The concept of tax domicile or residency is at the heart of the rules of international tax law applicable to individuals.
Indeed, it makes it possible to determine the extent of their tax obligations:
Do you have to pay your taxes in France?
What income is concerned?
Article 4A of the French General Tax Code establishes an essential division around the notion of tax domicile:
– Individuals domiciled in France subject to income tax on all their worldwide income,
– others not domiciled in France are only taxable on their income from French sources.
Knowing whether or not you are «domiciled in France» is therefore essential.
Whether you are French or not, the French tax authorities consider your tax domicile to be in France if you meet one of the following criteria:
– you have your home or your main place of residence in France ;
– you carry on a professional activity in France in France, whether or not you are an employee
– you have the centre of your economic interests in France.
You only need to meet one of these criteria to be considered as a French tax resident.
However, it is possible for the same taxpayer to be considered as a tax resident by two different States.
France may consider that he meets one of these three criteria and another country may also do so on the basis of its own criteria.
There is then what can be called a conflict of residences which will be settled by the application of a bilateral tax treaty between two States if it exists. The vast majority of these tax treaties are modelled on the convention proposed by the OECD and provide for
successive criteria for resolving this conflict of residence.
For example, in the FrancoBritish tax treaty, if a person is considered as a resident of both States according to their domestic law, Article 4-2 of the treaty of 19 June 2008 provides for successive criteria to settle this conflict of residence. These criteria are in line with the OECD Model Convention. If one criterion clearly tilts the conflict towards one State, the person is resident in that State without moving on to the next, if it does not allow a decision to be made, the person must move on to the next criterion and so
First criterion: the permanent home – this is any form of dwelling that the taxpayer has on a permanent basis
Second criterion: the centre of vital interests: family and social relations, occupations, political and cultural activities of the person concerned,
Third criterion: the seat of its business, the place from which it administers its property, without establishing a hierarchy between its economic and personal links.
Fourth criterion: nationality. It is essential to determine your tax domicile in order to know your tax system both in terms of direct taxes, such as incometax, and in terms of transfer duties, such as inheritance or gift tax.
We assist clients for their move to France. Contact us for a personalized study of your situation and an estimation of your taxes in France
Expert-Comptable – Chartered-Accountant