coupled with a family donation) to a child can renew the operation at 65 years old, then at 80 years old, without paying a single cent to the tax office.

Experts even recommend giving beyond the allowance; up to around 550,000 €. This is especially so the donor can pay the donation tax without it being considered a supplement of taxable donation.

It is better to smooth out the transmission of one’s assets over time in order to purge the allowance every 15 years and reset the tax calculation scale.

As the tax rate is progressive, it allows you to take advantage of the bottom of the scale several times, up to the one taxed at the rather reasonable rate of 20% (capped at 552,324 €, NDLR).

If nothing is anticipated, the same sum transmitted once after the passing will be taxed at a rate of 30, 40, or even 45%, as inheritance tax.

Of course, the age to convey varies according to the size of the estate.

The average person will start to work on it at the age of 60 or 65, after having built up enough assets to transfer part of them.

Nevertheless, to convey during one’s lifetime is a very good fiscal operation, not only to reduce inheritance tax in the long run.

By giving the usufruct of a rental property for 5 to 10 years to a child who will finance his or her studies thanks to the rents he or she will receive, the parents take the property out of their estate subject to the real estate wealth tax (IFI), with a tax saving at the end.

In the same way, it is sometimes more advantageous to give a property than to proceed to its sale.

The reason for this? The act of donation erases the added value tax on real estate capital gains (at a rate of 36.2%, NDLR).

Don’t give away too much too soon

With the 15-year time limit, the number of donations that can be exempted remains limited for large estates.

However, it is better not to give away too much too young, at the risk of impoverishing oneself, getting into difficulty or losing control of one’s assets.

This is particularly the case if you give away the bare ownership of your main residence.

The donor who becomes the usufructuary of his home can no longer sell it without the agreement of his bare-owner children.

The donor is irrevocably stripped of his property. As the popular French saying goes: “To give is to give, to take back is to steal”.

If one should not give away too soon, the opposite is also true.

After the age of 81, you should no longer transfer in dismemberment of ownership, because the value of the usufruct reaches the rate of 20%.

The donation tax culminates at 80% of the value of the property in full ownership.

The cost of the transmission becomes dissuasive, hence the need to anticipate these operations.

Moreover, after a certain age, giving away is no longer of any use to the estate.

Donations made by the deceased to his heirs in the 15 years preceding his death are taken into account in the succession.

The 100,000 € allowance between parent and child being common to inheritance tax, it will already have been used up.

Moreover, when the tax rate is progressive, the bottom of the scale of calculation already used for a gift of less than 15 years will not be reused, or only up to the remaining balance.

The next lowest unused part of it will be applied in ownership.

But, contrary to popular belief, a previous donation is not taxed again.

Only the inherited excess is.

Nicolas BRAHIN

Lawyer of the Bar of Nice

Specialist in banking and financial law

Panthéon-Sorbonne University

Cabinet BRAHIN Avocats

nicolas.brahin@brahin-avocats.com