Except that in law problems are just beginning

The German subsidiary of an SME in the Lyon region barely penetrate specialized distribution networks. At the headquarters of Villeurbanne, a commercial Director reveals a goldsmith in the matter. Why not send it in German mission Excellent management reflex. Except that, in law, problems are just beginning.

Many companies are currently experience. They are mean tax adjustments. They come from the French administration, but also German, Britain or Belgium. In the vast majority of cases, the companies are in good faith. Simply, they had not assessed the impact of their decision to management. Not only at the level of tax on corporations, but also of personal taxation collaborators expatriate. Lawyers at the firm August & Debouzy in Paris, MesCéline Huet and Sonia Bonnabry analyze the reasons for this delicate situation.

1. The availability of staff must give rise to billing

"Tax on corporations, the principle is unstoppable: a company with employees at disposal of a subsidiary must receive financial compensation", prevents MeBonnabry. In addition, this billing must conform to the said principle "of full competition. That is, the service must be paid at a fair price. The concept is certainly unclear, but it must comply. Otherwise, beware the tax relief! "It can be operated on the basis of an abnormal Act of management, said the lawyer, or reason for indirect transfer of profits from France."

The insufficiently invoiced amounts are subject to tax on corporations, the rate of 33.33. But the deductibility of incurred expenses may also be questioned in.

In addition, since January 1, the French groups are subject to an increased duty for the documentation of their pricing under significant tax penalties. From there to look twice before sending an employee in mission The fact is that the consequences of the obligation to billing do not stop there.

2 Danger to the collaborator of double taxation

The income of the employee can also be directly affected. In principle, the taxation is done in the country where the employee carries on its activity. "However, most States are agreed that, in the case of less than six-month mission, the country entitled to impose the tax is in fact that where the employee is ordinarily resident", said MeCéline Huet.

It must, however, that remuneration is not paid by an employer established where it is on a mission. This implies to agree on the concept of employer. Generally, countries retain economic qualification. They seek to define the entity that actually supports the burden of remuneration.

Most of the States, but not the France, which stands in accepting instead the legal concept. "Our country is interested in entity party to the contract of employment", continues MeHuet. However, this originality is prejudicial for the company and the employee.

Indeed, let us look at the case of an employee sent on a mission in the foreign subsidiary. Its parent to pay him compensation and it invoice cost to its subdivision. But then, it creates without knowing a risk to the employee: to be taxed both in France and in the country of mission!

"This tax will generally directly claimed to the foreign subsidiary." A burden for it to perform the delicate task of recovering the amounts to the employee. Of course, it could keep in his charge the amounts claimed. "But in this case, the local tax authorities would see an advantage itself taxable," explains MeHuet.

3 for a balance

Drying out of the public finance requires, in recent months, tax administrations have admitted no particular tolerance for corporations. They have therefore not choice. They must seek to limit as much as possible the dire consequences of this mandatory billing. But they may not completely protect themselves against tax risks. As the deplore MesBonnabry and Huet, "it is regrettable that the France did not aligned its position with that of other States". It is an additional obstacle in the context of international competition. But it is so: businesses must live with the French tax exception.