A custom-made solution for a biking enthusiast

Introducing Jean Luc and his business.  Jean Luc is 56 years old, and lives and works in fashion in a little village close to Paris. When one thinks about Paris and fashion the images that it incites are usually of au couture, top models, top designers, and very expensive, tailored outfits. Jean Luc doesn’t fit into this catwalk image. Although Jean Luc has a fashion company, the twist is that his fashion company is dedicated to biker fashion. Jean Luc makes very colourful, relatively expensive clothing for bikers out of leather and other similar materials.  These materials are woven then beautifully embroidered on to the back of the clothing tattoo-style, very similar to Harley Davidson.

Jean luc has some of his stock produced in France, but mainly imports from Eastern Europe. He supplies the producers in local factories with the designs which are then produced as small collections. A lot of work goes into each item of clothing produced.  For example, Jean Luc only has 50 jackets produced per collection, the hand embroidery that each piece involves is pain-staking but ensures each one is unique.

Fashion for bikers

Jean Luc uses the tattoo-style concept on all of his clothing which consists of jackets, trousers, boots, and all sorts of accessories for example wallets, hats, and scarves. Jean Luc’s business is has grown with a 3 million euro turnover each year. However, it’s not a massive operation: he is a niche producer. Jean-Luc's customers travel for about an hour on average just to get to his store, which is about an hour's drive from Charles De Gaulles Airport.  One is very unlikely to casually stroll by and enter Jean-Luc's store as a flight of fancy as it is quite remote, most of his customers hear about his trade trhough word of mouth, Jean Luc has also been featured in a number of biker magazines. This exclusivity works well with the type of reputation Jean Luc likes to exude and provides bikers with the feeling that they are buying something special, a piece of biking culture.

A vision

Jean Luc has built his company up over many years. He has now reached an age where he is considering semi-retirement but he would rather not sell the business.  Jean Luc enjoys creating his designs and taking them through to production stage, he envisions a future where he is involved with the business, but with a drastic reduction in hours to allow him to enjoy some leisure time.  He would rather leave things like  staff management, the day to day running of his store and other business-related tasks to someone else. In the meantime Jean Luc will take it easy, maybe take his wife on a couple of bike rides through Europe and simply enjoy himself.

In order to achieve this vision Jean Luc has been working towards a transition period. His son has agreed to become a general manager for a while before taking over the business for good in the future.

Expanding the business

Jean Luc has been selling a substantial amount of his stock over the internet. Furthermore, he has partners in a number of countries; affiliates, who sell his bespoke biker clothing from their own storefronts. However, the biggest chunk of the business still involves bikers from Paris or bikers driving through Paris to visit his store.

Jean Luc and his son agreed to focus more on the international expansion of the business. They have decided to reduce the amount of business they do in France,  in order to seek out and capture potential for their goods Globally. This applies mainly to Europe but also to Asia, where they can already sense gathering interest.

Finding St Matthew eAccounting

Jean Luc and his son recognised that in order to fulfill their plans for expansion, the legal structure of a sole-trader business in France was not going to work in their favour.  In the long term it was never going to be the best solution for them.

Many French entrepreneurs are setting up Ltd company's in the UK, which is due to the fact that setting up and running a business in France can be very expensive, laborious, and requires a lot of administrative effort. Going for the option of setting up a Ltd company in the UK is a common solution used to ease administrative burden and to a lesser extent optimise the company's tax situation.

Jean Luc and his son had heard about this from friends and decided to research whether the option of having a business in UK could be beneficial for their situation. As St Matthew does a lot of Google advertising and SEO throught the continent, Jean Luc found us quickly, got in contact and arranged a meeting to decide what the best way was of going forward.

A solution for Jean Luc

This is not an everyday situation. In terms of the size of businesses we usually work with,  Jean Luc counts is one of our larger clients. We analysed Jean Luc's plans throughly and devised a solution that we believe was quite unique in allowing Jean Luc to fully benefit from structures that had already been established, not forgetting planned expansions.

We provided the following solutions:

  • Advised Jean Luc to keep the French business, in France, for tax purposes.
  • Set up the UK Ltd company, ensuring that business done outside of France -  such as the selling of products over the internet or international trade - in the UK.
  • Set up an offshore trust on the Channel Islands that holds the intellectual property of the designs.

This means that theintellectual property of Jean Luc's business is held in the trust overseas, and the UK limited company pays a licence fee to the trust for using these designs whenever something is sold overseas.

So how does that work? There is an arrangement between the trust and the Ltd company for a certain licence agreement, the fees are paid and because it gets paid into the trust, the fees are really tax free. This is fully legal in the UK, there is no problem there, as long as the funds in the trust are not remitted anywhere else. However, the trust generates interest and gives Jean Luc the ability to build up capital in a way that does not require Jean Luc to put in a lot of hours.

How we help Jean Luc

We have certain contacts in the Channel Islands which allows us to help Jean Luc to establish this trust there.  It was initially quite complicated to transfer the I.T from the French business to the offshore trust because the I.T functionality had some value in the books already. Luckily, that was not the case with Jean Luc, which made things a lot easier. Contracts between the UK Ltd and the trust needed to be set up, for which we have specialised lawyers we work with on a regular basis to help with these kinds of transactions. The other services we provide are VAT processes, help maintaining the trust, help with the export licence (which is required when you sell goods overseas from and to the European Union) as well as the usual year end accounts.

Jean Luc now

The total process took around three months from start to finish.  Three months later Jean Luc was in a position to hand over the management of his company to his son. According to their succession plan, Jean Luc was still involved in the business to help train his son with the ins and outs whilst at the same time is managing to reduce his hours increasingly from month to month. To summarise Jean Luc's business has been quite a success story, Jean Luc is now a happy French client and one we hope to work with for a long time in the future.