EAGLE BUSINESS CORPORATION
Incorporation in the USA
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Incorporation in the USA |
| How to use a corporate | In France | Tax system | VAT |
US WAGE STATUS
1) Executive(s)
If the company in not registered in Europe,
wage status will be US.
If it is registered in Europe (see "In
France"), wage status could be either national or US.
2) Employee(s)
The system is similar for employee(s) but it is illegal to impose a US wage status on a European employee.
Whatever the case, mixed wage status is possible:
Substantial savings will be made even if just a part of the staff depends on US wage status.
For both company
(even US) and its staff, the situation is the same :
- URSSAF,
- ASSEDIC,
- Pension fund,
- AGS, etc. …
How to obtain it, comparison with French wage status, what about social security cover, retirement, French ASSEDIC, payslips and employees personal income tax for those benefiting from this particular US wage status?
You will have to fill in the SS-4 form to obtain an EIN (Employer Identification Number) for the company and a W-7 form to have an ITIN (Individual Taxpayer Identification Number) for any employee depending on US wage status and who is not US citizen, national or permanent resident.
Employees will receive their ITIN directly at home (used to pay IRS taxes and SSN for aliens).
Comparison with French wage status
A French employee under the US system will have:
He will be able to act and justify his situation and income like any other employee.
In this case, on the other hand, the US company
will not pay French insurance contributions.
Since both company and employees are
non-resident, there will be no US social
security contributions.
Employees will not benefit from any "social"
cover.
For US employees, we asked a Consultant in Insurance to put a "pack" in
place including several options regarding a social security cover "at
first Euro", mutual insurance company, unfitness for work,
disability, death
This agreement is specially designed for people living in France and not benefiting from any other social security cover (including French "CMU"). This agreement is appropriate for French employees depending on US wage status.
Monthly contribution vary from 180 (rate for
isolated person) to 410 Euros (rate for family)
For the record : Subscription to this "private"
agreement is not mandatory.
e.g., if the spouse is working as an emplyee and benefits from French Social security cover, her husband will be covered under her contract ("Ayant droit"). An avoided tax!
Since you do not have to contribute to mandatory
French Social contributions, the WHOLE available gain for retirement
will be paid to a pension fund.
Retirement pensions are thus guaranteed at a much higher level than the French pension.
You will not have to hope that future generations will pay for you "later..." and generate YOUR CONTRIBUTION for YOUR PENSION.
Up to date, there is no agreement to replace French unemployment benefits department.
A Manager, who previously was an Executive or freelancer will never have paid French unemployment insurance contributions and therefore could not benefit from it.
If his current company comes under French legislation this would remain the case and thus would not be a problem for him.
But, for French employees, absence of French unemployment contributions could affect his decision.
Comparing the HUGE money saving made by both
company and employee due to the absence of social security
contributions, employer will be able to offer its employees
a salary from 20 to 40% higher to compendate
for the risk.
Earning much more with a complete social cover and lower income tax (see "Personal Income Tax") in exchange for the absence of French unemployment insurance is a strong argument.
Even if just executives and a part of the staff agree to accept US wage status is enough for social security contributions to be reduced.
Will be drawn up according to US standards, on the one hand, the income (fixed salary, commissions and fees) and on the other, Federal Tax.
In the USA,
income tax is withheld from the gross salary at a rate around
17,41%.
French resident employees will have to fill in their tax return as usual and also form 2047 relating to foreign wages.
French Revenue Department calculates income tax as usual (tax allowances 10%, 20%, familial quotient, pentions...). Any tax paid in the USA will be taken into account and deducted from the income tax due in France.
Employee will separatly pay certain contributions (French CSG, RDS...).
For example :
Based on a gross salary of US$44.250 per
year, with "two parts" ("parts" are accorded by the tax department
depending on situation and family status), the result shows "NO TAX
TO PAY" in France.
The corporation that withheld Federal Tax on salary will pay it every quarter to the IRS along with form 941.
