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French residency


WendyG
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Hi everyone

I am sure the subject has "been done to death" on here previously, but I have today been told that the laws have been changed with regard to residency etc.

I always understood that one could only be here in France for a total of 183 days in any one year.  I have always adhered strictly to this, having been told that even the days of travel are counted.  Now that our passports are put through a machine as we leave and enter the UK this would seem even more important.

However, I have been told that because we are EU this is no longer the case.  Certain persons are over here living and doing up their property and have exceeded the 183 days.  Their property in the UK has been let.  Their main bank account is in UK and they only have a French bank account to pay the basic French outgoings.

Could someone please clarify the position.  I, personally, would like to sometimes stay over the 183 days but do not want to complicate my life. (I have a residence secondaire but retain a principal residence in UK)

Many thanks in advance.

WendyG

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The law has not changed. France has always had different requirements for tax residence from the UK. It has been the case for a long time that if you spend more than half the year in France you can be deemed resident. You can also be deemed French fiscal resident if the taxman decides that your main home is in France, your family or dependants live in France, or you have significant financial interests in France.

There is further complication in that the French do not have the 'ordinary resident' status for tax and social security purposes that exists in UK, and the French taxmen tend to regard domicile and residence as the same thing, whereas in UK they are totally different concepts.

Where you actually pay tax on any given source of income is determined by the France/UK double taxation agreement. Where your bank is situated, or what currency you are paid in is irrelevant.

 

 

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Wendy

My understanding is that if you keep the centre of your economic interest in the uk, you can stay more than 6 months in any year.  Enjoy your time in france in your maison secondaire and don't worry about exactly how many days you have been here. 

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The regulations concerning the right of entry into France for EU citizens and their subsequent residency are set out in the code de l'entrée et séjour des étrangers et du droit d'asile.

In brief, EU citizens may freely enter France provided they hold an passport/identity card issued by an EU member state and they are not considered a threat to law and order.

If they remain in France for more than three months, then they are considered as being temporarily resident here and must have sufficient resources not to become a burden on the social security system and have made provision for healthcare insurance.

Anyone gaining temporary residence as a result of a stay in excess of three months is also likely to be deemed as tax resident under the criteria mentioned by Will.  The 183 days is merely an arbiter for determining tax residency in marginal cases.

 

 

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I've been trawling through a few of the historic threads, looking for infomation on UK v French tax residency.  Your recent posts on the subject have been most helpful, as is the article you have linked in.

For our part, my wife and I will almost certainly be regarded as UK resident for tax purposes, as under the tie breaker rules, we would qualify on the centre of vital interests definition.  That's not my question here, but I was wondering what we would need to consider over the next couple of months?

We have a residence secondaire in Deux Sevres that we have owned since 2001, but hardly used since we moved to Scotland four years ago.  We have decided to sell the French property this year, but intend to spend some time there from 1 July onwards, to carry out some improvements and to stay on until we have secured a sale.......goodness only knows how long that might take in the present climate, but we are experienced in property related matters and not worried if time goes by.

Although we have no intention to continue to live in France once our property has been sold, we may find ourselves staying in France this time for more than 6 months.  I do not believe that our tax residence status would be affected by that stay. 

We also have no intention to subscribe to the French social security/health services  (we will rely on E111 and private cover), but I do wonder what other issues might arise?  I am thinking particularly about the registration of our UK car and whether the French Revenue would be able to make a case for payment of Social Taxes?

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Thanks for that, bigears. It might be an option, if, as you say, the figures work out.  However, with a permanent home in the UK at the moment as well and a clearly defined centre of vital interests, I am not sure that the UK Revenue would wear that.  We could still get clobbered for CGT in UK, whilst paying additional French social taxes.  It's this potential tug-of-war that I am striving to avoid!
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Don't make the mistake of thinking your centre of vital interest or some 183 day rule clears you to live in France without being tax resident here.

As Will previously explained, centre of economic interest is only one of four criteria, any one of which could make you tax resident. One of these is if your principal home is in France. That's why all of us who live in France but have our centre of economic interest elsewhere (eg, pensions paid in the UK, rental income from UK properties) are classed as being tax resident here.

As mentioned earlier, if you stay here for more than three months then you are considered as being resident here and the French impots could well regard your 'maison secondaire' as now being your permanent home.

Anyone who wants to come and live in France over and above a reasonable temporary period must comply with all the various French regulations and contribute through the tax system like everyone else who lives here.

 

 

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The subect matter that you have raised is very complex and you should seek proper professional advice rather than accept well meaning advice offered here by some.

 

Essentially you need to look at the double taxation treaties or as known in France as the convention. Each country looks at the same set of circumstances differently, in France they consider intent, economic interests PPR etc.

 

I would suggest that you have a look at IR 20 in the UK for periods up to the 5th April 2009 and HMR C6 after 6th April 2009.

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Thank you both very much.  As an (albeit recently retired) IFA of 20 years standing, I do appreciate the importance of taking appropriate financial advice and will be doing so.  Nevertheless, the practical experience of those "already in the system" is also very important, hence the question.

 

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hi

I am interested in this topic as we will be selling our french maison secondaire in about two years, once we are finished the renovations, after 10 years of ownership.  From a notaires point of view dealing with the sale of the french residence, if you have declared french tax residence and gone through two french tax forms and altered the status of your house to maison principal, will it sail through without any french capital gains tax liability?  Will the fact that you own property in the uk alter the notaires's decision, will he/she actually ask the question? 

Was the reference to paying cgt in the uk  to do with the uk revenue smelling a rat and charging it on the french sale, but why should they if you were indeed  a french resident, who would indeed inform them of the sale?  Perhaps the movement of funds to a uk bank would trigger off an enquiry.   Surely uk people do legitimately taste full time residence in france after having a holiday home here for a few years and decide perhaps the winters are not for them and decide to sell up and go back to live in the uk full time.  

I  would be interested in hearing from people who have actual experience of this type of situation.

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I would be more worried about what the French tax people think about why you have started declaring tax in France after 8 years of not having done so, but from your previous posts on here you think that they are stupid don't you?  However, you mighty be able to duck and dive as is your want but there is a real risk that unless your employment circumstances in the UK have changed and your actual residency they might just ask for tax back for the last 8 years and you end up being taxed in both countries,  What sweet justice that would be[:D]  Like your optimism about selling your house in two years time though.[kiss]
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I seem to have opended up the proverbial can of worms here![:D]

We are certainly not trying to avoid paying any tax that is legitmately due, whether in the UK or France.  What I am keen to avoid is getting wrapped up in red tape unnecessarily, as  we have no intention of remaining in France.  Our eventual detination will be Portugal, where we will building a house, once the Euros are freed up from France.  If you think the waters are muddied in France, try making sense of the Portuguese version of the tax rules!!

My point about the UK CGT arises because I believe that the UK tax authorities would challenge any "self-declared" French Tax residence status, given that we have a permanent home here.  If we were to give up our permanent UK home, then that would end the interest of the UK Revenue so far as the CGT on the French property was concerned.  However, that might well open up the door for our main source of income (from UK property rentals) being taxed up front at 20% (far more than we need to pay). 

There is also a separate issue on CGT payable on UK property sales (of which we have a number planned).  By being French tax resident, I believe that we will lose an annual CGT allowance, which, for the two of us, will be best part of £20,000 each year, or £3,600 of tax that doesn't need to be paid.  The loophole on French CGT for ex-pats on UK gains is being closed this year, so the entire profit will be there to be taxed by the French Revenue in the future.

My discussions with the UK Revenue are ongoing, but they like to fall back on "we won't give advice, it's up to the tax payer to determine his or her position and ensure the correct amount of tax has been paid" - bless them!

 

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