Death and Taxes are the only sure thing in life…. At least in France you pay less taxes.
So you’ve been living / working in France for a short period of time; things are going well. The job is interesting, the food and wine are great, and the cost of living is not as high as you had expected. You have even had a fantastic holiday for a month on the Riviera, and now return to work with your batteries recharged. It looks like it was a good move coming here after all.
That is, until you open the letter from the tax authorities that has been lurking deep in the letter box since you left in July. They want to know about your tax status in France! You try to put it to one side, hide it under other pieces of paper; remember ‘out of sight is out of mind’. It never seems to work I’m afraid. Somehow it falls on the floor intent on tripping you up. What to do? Axis Strategy helps!
Death and taxes, as they say, are the only two sure things in life……we may as well get used to it! The best way to do this is to plan your affairs for these eventualities.
You should start the process by establishing whether or not you are liable to pay French taxes in the first place.
Personal income tax in France is called Impôt sur le revenu
You are deemed to be liable to French income tax if:
● You are fiscally resident in France
● On the income of the whole household
● On the basis of your worldwide income
Individuals who reside beyond the borders of France may also be subject to French income tax. This would be the case for non-residents who receive rental income from letting property in France.
Resident or non-resident in France?
French law (Article 4B of the Code Général des Impôts (CGI) stipulates that an individual is resident for tax purposes in France if they meet any one of the following conditions:
● Your permanent / habitual home is in France
● You spend most of your time in France i.e. at least 183 days during a calendar year
● Your professional activity is in France. This can be either as an employee or on a self-employed basis
● The centre of your economic or financial interest is in France e.g. business, investments, etc
Although the law seems relatively straight-forward, problems do arise where individuals live in France and work across borders, or vice versa. This situation is becoming increasingly popular given the mobility of labour in the European Single Market. In such cases the Double Taxation Agreement between France and the second country would determine the rules that apply. The challenge for the individual and relevant tax authority is to have their case interpreted in a consistent way.
Sometimes cases can be resolved by examining the provisions of the international tax treaties in place between France and other countries, or the nature of the employment or business and the terms on which it is undertaken. On other occasions, the interpretation of your particular case may be solely at the discretion of a local official.
There is evidently no set formula to how cross-border issues are resolved. Let’s face it, it was never going to be easy to move country in the first place!