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.
Individuals, whether a French or foreign national, are considered 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.