Basic residency rules for France

ALTHOUGH Johnny Halliday may have fled to Switzerland to dodge the French tax authorities, it is not an option open to many.

So issues concerning tax are likely to be high up on many people’s agendas when they are thinking about a move to France.

And the biggest factor that will decide how the tax office will treat you will be where you are considered resident.

An individual, whether a French or foreign national, is resident according to the French tax code if:

- You have a permanent home or principal place of sejour in France.
- You spend more than 183 days in France during a calendar year or spend more time in France that any other country.
- You carry out an occupation or are employed in France, except where this is incidental to a foreign activity.
- Your centre of economic interest is in France.

So if you fall into one of these brackets you are considered French resident and will pay taxes on your worldwide income.

But if you are outside, then you are considered non-resident and would pay taxes only on your French source income.

The tax authorities will decide your status at first and you are allowed to appeal if you do not agree with their decision.

But it can be seen that the rules have nothing to do with visas, passports, property ownership – you could be renting and be considered French resident for tax purposes.

If you have decided to move to France permanently then you should contact the tax authorities in your current country.

They may ask you to provide evidence that you are no longer resident, for example, in the UK the Inland Revenue ask if you have taken steps to acquire accommodation abroad.

It is possible that you may receive a tax refund but also you affairs will be tied off, ready to be set-up abroad.

However, it could occur that you fall between two stools and this is where the double taxation treaty between the UK and France comes in.

France also has taxation treaties with all other EU states as well as the USA, Australia, Canada and around 70 other countries.

But what the agreements ensure is that income that has already been taxed in one country is not liable to tax in another.

For example, pensions received from the UK, except for government pensions, will be taxed in France and not in the UK.

Residency and double taxation treaties are complex affairs and professional advice should be sought – but it is an important consideration.

A useful starting point is the Inland Revenue website:
Income Tax when leaving the UK

Comments

[shannon]

Thanks so much for this post, I've been wondering about this since I moved here about a yr ago! The tax issue had to be resolved eventually & I'm glad to have found out certain things from your post.

[Craig McGinty]

Hi Shannon, glad the article has helped out - at least getting your tax straight is one less worry.
All the best, Craig

[Heidi Baloun]

Canadian Resident dies and he has his RRIF benificiary his sister in UK. What are the taxes of the RRIF and who has to pay for it. Is it the estate or the benificiary. What are the witholding taxes in Canada. In the treaty it says that we can keep up to 43% witholding taxes in Canada and send the rest to UK. Nobody seems to know the right answer. We have been in touch with Ernest & Yound the biggest accounting firm in Vancouver and they don't have a clue about it. We have 3 lawyers working on this case and we don't have any definite answer. We are sure that this has happened before and how the accountants and the lawyers have delt with it. Please help, we are frustrated and don't know whom else to speak to. The Revenue Canada tells us that we have to hold the taxes in Canada but the accountants and the lawyers are doubtful about it.

[Sophia Lee]

I wonder if anyone can help me find out some information on becoming a french resident.
I am 2 years off retirement age, own a building project in france and work as a carer in England. I work for an agency so I pay my own tax, in other words I'm self employed. I would like to become a french resident this year and comute from time to time to carry on the work I'm doing in England.
Questions I'm looking for answeres to are:-
If I declare my earnings in france for tax purposes, would I have to pay social charges.-Equivelent to Nat. Ins. contributions? and is this alot mor than I pay in England?
Also would I be entitled to an E106?
Sophia

[Craig McGinty]

Hi Sophia
If you are considered French resident then you would be included in their taxation system, so would be asked to pay social charges.

Contributions are higher than the UK, although the overall tax take is not that different, and I'm sure people would say that the services you receive are much better.

As for the E106 that only applies to people not working who would be entitled to Incapacity Benefit, and is for a limited period, more here:

http://www.dwp.gov.uk/international/sa29/medical_06.asp

So if you were paying into the system as self-employed then you would receive health cover as normal, and upon retirement receive cover as if you were in the UK.

I'd take a look over the Department of Work and Pensions website and give them a call.

Hope this helps
Craig

[Jef Walker]

Hi, can you help me solve a tax problem i have that niether a french accountant or an english accountant cannot.
I moved to France 6 years ago and managed to get a French national insurance number whilst i worked for a french company,a few years ago i left the company and started to work abroad in places like the far east,middle east,Brazil etc.I am paid through an agency in the uk but am still living in France. My question is where should i pay tax? as i am not in the uk for more than a couple of weeks in one year and i am not in France for 183 days per year.
Thanks,hopefully you can answer this question,as all the accountants i speak to are confused.

[Craig McGinty]

Hi Jef, you might want to take a look over this article from an accountant I know, please see:

Emigrating to France - UK tax implications
http://www.sbncanews.com/2007/08/emigrating-to-f.html

I would also consider a visit to your local tax office next time you are back in France.

All the best
Craig

[Steve]

Hello, the rule is that if your principal residence is in France then all of your income, wherever it is earned and paid, is taxed in France. You're obviously talking to the wrong accountants. I suggest that you contact your nearest K.P.M.G. office. I found them to be very efficient and knowledgeable. I lived in France until 1996 and was a self-employed professional there. 'La systéme' en France is very possessive about tax and residency as you will soon find out!!

All the best

Steve

[Terrence in NY]

I just came across your website today: its terrific!
Quick question about pensions: its mentioned on the site that english pensions (other than gov. ones) would be taxed by France . What about government pensions from the US gov. received by Americans resident in France?....thanks

[Craig McGinty]

Hi Terence, I would drop in on the US embassy in France website, this page highlights tax issures:

http://france.usembassy.gov/irs.html

All the best
Craig

[Terrence in NY]

Thanks Craig, you're just too helpful!

[Elizabeth]

Hello,

I have been working in france for six months now, wondering if there is the possibility of paying taxes on a monthly direct debit type system? How would I find out about this?

Also, I am living with my french boyfriend. Do you know any benefits available to us in terms of cohabitating, tax reductions etc?

Thank you

[Craig McGinty]

Hi Elizabeth, you are most probably best starting with a visit to your local tax office, or Trésor Public, more here:

http://www.thisfrenchlife.com/thisfrenchlife/2007/08/tracking-down-t.html

All the best
Craig

[Marc]

A word of warning.
I have unfortunately become something of an expert regarding residency rules and taxation.
This came about because of an alleged Capital Gains Tax issue on the sale of our French house - we are moving within France by the way.
We have lived in France for 2 years at our Prinicpal Residence, have a business, pay cotisations, etc etc.
Long long story short: our Notaire told us no CGT is due. The tax office told us CGT IS due and rang the Notaire to give them a 'telling off'.
The Notaire then said CGT IS due.
Hacing researched this as thouroughly as possible nobody would give us a concise straight answer - even the tax office could not (would not?) answer further questions or clarify just what the percentage CGT due was when we enquired further.
In the end we contacted TAJ of France (avocats) who researched and clarified our position. We were not at all due for CGT (never were) and this information was sent to our Notaire AND the tax offcie who backed down - no apologies of course.
In short, the tax office had balatantly lied to us and reprimanded and informed our Notaire quite wrongly.
If you have ANY doubts about taxation issues contact a profesional. It did cost us money (which we will never get back) to do so but has saved us many thousand Euros.
If anyone needs further information I would certainly be pleased to pass on details of contacts etc.
Regards
Marc

[Peter]

Good grief, what a great page to find on my very first search for residency rules in France.

I have my own query which I hope you can help with. I am a British national, fully self employed, and I pay full UK taxes on my earnings whether they are from UK clients or European ones.

I have lived in Estonia (in rented accommodation) for the last four years, where they were happy to have me resident and not bother me about taxes at all. My 'home' address and the one from which I officially work is still a UK address.

After Christmas I'll be moving to live with my girlfriend in Paris (rented acommodation again), and while I will be splitting my time between there and England, it is possible that I'll be living there for more than 183 days in a year (although I will still retain the UK address as my 'official' work and home address).

As almost all of my custom is in the UK (with the rest being in Estonia), will I be able to carry on as I am, advertising myself as a UK supplier with a UK bank for payments, etc? My worry is that if I have to pay French taxes it will complicate the whole process of doing business with my UK clients.

[Craig McGinty]

Hi Peter, glad you found the page useful. Unfortunately you will have to pay taxes in France if that is where you are considered resident.
It shouldn't impact on working for clients wherever they are based, you will just have to be aware of currency exchange.
There are more tax related articles here:
http://www.thisfrenchlife.com/thisfrenchlife/taxation-finance-france.html
and work/employment ones here:
http://www.thisfrenchlife.com/thisfrenchlife/work-employment-france.html

Hope this helps
Craig

[Ken]

I have 2 holiday cottages in France. Currently I am UK resident but in 2010, I intend to register as French tax resident and live in one of the cottages. However, and heres the complicated bit, the cottage I don't intend to live in was bought more recently than the one I want to use. So if I declare that the unused one is actually my principal residence and pay the bills including d'habitation, then presumably I can sell it in a couple of years time without paying capital gains tax? By the way, neither cottage brings in any rental income. My question is, how much do I need to be seen to be living in a house for it to be classed as principal - or is it just something I declare on paper? Thank you.

[Guillaume Barlet]

Hello Ken,

There are no rules per se for the French tax authorities regarding the time you have to spend in a property for it to be deemed your main residence. For instance, in 2001, a French Court has declared that living in 5 different properties within the space of 3 years does not prevent each property to be deemed your main residence.
I must admit that it is a grey area and that it is always better to constitute sound proofs before any dispute with the tax authorities arises.

I am a French lawyer based in the UK (Cheltenham) and I can assist you if necessary (email address displayed with comment).

[deb]

as a u.s. citizen thinking about retiring in paris, i wanted to know if there were any residency requirements. would my social security be direct deposited into my bank?
thanks

[Craig McGinty]

Hi Deb, I'm afraid my knowledge of the rules governing US citizens is not as strong as http://www.jeantaquet.com/ and http://www.americansinfrance.net/ think you are best dropping in on both these sites.
All the best, Craig

[christina- USA florida]

Hi Everyone. I was wondering about moving from the states never to return here. I wanted to know about what it takes and how to make it possible. Is there somewhere i get check about all this type of info. Especially the taxes. I don't own my own business. I would get a job. I would appreciate any help. Thank you.

[Craig McGinty]

Hi Christina, read, read and read some more, and brush up on your French.
I've a list of articles here that might help:
http://www.thisfrenchlife.com/thisfrenchlife/selected-articles.html
Drop in on the website of the French embassy in the US:
http://ambafrance-us.org/
And I'm afraid it won't be very easy to find a job unless you have very good French, it is expected that unemployment levels will hit 10 per cent later this year.
All the best,
Craig

[glyn smith]

i have lived in france, spain and germany over the last year.
i am now buying a house in france and i want to live there permanantly.
what is the proceedure to become resident?
i will not be working in the country, but i would like to know who i have to see to become resident.
thank you for an excellent site

[Guillaume Barlet]

Dear glyn smith,

I suggest that you check this with a specialised lawyer before you move to France as timing is of great importance in residency matters.

Your status also depends on how long you have spent in each country and what your activity was (amongst other elements). The residency rules are different for each of the countries you have lived in and you need to allow time to plan and to anticipate any issues.

Kind Regards,

Guillaume

[glyn smith]

thanks.
i haven't been working in these countries and divided my time in each country so that i was never in any country for more than 100 days.
i have basically been a tourist in these countries for the past year.no work and no tax paid.

[Guillaume Barlet]

Dear glyn smith,

The number of days you have spent in each country can only be an indication of your residency status but other factors are to be considered.

The fact that you did not consider yourself as a resident may not deter the tax authorities to think otherwise. Not paying taxes is not a condition that should be taken into consideration.

Regards,

[Soni Razak]

Sir,
I would be getting married to a french resident soon and so would like to have information about the person from an authentic source,can i approach the french embassy for the same.I live near Pondicherry.What is the procedure i need to follow and whom do i meet to get the relevant information.Please help.

[Larry Bovell]

Dear Sir,

I am 64 years old and a retired teacher. I have lived here in France for the past five years, with my partner, in her house. I entered teaching in my late thirties and so receive reduced pension which is paid to my wife in England who then gives me half. When I first came to France I had no income at all and was fully supported by my partner. For this reason, I did not register with the tax office although I realise now that this was a mistake.

I received a telephone call this morning (Sunday) from an official from the tax office in Paris claiming I have evaded paying taxes and he is going to arrive here tomorrow (Monday) with a police escort. He also claimed that I have large cash deposits in an account in England which is untrue. There is approximately £10,000. in a building society account in the joint names of myself and my wife and I also own half the house she lives in. I do not touch the building society money and she receives the interest.

Being under the income limit for paying taxes,
I am afraid that I didn't register with the tax office when I started to receive my teacher's pension but I was going to do so before I receive the state pension in June, next.

Could you please advise me why the tax officer is bringing the police with him tomorrow and what are the implications. Is it normal?

Yours sincerely, Larry Bovell.

[EMMA CLAXTON]

hi, we are a young, unmarried couple with 3 children (3.5, 2.5 and 4 months) and bought a house in france 3 years ago. my husband is a director of a british company so self employed, he is currently working in italy for a slovenian company and i want to make myself and the children residents of france as we have been living here since nov 09 permanently now. what do i do????? also, where do i stand with child benefi here and do i have to have residency to claim? if anybody could offer advice id be grateful! thanks!
regards
emma

[marco sellors]

Hi I need info if I am living in Italy but commuting to Nice France and working full time who do I apy taxes to? It appears to the French but when my wife or kids are sick do I only get health care in France rather than where we live in Italy?

Many Thanks

M