In short
- Setting up a UK limited company while living in France is legal. The question is not the formation, it is the taxation that follows.
- A company is taxed where it is effectively managed. A limited company run from a living room in Lyon is, under the France–UK tax treaty, a French tax-resident company.
- Even without residence, an activity carried on from France creates a permanent establishment, and the profits attributable to it are taxed in France.
- Personally, dividends from a limited company received by a French resident fall under the flat-rate levy, and a salary paid for work performed in France is taxed and subject to contributions in France.
- The limited company creates no tax advantage on its own: the director’s tax residence and the real location of the business do. Depending on your profile, the outcome ranges from “no gain at all” to “down to 0 % at personal level”.
Review your situation with us, with no commitment
The question that comes up in every other call
“I live in France, I want to set up a UK limited company, can I?” The short answer is yes. No UK rule requires the shareholder or director to live in the United Kingdom, and no French rule prevents a resident from owning a foreign company.
The useful question is a different one: where will that company be taxed, and you with it? That is where most of the arrangements sold online fall apart, and it is what this article sets out plainly.
First layer: where is the company resident?
The United Kingdom treats any company incorporated there as resident. France treats any company whose place of effective management is in France as resident. A limited company run from France is therefore claimed by both states.
The France–UK treaty settles that conflict in its Article 4: where a company is resident in both, it is deemed resident in the state where its place of effective management is located, meaning where the key management and commercial decisions are in substance made. Not the registered office address. Not the country of the bank account. The place where you, the director, decide.
Consequence: a limited company whose sole director lives and works in France is, absent real substance in the United Kingdom, a French tax-resident company. It must file and pay French corporation tax on all its profits. The UK tax already paid is not lost, the treaty prevents double taxation, but the expected saving disappears.
Second layer: the permanent establishment
Suppose a limited company whose effective management genuinely is in the United Kingdom, for instance with a partner who lives there and takes the decisions. If you, a French resident, carry on the activity from France, with a fixed place of work or by habitually concluding contracts for the company, you constitute a permanent establishment in France within the meaning of Article 5 of the treaty.
The profits attributable to that establishment are taxable in France. For a sole consultant who generates all of the turnover from home, “attributable” means, in practice, almost all of it.
An undeclared permanent establishment is treated as a concealed activity: back tax for the open years, an 80 % surcharge, late-payment interest. It is the scenario we refuse to support, and one of the most expensive formation mistakes.
Third layer: you, personally
Dividends
The United Kingdom applies no withholding tax on dividends paid to a non-resident, as we explain in a dedicated article. A French tax resident therefore declares them in France and falls under the flat-rate levy, social contributions included, unless they elect for the progressive scale. The absence of UK withholding avoids double deduction; it does not reduce the French tax.
Salary
A salary paid by the limited company for work performed in France is taxable in France. It also falls under French social security: the place where the work is carried out determines the applicable scheme. A limited company employing a French resident must then register as an employer with no establishment in France and pay the corresponding contributions. Many are unaware of it, and regularisation is painful.
Filings
A French resident who holds or uses an account abroad, including a company account over which they have signing authority, declares it each year with their income tax return. Omission is penalised by a fixed fine per account and per year.
Article 123 bis, for completeness
This provision taxes in the hands of a French resident the profits of a foreign entity they control where that entity is subject to a privileged tax regime, meaning tax that is 40 % or more below what it would be in France. With UK corporation tax at 19 % to 25 %, a normally taxed limited company does not in principle fall into that category. So it is not Article 123 bis that causes the problem for a French resident: it is effective management and the permanent establishment.
What is possible, honestly
- A limited company with real substance in the United Kingdom. Management, team or operations actually there. The French resident is then a shareholder, taxed on dividends in France, and the company pays its tax in the United Kingdom. Coherent, defensible, rare for a sole freelancer.
- A limited company accepted as a French company. Declared and taxed in France, with a declared permanent establishment or French tax residence. It brings legal flexibility and access to the UK market, no tax gain.
- A limited company set up in preparation for a move. This is the most common case among our clients: the company is formed a few months before a change of tax residence, and its benefit unfolds once the director is settled in a country that does not tax, or lightly taxes, foreign-source dividends. Depending on your profile, personal taxation can then fall to 0 %.
What is not possible: running a limited company from France, declaring nothing in France, and hoping distance does the work. Neither in tax nor in law.
A worked example, step by step
A consultant generates £80,000 of profit before remuneration. Two situations, by way of illustration and excluding social contributions.
- She lives in France and runs the company from home. The company is French tax resident: French corporation tax, around 15 % up to €42,500 of profit then 25 % above, roughly €15,800 on a converted profit of about €93,000. Then the flat-rate levy on distributed dividends, 31.4 % in 2026 including social contributions. Overall cost close to that of a French SASU. No gain, but bookkeeping in two countries.
- She has moved her tax residence to a country that does not tax foreign dividends, and runs the company from there. UK corporation tax at 19 %, so £15,200. Distribution with no withholding. Personal tax: down to 0 %, depending on the country and her profile.
- What changed between the two. Not the company. The director’s tax residence and the place of effective management.
Our plans always begin with that residence question, before any incorporation.
Frequently asked questions
Can I form the company now and move later?
Yes, and it is often the right sequence. As long as you live in France, the company must be treated as French. A properly documented change of residence switches the regime.
Is a London registered office enough to locate the company in the UK?
No. The registered office is a legal address. Tax residence is judged on the place of effective management, not on an address.
What if I spend fewer than 183 days in France?
The 183-day test is only one of the tests. Your home, your centre of economic interests and your main place of activity count too. A departure is prepared, not declared.
Is a dormant company awaiting my move a problem?
No, if it carries on no activity. It simply has to meet its UK filing obligations.
Why do so many websites promise the opposite?
Because formation is easy and sells well. The consequences arrive two or three years later, at another provider’s door.
What to take away
The UK limited company is an excellent tool for a director who does not live in France, or whose business really is in the United Kingdom. For a French resident who runs it from France, it is a French company with a foreign register. The difference is not the vehicle; it is you.
To go further: how a limited company can reach 0 % tax, and for whom.
