Won’t get fooled again

November 2017

“ From Wikipedia
"Won't Get Fooled Again" is a song by the English band The Who, written by Pete Townshend. It was released as a single in June 1971, reaching the top 10 in the UK, while the full eight-and-a-half-minute version appears as the final track on the band's 1971 album Who’s Next, released that August.
This iconic song has swept a complete generation in the 70’s. Today its message can be interpreted in very many ways. The idea is that everybody lies and cheats; politicians, medias, the corporate world, bosses, spouses, ... It has reached the point where it feels like that there is a conspiracy theory for just about everything.
At the same time, crooks have perfected their methods and phishing is only one ways in which their prowess is revealed. We are now living in a world where we need to be cautious just about all the time. This changes the way we live and many people become suspicious of everything, and expect the worst all the time.
This issue deals for the most part about not delivering what has been promised. A foreigner is always an easier prey. Since everything seems weird, it is very difficult to discriminate between cultural differences and being taken advantage of. It is easy to state "Won't Get Fooled Again" when we get mad after finding out that we have taken for a ride. We blame ourselves for not having being vigilant enough.

RAPID CHANGE IN HOUSING IN THE PARIS REGION
I have heard very few people commenting about a phenomenon that is visible all around Paris. While Paris proper is slowly losing population, its suburbs continue to grow faster than the French population as a whole. This means many people working in or near Paris are living farther and farther away. I saw a similar situation firsthand in greater New York, where people work in Manhattan but live far away in New Jersey and Connecticut. The small town where I grew up in Paris’s southern suburbs, about 20 miles from the city, had an urban life disconnected from Paris, with its own active town center. There were large families living in big houses, including the one I grew up in, which was around 100 years old.
Today, most of those houses are condominiums. Each unit is a small studio or one-bedroom apartment. They were converted on the cheap, and the comfort level is really low. So many people are desperate to live in the Paris region that no matter how terrible an apartment is, it will be rented.
It is never too late to stop such destruction, but a lot of damage has already been done. A recent law upgrades the standards regulating what constitutes decent rental housing, and the government of the Ile de France region, which includes Paris, is determined to expropriate the remaining unspoiled properties and prosecute unscrupulous landlords.

http://www.lemonde.fr/logement/article/2017/09/05/l-ile-de-france-s-attaque-aux-marchands-de-sommeil_5181177_1653445.html/

AVOIDING CROOKS WHEN REGISTERING AS SELF-EMPLOYED
The registration form for self-employment, accessible through the CFE-URSSAF website, is offering a new option that is very useful. You can choose to have your information kept private during the registration procedure.

For a long time, INSEE’s policy was that such information should be fully public, with the idea that clients would check the company before doing business with it. However, this almost never happens. As far back as I can remember, there have been establishments offering their services to new businesses. Some of them are genuine, but most are what I consider to be crooks. In their letterhead, names and logos, they try to look like divisions of the French administration linked to business creation. But the “service” they offer is usually just a mention in a database that nobody checks, for which they charge between 200€ and 500€. It is often difficult to find the truly minuscule fine print at the bottom or on the back of their mailings, stating what the service is.

Now, by checking a box on the registration form, you can opt out of having your information become public, and thus avoid receiving these unwelcome solicitations. This does not mean everything you receive in the mail will be pertinent to your particular business, but at least everything is official, which makes the process a lot safer.

President Macron is going after an organization called the Régime Social des Indépendants (RSI), which was never well-organized but today has become just plain dysfunctional on so many levels that his efforts to get rid of it have made headlines in the French media. As a period of high uncertainty starts, I prefer to identify the services the French administration offers, noting that the names associated with some of these divisions may change.

1 – Health coverage is obtained on the day of registration. One of the organizations commonly chosen is RAM,

2 – A retirement account is opened when you sign for self-employed status. The organization in charge is usually CIPAV,

3 – The family subsidy collection agency is called URSSAF,

4 – The tax office’s business division is also informed of the creation of your business, and writes to inform you that it has opened a file for you,

5 – There are also several organizations sending mail about retirement accounts for any employees of the new business. You can set these aside, as they are irrelevant for many self-employed people, who usually have profession libérale status, at least at first.

Becoming self-employed used to entail many special procedures, but the number has decreased over the years.

President Macron is making a huge effort to unify everything in a single group of organizations for self-employed people – one for health, one for retirement and one for unemployment. This will not happen right away, but we know for sure that the RSI as it exists today, is nearly defunct. We just do not know yet what will happen after it is closed, or how the situation will be handled.

DOUBLING THE CEILING FOR MICRO-ENTREPRENEURS (FORMERLY AUTO-ENTREPRENEURS): PROMISES AND REALITY
President Macron is also making speeches about doubling the maximum income for the type of self-employment formerly known as auto-entrepreneur but now called micro-entrepreneur, and the government is working on carrying out his promises. There are so many aspects to this that I want to address just two, which I believe illustrate the complexity of the change.

1 – Immediate payment of social charges, monthly or quarterly
Being a micro-entrepreneur has this excellent feature: You declare your revenue either 12 times or four times a year, paying the related taxes at the same time, thus immediately freeing the business from tax debt. This is a wonderful change from the previous system, which delayed up to 18 months the payment of some of the social charges and should clearly be adopted for many other types of business, as it prevents people from spending tax money, and never paying their taxes.

2 – TVA
The sales tax called the value-added tax or TVA is the single largest provider of funds to the state coffers, so any change could have serious consequences on the budget deficit. Previously the auto-entrepreneur income ceiling was low enough that it did not have much effect on the amount of TVA collected. Doubling the ceiling and keeping the TVA exemption would have a very significant impact, however, and there is no way this will happen.

The current system is coherent and works well. This is one reason it is so popular. It has two excellent features, immediate social charge payment and no need to hold any accounting. There is just one standard deduction, which makes it impossible to claim expenses.

Should the income ceiling double for payment of social charges but remain the same for charging TVA, this status will lose one of its best features. No solution seems to have been decided thus far.

For your information:
The service providers’ annual revenue ceiling would go from 33,100 euros to 70,000 euros
The annual ceiling for sales activities would go from 82,800 euros to 170,000 euros

I will continue to follow this topic very closely, as it affects a lot of people.

http://business.lesechos.fr/entrepreneurs/auto-entrepreneur/030522905401-microentrepreneurs-le-regime-social-etendu-312662.php?BCarpDI3G0w4JAkD.99

CRACKING DOWN ON UNDOCUMENTED FOREIGNERS IN FRANCE
The French government has come up with an interesting twist on the control of undocumented foreigners. When the Schengen Agreement was signed, the idea was to improve efficiency by loosening border controls inside member countries and strengthening controls at the Schengen-area borders. The migrant and refugee crisis as well as the terrorist attacks shattered this goal and all member countries have tried to manipulate the existing legislation so they can check who is coming in.

Since country borders within the Schengen area no longer have custom offices, each police force has the right to freely check within 20 km from the border. The French government’s latest idea is that every international airport should also be considered a “border,” as they are a point of entry to the country. The point is completely true, although airports have ample police forces, and even when a person travels within the Schengen area, there is always the possibility of controls when suspicion warrants.

If the 20 km zones were applied on airports throughout France, it would put two-thirds of the French population within the zones.

Many nonprofits in France are fighting this new idea, since the true motive for such controls has nothing to do with fighting terrorism or monitoring the refugee crisis. The main reason is to catch as many undocumented foreigners as possible, since most of them live in the largest cities. Of course, this would contravene the Schengen guidelines and be stricken down by EU authorities. But using terrorism as the reason, it has a much better chance of being approved and seen as complying with the EU legislation.

http://abonnes.lemonde.fr/societe/article/2017/09/12/le-gouvernement-prepare-une-extension-massive-des-controles-d-identite-aux-frontieres_5184205_3224.html?xtmc=le_gouvernement_prepare_une_extension_massive_des_controles_d_identite_aux_frontieres&xtcr=1

MY HELPER HAS STARTED WORKING WITH MY CLIENTS
Sarah B., as my helper has called her business, started a tad later than we were hoping for. This is the kind of situations that happens all the time when one launches a new business. She is now addressing the needs of people earning less than 33,100€ in gross sales, with the micro BNC fiscal status. Such clients are exempt from doing full bookkeeping, but still have to file declarations of income to the tax office and to RSI for social charges. Managing payment of the social charges and understanding how it works can be quite complex. I do some of it when people initially register, because almost all these documents are needed to obtain the related immigration status. After that they should be autonomous, but in fact most of the time they are not.

I have been giving her name and information upon request. Her fees are between one-half and one-third of what I charge, depending on the level of services requested. Of course, she works under my supervision, so I guarantee the quality of the service, and she keeps her files in my office.

OFFICE CLOSED FOR CHRISTMAS
The office will close for three weeks for the Christmas holidays, starting on Friday December 15th, reopening on Monday January 8th. As always, I will be reachable by email for emergencies and important matters. The service I offer of receiving mail for clients will continue while the office is closed. I did not take much of a summer vacation so I have decided to take some time off, close to the normal length of my vacation. Of course, I will honor the prefecture meetings already scheduled, as well as a couple of other engagements.

 

Best regards,

EDITORIAL FREEDOM OF AN AUTHOR

QUESTION

I have known about you for many years but have only just begun reading your newsletter and Q/A. This past newsletter made me so very sad for you: your despair at the world events and catastrophes, that you, like most of us, can only helplessly witness. While of course you can do nothing about hurricanes, floods, terrorism and death, you do prevent or alleviate much personal disaster and allow many people to make sense of a system that is difficult to navigate. And that with a combination of unfailing courtesy and clinical detachment; you rarely bite back when faced with entitlement, sarcasm or erudition. I love the way you accept that people ARE the center of their universe ... anyway, all this is to say that you do so much for so many, and France is certainly a better place with you in it. I wish you comfort.


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ANSWER

Thank you so much for your encouragement in my work. Please allow me to comment your kind note. Artists such as actors, performers, musicians and so on have two lives – their personal, intimate one and their artistic one, whether they both create and perform or just perform. Therefore people in the public eye often have a hard time making the public understand that they must dissociate the person from the art. The best example is that the character played by an actor has nothing to do with who the actor is. Alice Cooper performing on stage is just a show; the man, Vincent Damon Furnier, is the son of a minister and a devoted Christian himself. His career as Alice Cooper illustrates how far the dissociation can go.

Regarding the newsletter section you mention, I admit that I enjoyed crafting it and I thank my friends for helping me with it. My intent was to approach the topic of global warming, often seen in the USA as being a liberal issue, from a very conservative point of view – Catholic, religious right, old-fashioned corporal punishment – as well as sailors’ traditions shared around the world. This way my message is neither conservative nor liberal. It covers both sides and at the same time it shows that addressing the reality and dangers of global warming can be done from a very conservative point of view. This is crafting. It does not say much about who I am.

To sum up, I am an author and a militant. Global warming is an issue for me because it creates millions of refugees through out the world. The saddest thing for me is that it takes hurricanes devastating the USA to stir up awareness in the West, of the true consequence of global warming, when the countries of the Pacific Ocean have long suffered so much more devastation and so many more deaths. Almost all those countries used to be called “third world” countries, and in the eyes of much of the West they do not really count.

Furthermore, to show that I can distort all slogans, I would use “All lives matter” by taking it out of its American context. What I mean is that a death toll in Texas should be measured the same way as the one in Bangladesh happening at the same time as a result of severe floods.

ACRONYMS IN FRANCE RELATED TO SMALL BUSINESSES
QUESTION

I have a few questions regarding my registration with URSSAF, which I wish to do online. What will my legal status be (my statut juridique)? EI, EI avec option EIRL, or EURL? I was very happy that the prefecture approved my project and I now need to register to start working by creating my business.


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ANSWER

To say that these acronyms are confusing is an understatement. Even most French people are confused and misuse them all the time. So I need to cover some fundamental concepts to clarify the matter.

Being self-employed means having to choose between one of four options:

1. Self-employed professional = profession libérale; the income tax is called BNC,

2.Craftsperson = artisan; the income tax is called BIC,

3. Merchant = commerçant; BIC,

4. Creating a corporation = création d’une personne morale. The activity is considered commercial in nature regardless of what exactly it is, and the income tax is the corporate tax called IS, unless the corporation is fiscally transparent and the business owner pays BIC.

Now, let’s review the acronyms you mention.
1 – EURL (entreprise unipersonnelle à responsabilité limitée)
This is a corporation with one owner. The corporation is paid, not the owner. Therefore, there is a need to define how the EURL pays you.

2 - EIRL (entreprise individuelle à responsabilité limitée)
You create a business without a corporate structure but you want to limit the liability linked to the business and so assign a portion of your assets to secure the business. This gives your business a commercial status; the carte de séjour will be of the commerçant type.

3 - EI (entreprise individuelle)
This acronym covers all four types of status presented above and does not make any distinction betweenauto-entrepreneur (now called micro-entrepreneur), which means that it has micro social and fiscal status (this was explained in the section doubling the ceiling for micro-entrepreneurs); and classique, which entails traditional billing of social charges from URSSAF, RSI and CIPAV and the micro fiscal, such as micro BNC and micro BIC.

To know what choice to make, you have to answer a very basic question: “What kind of liability does my business carry?” The common way to illustrate this is to review the business wondering if the “million dollars lawsuit” is possible. If this kind of liability exists then the business must be created with a limited liability scheme. If such a risk is inconceivable then this protection is not needed.


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INTERNSHIPS IN PARIS
QUESTION

I am American and I have been offered two full-time stages in Paris for different periods: the first from October to December 2017, and the second from January to July 2018. Both are paid a stipend, and each is with a multinational corporation. I intended to enroll in French language courses in order to improve my French, as I will be studying to enter a French business school. The prep school can sign a convention de stage, and the French courses qualify me for a student visa. What is unclear to me is whether I can legally undertake two stages, and obtain two internship visas, and, if not, whether I can obtain a student visa for the first three months followed by an internship visa for the following six months.


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ANSWER

I believe your best choice is to ask for standard foreign student immigration status. These internships clearly mean a lot to you and I can understand why. But you need to choose the right legal grounds to obtain the best status, which means one that is secure and long lasting.

1 – As you are a foreigner who will take classes to learn French, I assume you could hold a carte de séjour related to your studies. There is the most obvious answer: your studies should grant you student status in France.

2 – As a secondary consideration, it happens that you have been offered two full-time stages with stipends. They are not considered employee positions but student positions involving learning while working for the company. Legislation in recent years has significantly tightened the set-up for internships. Today a stage is legal only if it is part of a study program. But you state that the business school is signing the contract, so it should work. However, since the internships are full time, make sure you will be studying something other than the French language. This is probably one of the few weak points of this situation. What are you learning in the internships and how are they related to your American studies, since you will not have time to study at the French business school?

Without knowing your current immigration status in France, it is impossible to answer you more precisely. The procedures for both employee status and student status, and the guidelines associated with them, are quite different depending on whether you are already legally living in France or need to ask for an immigrant visa to start the process.

I am not 100% sure, but I think if you were to get an immigrant visa linked to the internships, it would last a full year since your two stages combined will last 10 months.

If you qualify for regular student status because you are studying French, it comes with the right to work as an employee for 60% of full-time hours. Your internships would not considered employee positions, since internships are rarely paid, even if a token stipend is given. Therefore, should you wish to take this option, your immigration status would be based on your studies.

The regulation is crystal clear: you cannot hold two cartes de séjour, only one, which must cover the main reason you are in France.

My advice is to ask for the generic student immigration status, which allows you to have internships as part of your curriculum. When the student carte de séjour expires, you will either renew it or change it, depending on how far along you are with the prep school. At that time, you will prove that you were a full-time student in both capacities, studying and being an intern as part of your schooling.


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GOING FROM STUDENT TO EMPLOYEE IMMIGRATION STATUS
QUESTION

I have been a foreign student in France for a few years and want to become an employee. I received a complete job offer a few days ago and just learned from them that the labor inspectors (inspection du travail) visited their office. They were told that they did not have the right to hire a foreign student on a fixed-term contract (CDD). The student immigration status allows only part-time work – 60% of full-time hours. The worst thing with this situation is that the prefecture advised this solution. Clearly the inspection du travail rules, as they are the cops. Can you explain this insanity?


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ANSWER

I am not sure this is insanity, but I see why it is difficult to understand as you have presented it.

The key to understanding the legal problem is this: too many people think that with an autorisation provisoire de séjour (APS), a master’s degree or a job offer from the right employer, a foreign student can work full-time. But students only have the right of 60% of full-time. People often think this means that they can work full-time for seven months. The French administration does not see it this way.

The starting point is that a foreigner has been a student in France for a few years, has received the diploma and is now looking for work. The procedure goes as follows in almost all prefectures and at DIRECCTE (the regional department of businesses, competition, consumption, labor and employment).

1. The foreigner contacts the prefecture, perhaps making an appointment, so that the prefecture knows that the procedure has started.

2. The foreigner, with a prospective employer’s help, prepares a file and sends it to DIRECCTE.

3. DIRECCTE has two months to respond yes or no.

4.The employer, the foreigner and the prefecture are informed of DIRECCTE’s decision.

5. If the answer is yes, the prefecture prepares the request to have the carte de séjour made.

Throughout this procedure, a lot of things can go wrong.

1 – The employer wants the person to start right away and has them sign a job contract. One error often made is that it is open-ended (a CDI). This makes it legally impossible to sign another contract at the same time. It is a full-time contract, and the one on which DIRECCTE will make its decision. DIRECCTE takes this as meaning that the foreigner and employer have started the labor relationship without its authorization and hence denies the request.

Or the contract is a full-time CDD for two, three or four months. It is then possible to sign two contracts at the same time, since the CDI supersedes the CDD, which has a contractual end date. However, if DIRECCTE issues its approval before that, the CDD is terminated early and the CDI is enforced. Therefore, the CDI usually contains a waiver stating that it will only be enforced upon receiving authorization from DIRECCTE.

The authorities often consider the CDD as illegal since it is full-time and it was started without any authorization.

The only safe solution is to sign a CDD stating that it is for 60% of full time within the duration of the contract, complying with the student right to work. This is what the prefecture advised.

2 – Under the latest legislation, holding a master’s degree from a registered university or an equivalent school, such as a French grande école, carries the same rights and prerogatives as an APS. Not all employers know this, and I am not sure that all prefectures bear it in mind when they address these requests for a change of status. These diplomas take away the right DIRECCTE has to veto the request to work as an employee based on existing unemployment in that profession.

3 – This said, the minimum salary to benefit from this abovementioned protection is 50% more than French minimum wage. If the monthly gross salary is below 2,200€, even by a tiny amount, this protection disappears and DIRECCTE issues a negative answer as a rule. If the salary is composed of base and commission, only the base counts, regardless of how secure the commission amount may be.

4 – The other popular status that grants this protection is called les métiers en tension. The idea here is that there are several jobs for which unemployment agencies show that there is unemployment and also candidates who cannot find work. At the same time, many employers complain that they cannot hire a good employee with the right qualifications. So the French administration has put together a list of these jobs in each region. Each DIRECCTE must accept these requests if the monthly gross salary is at least 2,200€.

5 – When none of the above applies, the file must be constructed so as to prove that in this specific case, there is virtually nobody else who can that do the job because of its requirements. In such a case, the usual list of documents requested by the administration is totally insufficient. The file should look more like a lawyer’s file for a court case, where everything is documented and proves a point.

6 – Finally, although DIRECCTE is supposed to respond within two months, there are absolutely no consequences for them if they take longer. Some DIRECCTE offices in the Parisian suburbs are notorious for taking four months or more. This causes all kind of problems, such as the carte de séjour expiring in the meantime, and if a récépissé is not issued, the employer may get scared and fire the employee. The 60% of full time might be insufficient to do the job, which could be a reason to hire someone else.

To conclude, I would like to reiterate that the CDD must comply every month with the foreign student’s right to work, and must also comply with other provisions of French law. That way there is no room for an adverse interpretation and the situation you have described will not happen.

DISCLAIMER

Please forward this message to all those who would be interested in its contents. The information contained in this newsletter is intended only as general information. I strongly urge readers to seek professional guidance concerning the legal and tax matters mentioned. This newsletter is intended as a general guide and is not to be taken as professional advice.


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One thought on “Won’t get fooled again

  1. I am a partner in an Americn LLC which purchased a village house in France in 2006 through the establishment of an SCI. In recent years we have begun receiving requests from the Inspecteur des Finances in our département for information about the value of the property, the identity and addresses of the partners in the SCI, and the financial conditions under which a transfer of shares would take place. We have provided the information, although we have no idea what the current market value of the house might be. Since the LLC is owner of the SCI, to what extent are the individual partners subject to taxation if/when they decide to sell a share? The situation has recently become more than hypothetical, and we would appreciate knowing where the share’s former and new owners stand. Thanks for your advice.

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