THE MISFITS

The 1961 John Huston film “The Misfits” deals with Americans struggling to fit a standard social mold, a fascinating portrayal of the round-peg-in-a-square-hole theme. I also happen to have been a Marilyn Monroe fan since the age of 15. Setting aside its “wild, wild West” scenes, the movie depicts people who are incapable of staying in the position society assigns to them. With its very strict guidelines, living in France almost always creates this feeling among the foreigners who settle here. They cannot fit into the slot the French system assigns to them. Although their situation is not the same as that of foreign residents, it is interesting to see a growing number of French people feel the same way.

AUTO-ENTREPRENEUR A YEAR LATER
About a year ago, the auto-entrepreneur status was created. Rarely has the creation of a fiscal status become so popular so quickly! (See a full review of this status in the February 2009 issue.) September 2009 saw a record high of 56,548 new businesses created in France. This was an increase of 36.8 % from the previous month and more than half of those were auto-entreprises. The trend continued in October with 55,233 businesses created, a small decrease of 5.3% from the September record high. Since the beginning of the year the total number has reached 424,209.

READERS’ COMMENTS ABOUT THE TAXE D’HABITATION and THE TAX INSPECTOR’S JOB DESCRIPTION

1 – TAXE D’HABITATION and RENTING FURNISHED APARTMENTS
One of my clients wrote to me about what happened to him recently when he went to the tax office regarding a missing taxe d’habitation bill.

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THE COMMENT
"I have two properties located in the 7th arrondissement and I received my taxe foncière bill for both, but I only received one taxe d’habitation bill: the one for my primary residence but not one for the short term rental. This worried me so I went directly to my Centre Des Impôts (tax office).

I happened to get a Controller in a very happy mood who was very open and helpful and even PATIENT! He informed me that I had ZERO taxe d’habitation to pay, as this was already covered (paid for) in my taxe professionelle bill. He called the person assigned to my specific street and she reconfirmed this. When I asked why I was not being charged for the redevance audiovisuelle (TV Tax), he said I had already paid for this at my residence, and no one pays twice, no matter how many properties/TVs they own. This must be part of the reason my taxe professionelle bill was so high, over 600 Euros.

So I learned that if you are an owner and declare the income on your short-term rental property, you are exempt from paying the taxe d’habitation on the property. He also explained that, in addition to the social charges I pay based on my salary, I also pay the C.S.G. and the C.R.D.S., two taxes that are social charges on my rental income. "

MY ANSWER
It sounds strange to every foreigner, but the job description of the French tax inspector includes being a tax adviser for the public. He/she will give information that is beneficial to the individual, even when it decreases the amount of taxes paid to the state. So it pays to meet with your tax inspector in France.

Secondly, I am not a tax specialist and would need to do some calculations, but considering how expensive the "taxe d’habitation" is on a secondary lodging and how rental income is taxed, it is possible that many French fiscal residents engaged in short-term rentals would be better off declaring the rental income in France and benefiting from the provisions listed above.

2 – CHANGING THE AMOUNT OF TAX OWED LINKED TO THE VALUE OF A PROPERTY
Another client wrote about receiving an enormous increase in her taxe d’habitation bill.

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THE COMMENT
“ You brought up the taxe d’habitation issue recently and mine just skyrocketed by 175% this year, as did my neighbors’! I have not paid it yet because I was planning to go and talk to the local tax office and try to make sense of it. Ha! I just got a call from a neighbor who said that we had previously been paying the taxe d’habitation based on the claim that our apartments were without plumbing, i.e., a sink, a shower, or toilets! Apparently the status of the building had not been updated since 1970, and the owner finally did so last December – without informing us of course! “

MY ANSWER
Even though I fully understand your anger and your feeling that you should have been informed of such a drastic change in the amount, I am not sure that it is realistic to expect a tax reduction or even any warning of a tax increase, considering how the tax is calculated and how the bill is sent.
As far as I know, there is no official procedure to decide which building or even which block will be reviewed in order to update the tax office's information on the conditions and amenities in a building or in individual apartments. Such a review is certainly not done regularly. The tax office will contact the owners and sometimes the syndic (the management company of the association) to get an updated description of the apartments. In your case, your landlord could have informed you that he had answered the questionnaire and that your taxe d’habitation might be increased. He probably did not know when the previous assessment had been done, so unless he was sure that it would impact your tax liability, I believe he was better off not saying anything to you. This opens a different topic, but keep in mind that in France, the landlord-tenant relationship is usually one of total distrust on both sides. This explains for the most part why I advise that both parties should be cautious about open communication.

In general, the tax office computers automatically send out bills based on the new assessment data. There is no human involvement here except for the person plugging in the new data. I am sure that their job description does not allow them to contact the renters and forewarn them.

Also, I do not think that the French administration believes that it has a duty to warn individuals about rising tax assessments, and for that matter, I doubt if any administration in the world would do so.

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THE CREATION OF A DATABASE FOR PEOPLE ENTERING FRANCE
On October 19th, Mr. Eric Besson, the immigration minister, launched a new program at the Roissy-Charles-de-Gaulle airport to monitor the entrance into France of foreigners who travel in or through France, but without the intention of staying. It is called P.A.R.A.F.E.S. and stands for passage automatisé rapide aux frontières extérieures Schengen.

The program uses biometric recognition. Instead of presenting their passports to an immigration officer, travelers pass through an airlock to have their fingerprints verified. This implies of course a thorough pre-registration in the database, which at this point is purely voluntary. The system is currently designed for business travelers who come to France frequently, and who would appreciate saving time going through customs.

By the end of this year there should be 13 airlocks installed. I think this is the first step towards implementing a new policy where foreigners who are permitted to enter France without a visa will be recorded, as is done in the USA is doing. The police will have a record of the date of entry into France and therefore will be able to monitor who is overstaying in the country. I do not see this happening anytime soon but it is clear the initial tools are now in place.

MY TALK AT A.A.R.O. ON NOVEMBER 19th
The Association of Americans Residing Overseas (A.A.R.O.) asked me to do a presentation to address some of the bureaucratic and financial issues foreigners encounter here in France. I addressed the topics of legal and fiscal residency, employee and self-employed work status, and operating a business through a corporation. It lasted over two hours and about 30 people were present. I always enjoy giving these kinds of presentations and helping to clarify the complex issues of living and working here. I would like to thank the A.A.R.O. for the excellent job it does for its members as well as for American people living abroad in general.

OFFICE STAYS OPEN DURING THE CHRISTMAS SEASON
I will celebrate Christmas in Paris. Therefore, the office will stay open except for the 24th, 25th, 26th, 30th, and 31st.

Please allow me to wish all of you a

MERRY CHRISTMAS AND A HAPPY NEW YEAR.

I would like to remind everyone that there is no January issue.

Best regards,

Q & A

WHICH IMMIGRATION VISA IS THE RIGHT ONE FOR ME?

QUESTION
I was in Paris for two months earlier this year trying to figure out what kind of visa I need in order to work here. I am in an odd situation since I have two careers, so to speak. I am an independent contractor working online and also an actress and model. I want to know which job offers I can legally accept while in France (film, modeling, etc.).

I have considered going to school here just to get a visa but I would prefer not to spend the money or the time to be a student. I have heard that it is possible to get visas if you work on a contract basis or if you are an artist, but I have not found any solid information on this. If you have any advice, I would greatly appreciate it.

ANSWER
The multitude of visa choices can sometimes be confusing. The fact that student visas seem easy to get does not mean that it is the right choice for everybody. On the contrary, my experience has clearly shown that the easiest and most successful way is to choose from the charts the visa, which closely matches your personal situation NOW. The fact is, rather than registering with a school, you can choose from five different visas in order to stay in France.

1 – CARTE DE SEJOUR VISITEUR / Subcategory: extended tourist
The visiteur visa gives you the right to live in France but zero right to work. If you reside here fewer than six months total, you can continue to work as an independent contractor online while staying in France and you report all your earnings in your American taxes. Should you get a contract for modeling or acting, let the "agent" take care of the visa issue and the temporary change of status.

2 – CARTE DE SEJOUR VISITEUR/ Subcategory: self-employed / profession libérale
This gives you the right to work and live in France with your own French tax ID number. Your American clients can still pay you on your American bank account, since this French fiscal status does not affect how or where you are paid. You will also have to file French income tax forms and declare your American income including your online-generated income, but fortunately the French-American tax reciprocity treaty means you will not pay any income taxes twice. If, in addition, you do any modeling or acting in France, you will have to pay the French social charges and income tax on that income. See the 2nd Q/A of the October issue for more details.

3 – CARTE DE SEJOUR SALARIE/ Subcategory: performing artist
A performing artist in France always has an employee status even if it is just for one performance. Your employer must initiate the visa procedure for you in France while you are still in the USA, and you must maintain your independent activity in the US until the visa is issued. Since your status will be as an artistic employee, you will need to decide which of the above solutions will cover your self-employed income. The July-August 2009 issue on auto-entrepreneur status addresses in greater length the problems involved in combining employee pay with self-employment income.

4 – CARTE DE SEJOUR COMPETENCE ET TALENT / Subcategory: artist
If you have a well-established career in the USA as an actress and model, you can ask for this visa/carte de séjour based on that. If on top of that you have an agent in France, getting a visa becomes easy. The important point here is that you do not need to have an employer sponsoring you.

5 – CARTE DE SEJOUR COMPETENCE ET TALENT / Subcategory: professional
For this card, you would need a solid track record to prove that your business is viable and that it would be successful in France.

I would advise you to concentrate your efforts on obtaining one of the Compétence et Talent visas, collecting and organizing your documentation for both subcategories. These cartes de séjours are valuable and would be the best option for you. The visiteur status or the profession libérale would be your second choice. One of the reasons why you were confused about the requirements was because there is really no such a thing as an artist’s visa. Although the website mentions that artists can work in France, it does not clearly define the specifics of the Compétence et Talent visas.

GENERATION SKIPPING GIFT IN FRANCE

QUESTION
I am American, and my wife is French. Her French parents have signed an acte de donation à titre de partage anticipé to their three children. We are currently living in the USA and would like to retire in France and live in one of the houses that was gifted. We are wondering if we would be allowed to buy out my wife’s siblings' shares while the parents (the "donateurs") are still alive. The parents are now in a nursing home and the upkeep of the homes has become a financial burden on the two siblings who remain in France.

Furthermore, it would be helpful to sell one of the properties in order to pay for the nursing home fees because the parents' pensions are not sufficient to cover all their costs. We have a copy of the acte in our possession but we do not understand the significance of some legal terms.

ANSWER
Your question seems to be quite detailed and in order for me to answer accurately, I need to know what was exactly given to your spouse: what rights, and for which property.

Here are the assumptions I am making in order to answer your question.

1 – the French parents retain the usufruct of the house, i.e., the right to use and to rent these properties.

2 – Each child received a fraction of each property, which means that altogether they hold the titles on the properties, but have no right of usage.

Without going into the details, you have the right to buy any fraction of the properties during the lifetime of the parents who retain the usufruct. However, the usufruct can never be sold independently, but can only be sold if the entire building is sold by all the owners. “All the owners” includes the children who hold the title and the parents who hold the usufruct.

A common way to address this issue is for the parents to rent their properties and use the rents to pay their nursing home costs.

So as you can see, your current legal situation does not allow you to live in any of those houses. To make things simple, you could just rent the home and be a tenant of your in-laws. The situation would then radically change once they die.

To find the best solution for all parties involved, you will first need to:

1 - establish the monthly budget of the parents

2 - estimate the market value of the properties

3 - estimate the net income of renting the properties

Once you have this information, consider the following three scenarios:

1 – Rent all properties
This protects the principal and produces a steady stream of income but keeps the liability very high due to the obligation of maintaining the properties in good standing.

2 –Sell all the properties
This creates liquid assets, produces a steady stream of income if you invest in an annuity, and erases any liability. However, an annuity does not guarantee preservation of the principal.

3 – Sell some properties rent others.

The main problem is how to gain agreement from all three siblings about what solution to implement. These properties most likely have sentimental value to all or some members in the family, and as such, selling the houses could be difficult for some. In short, the best practical solution could be the most painful.

This is the reason why it is essential for you to do some extensive homework before saying anything to anybody. Your wife and her siblings will, at some point or another, see you as an outsider and therefore your motives will be questioned, or your input will simply be dismissed because you do not “belong.”

This will require a lot of patience on your part but your wife, no doubt, will be your best spokesperson. You will have to accept that the most sensible solution may not the best solution for all the people involved.