Tax Resident or not ?

[Martin963]

Very interesting article,  thanks for the link

I hadn't realised (if I'm reading it correctly) that "centre of economic interest" takes precedence over place of habitual abode provided  (again if I'm reading it right) that one has a residence in each country.

We've been carefully counting our days in France (thinking that the 180 day rule would apply to us) -  seems we might have been being over-careful.

Very interesting and food for further thought.

But am I not right in thinking that one should not spend more than 90 days on the trot in France as if one does one is obliged to register for the health cover and re-register a car (and maybe other things)?

[dragonrouge]

ErnieY I too have misgivings over the one strand of hair plus the nose.  My mind is running wildfire here and before I can commit to a normal relationship with you it is an imperative that I have and see a full disclosure.  One has to be certain before once more jumps.

I am also confused not sure whether you actually exist or are a virtual person.  Please come clean and that word should also be applied to those handsome guys.  We used to have some like that in the Welsh Valleys but they played prop for Wales.

best wishes

[Will]

[quote user="Martinwatkins"]
I hadn't realised (if I'm reading it correctly) that "centre of economic interest" takes precedence over place of habitual abode provided  (again if I'm reading it right) that one has a residence in each country...

But am I not right in thinking that one should not spend more than 90 days on the trot in France as if one does one is obliged to register for the health cover and re-register a car (and maybe other things)?
[/quote]

Martin - may I refer you to the 8th post on p2 of this topic, which probably got a bit lost among the discussions about those attractive brothers. One can be tax resident in several countries, and where you actually pay tax on any particular slice of income is determined by double taxation agreements rather than any order of precedence.

Those other things to which you refer are precisely the sort of things I was thinking of in the last paragraph of that post.

[AnOther]

[quote user="sweet 17"]I'm sorry, Erns, no one will kiss you now you look so dreadful with that one hair sticking out of your head and that great big conk![/quote]I suppose you don't care for this one then sweets [blink]

[mint]

Certainly no worse than the previous one, Erns!

[andyh4]

[quote user="Will"]

One can be tax resident in several countries, and where you actually pay tax on any particular slice of income is determined by double taxation agreements rather than any order of precedence.

[/quote]

 

That is what I thought Will, but in another fluffier place I was firmly put in my place for making such an assertion by someone who makes a living from cross border financial advice.

 

It seems there is a difference (subtle enough that I don't understand it) between tax liable and tax resident.

[Will]

Andy - I believe a similar discussion has been held on this forum too. Paragraph 1.4 of HMRC publication IR20 says:

"It is possible to be resident (or ordinarily resident) in both the UK and some other country (or countries) at the same time. If you are resident (or ordinarily resident) in another country, this does not mean that you cannot also be resident (or ordinarily resident) in the UK."

I think that 'tax liable', although not a technical term which I have come across (I am not an accountant), refers to the double taxation agreement that determines that you do not pay tax more than once on any particular slice of income. There is also the fact that although IR20 says you can be resident in more than one place, it also states that you can only be domiciled in one country. As France does not make the same distinction between residence and domicile, any France-based or non-British advisor might not totally apprecaite this difference in terminology.

IR20 is a very useful document, but of course only gives one side of the story - i.e. it does not specifically go into French fiscal residence, which is covered (briefly) by the article referenced at the start of this topic. It also explains the difference between 'residence' and 'ordinary residence' - another differential which does not exist in France but has implications in UK beyond just taxation, e.g. eligibility for NHS treatment.

 

[Martin963]

Noted Will.   I did read your post but -  as you suspected - didn't give that final paragraph the due attention it deserved.

[bigears]

hi

just read the article and it has re-inforced what I have always believed i.e. 183 days isn't the overriding factor.  I remember having discussions about this in the past and people were banging on about it being the overriding indicator.  I'm actually soaking the sun up in nz at the moment after a most satisfying days work in about 30 degrees.  This year I will probably stray over the 183 days in france but will not be worried about it, probably will not even count the days.  We will only become french tax resident when my wife is able to obtain an e121 and then we can sell the house as our main residence, quite legitimately and move on to pastures new. 

[AnOther]

[quote user="bigears"]I'm actually soaking the sun up in nz at the moment after a most satisfying days work in about 30 degrees.[/quote]Lucky b*****d [:P]

If it were not for the fact I still have to work and the reluctance of 'er indoors to be so far from the kids it's where I'd be. As much as we like being in France it'll always be a poor second [:(]

[Complikate]

[quote user="bigears"]hi
just read the article and it has re-inforced what I have always believed i.e. 183 days isn't the overriding factor.  I remember having discussions about this in the past and people were banging on about it being the overriding indicator.  I'm actually soaking the sun up in nz at the moment after a most satisfying days work in about 30 degrees.  This year I will probably stray over the 183 days in france but will not be worried about it, probably will not even count the days.  We will only become french tax resident when my wife is able to obtain an e121 and then we can sell the house as our main residence, quite legitimately and move on to pastures new. 
[/quote]

Lucky you bigears; I just spent the last few days in old blighty and it's pretty nasty.

Just to say you are playing a dangerous game if you do not count your days in France. It shows that people see what they want to see, beacuse to me it is made very clear that the double tax treaty says if you spend more time in France than anywhere else you are resident. If it is agreed in law by both countries, you will get sympathy from neither. Note that it is not for the French fisc to prove that you were in France more time than anywhere else, it is for you to prove that you were not. All the French fisc has to do is point the finger and make the accustation. If you do not count your days and evidence your travel, you could find yourself in trouble.

Kate

 

[Martin963]

Kate - well I'm one of the people who "see what they want to see" as you put it,  because working through the "list" in sequence:

In my case:

I have a residence in both countries,  and the advice states:

"If you do own a “residence” in each country, then it is settled by your centre of economic or “vital” interests."

So I go on down the list to this next determining factor,  and in my case that (centre of vital interests) is very definitely in Britain,   ("Ultimately this is where you run your financial life from, for example

it may be where your income is paid from, where your business interests

are and also where you manage your assets from".) 

So -  just to check - I go on down the list to the next bit:

"Article 3b states that if your centre of vital interest cannot be

determined then it is down to where you have your habitual abode. This

does not count the number of days in a country, but merely where you

are spending most of your time."

Well that doesn't apply to me because I CAN determine my "centre of vital interest".   It could not be clearer.   My only assets in France are my house and a bank account for expenses there.   Everything else is in Britain  (and I've just finished doing my UK tax return!!)

So in my (potential) innocence my reading is that although  I can't determine my residence from the section on owning a residence,  but because I am able to determine unambiguously my centre of vital interest,  the "sequence" on the checklist stops there and I needn't unduly worry about the number of days,  (apart from the considerations that Will has pointed out,   health,  car etc)

As I said in an earlier post,   we have been keeping the right side of the "180 day rule" as we previously understood it to exist.   Like bigears,   I was idly wondering whether we had perhaps been erring unnecessarily on the side of caution.

I'm sorry if I'm being thick here but I took the document originally cited as a sort of "sequential ticklist",  that you worked your way down until something "definite" told you the answer.    Please correct me (us!) if I'm wrong.

[allanb]

With respect, I think neither Kate nor Martinwatkins has stated it correctly.

Your tax residence is not determined by the treaty; it is determined by the separate laws of the two countries.  Since each country makes its own rules, they can overlap, which is why you can be resident in both (as Will and others have said).

What the treaty actually says is this (my emphasis):

For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

Now if it turns out that you are indeed resident in both, then the treaty does have something to say about residence; it contains rules to determine which of the two you are deemed to be resident in for the purposes of that particular treaty - and not necessarily for any other purpose (social security, pension rights, vehicle registration, military service, etc, etc).

Having established which of the two you are resident in (or deemed to be resident in) for tax purposes, you then say to yourself: OK, do I have any income arising in the other one?  If so, the treaty says which of the two has the right to tax it. 

[Martin963]

No respect required allanb!   I'm only trying to understand the original document

....   which perhaps - in an effort to be concise and understandable - has led to misunderstandings.

Better go on keepinig to the 180 days as well then.

Thanks anyway.

[bigears]

hi

to my mind keep things simple and be resident only in one country at a time. 

[Will]

Allanb makes a very important point. The rules of the various countries determine where you are tax resident; the double taxation agreements determine where a particular item is taxed; but these only apply to taxes. Other things work differently, notably social security.

The norm in Britain is that tax and NI are collected together, so the two are often regarded as closely related. In France, they are collected separately, and although the actual collection is handled by two or three central (often regional) agencies there are something like 16 separately listed and separately calculated elements that go to make up the equivalent of NI.

So where you are tax resident may not necessarily be the same place where you are liable to pay social security contributions. In general (though there can be exceptions) you will only be affiliated to one country's health and social security system, and that will be the country in which you spend the most time.