We are often asked – what makes me tax resident in France, what are the circumstances that define the term tax residence in France?
We always advise anyone with a tax question to get professional assistance but briefly – these are the current (2022) rules and points of principal:
Permanent or indefinite stay in France rule
According to French domestic rules, any person becomes French tax resident from the day they arrive in France – if they intend to settle permanently or if their stay is indefinite.
Test for tax residence in France
If the permanent/indefinite stay rule can’t be applied then status will be decided from whatever other point a person can be viewed as having commenced residence where at least one of these four tests is satisfied. According to French law an individual does not have a choice – they either are, or are not, French tax resident under these rules.
1. France is where the main residence or home is (foyer). This comprises the notion of permanence and stability. Temporary absences from France are deemed immaterial – the French authorities will not count that as a factor. If a spouse and children live in France a person it is highly likely that the authorities will consider a person French tax resident even if they work abroad.
2. France is the principal place of abode (lieu de séjour principal). This is usually taken to mean more than 183 days in France in a calendar year. It does not have to be a continuous period of 183 days; – the rule is applied cumulatively, assessed over a French tax year (which is 1 January to 31 December). Note – it also includes part days – not just whole days.
It is also possible that a person who spends less than 183 days in France may be considered tax resident if they have spent more time in France than in any other country.
3. A person’s principal activity is in France, for example, their occupation is in France. Even if this is a non-salaried position this rule is applied. This rule is also applied if a person’s main income comes from France (whether salaried or not), unless they can show that such activity is purely incidental (à titre accessoire).
4. France is the country of a person’s most substantial assets i.e. the place of principal investments, where assets are administered, or where a larger part of income is drawn.
There are circumstances when a person may be considered simultaneously tax resident under the domestic rules of another country. In this case the authorities may look at the “tie-breaker” rules in the double tax treaty between the two countries, if one exists and make a decision after their review.