The question of residency features highly in requests I receive from prospective new clients looking for advice generally. These requests generally come from people who are looking to move permanently to France. I also receive requests from people who have lived in France for some time, either on a part-time basis (before returning to the UK or elsewhere for the remainder of the year), or on a full-time basis, living ‘under the radar’, so to speak.
In French tax law, the definition of domicile fiscal can fall under personal, professional and economic conditions. To be considered resident in France for tax purposes, any ONE of the following conditions must be met:
1. Your main home is in France
2. You work in France, either on an employed or self-employed basis
3. Your centre of economic interest is in France. This can include your investments, or business interests are here
In addition, there is the commonly known means-test of 183 days in the year, which many people use as the chief determinant; like most things in France it’s not as simple as that. If you spend less than 6 months in France, but spend even less time in another country, then you can still be considered resident in France. Take the retired couple who spend their time between UK, France and Spain. If they lived in UK for 4 months, Spain 3 months and France for 5 months, they will be deemed to be resident in France because it is France where they have spent the most time during the year.
There are, of course, many different scenarios that determine residency, for instance the couple whose business is centred exclusively in UK, but live in rented property in France. All activity is in UK, yet because the couple switch on the home computer to check the company bank balance, this is construed as operating a business in France, thus definition 3 applies.
There are always grey areas, where tax residency can be in more than one country; in these cases, one hopes that a Double Taxation Treaty is in existence that would apply to ensure the person isn’t taxed twice.
What does concern me, though, are those people who have lived in France for a number of years, but not declared themselves resident. Common Reporting Standards were introduced in January 2016, whereby tax authorities from over 100 countries now share financial data between the host country and the country where the individual lives. Assuming that the individual declared him or herself non-UK resident on the grounds of moving to live in France, then any financial information (bank accounts, investments etc) will now be shared with the French tax authorities. Depending on that individual’s circumstances, they may suddenly appear on the fisc’s radar, who might just start to take an interest in them. Non-disclosure of financial information is becoming a big deal, so it is more important than ever that residency is determined and if that is in France, affairs are put in order to address any tax implications for savings and investments.
If you have personal or financial circumstances that you feel may benefit from a financial planning review, please contact me direct on the number below. You can also contact me by email at firstname.lastname@example.org or call our office in Limoux to make an appointment. Alternatively, I conduct a drop-in clinic most Fridays (holidays excepting), when you can pop in to speak to me. Our office telephone number is 04 68 31 14 10.