183 days

[Evianers]

Can anyone please confirm whether the 183 days ruling for residency in France is still applicable for tax purposes bearing in mind by the time we arrive in LBF on [ca.] 5 July this year, we shall technically be retired. If we decided to immigrate slightly earlier, would this be a problem, meaning would we then be subject to a whole year's tax? Thanks for all knowledgable answers.

[Pickles]

[quote user="Evianers"]Can anyone please confirm whether the 183 days ruling for residency in France is still applicable for tax purposes bearing in mind by the time we arrive in LBF on [ca.] 5 July this year, we shall technically be retired. If we decided to immigrate slightly earlier, would this be a problem, meaning would we then be subject to a whole year's tax? Thanks for all knowledgable answers.[/quote]

Errrr ... from the French point of view, you're tax resident as soon as you arrive with the intention of making France your main residence, aren't you? And from the UK point of view, you get your annual allowances pro-rata for the period between 7 April and your date of departure. The 183 days doesn't really apply unless you are thinking that you may return to the UK frequently ... Or have I misunderstood the question?

Regards

Pickles

[Evianers]

Sorry, should perhaps have mentioned that we do not live in the UK.

We live currently in Belgium [left UK in 1976 so UK tax doesn't apply].

There used to be something about taking up residence with fewer than 183 days left in the financial year. It is this where we need up-to-date clarification. Perhaps it no longer applies...............

[Will]

Just because Britain has a 183 day residence qualification it is often assumed that France has likewise. As stated above, this is not the case.

French tax residence starts from the day you start living there on a permanent basis, and the French tax year ends on 31 December, so you declare your worldwide income in France for that part of the year; if it is less than half the year that doesn't mean you escape paying tax.

If there is any further doubt about tax residence, you can be considered French tax resident when any (not all) of the following conditions apply:

1. your main home is in France

2. your family or dependents are in France

3. your main centre of economic interest is in France

4. you spend at least half of the calendar year in France.

This means you can be tax resident in more than one place, which doesn't excuse you from paying your dues anywhere, and is generally taken care of by double taxation agreements or similar. Note that where you are taxed on any sum is at the discretion of the tax authorities of the country concerned, it is not your choice, though you can of course arrange lengths of stays etc in order to take advantage of more favourable tax regimes.

[Pickles]

[quote user="Evianers"]

Sorry, should perhaps have mentioned that we do not live in the UK.

[/quote]

Ah! Sorry, I've been reading this forum for long enough that I should have remembered that ...

[quote user="Evianers"]

We live currently in Belgium [left UK in 1976 so UK tax doesn't apply].

There used to be something about taking up residence with fewer than 183 days left in the financial year. It is this where we need up-to-date clarification. Perhaps it no longer applies...............

[/quote]

I had a quick look on www.impots.gouv.fr which confirmed the position. You're liable pro-rata on your worldwide income, as Will notes, on arrival.

Regards

Pickles

[Teamedup]

As your residency only starts from the day you arrive, you don't have to declare anything earned prior to your arrival.

[allanb]

[quote user="Will"]This means you can be tax resident in more than one place, which doesn't excuse you from paying your dues anywhere, and is generally taken care of by double taxation agreements or similar. Note that where you are taxed on any sum is at the discretion of the tax authorities of the country concerned...[/quote]I think this needs correcting.  You can't be tax resident in more than one place at the same time. 

You can meet the definition of "residence" in more than one country at the same time, but if there's a tax treaty between the two countries (as there is between the UK and France) then the treaty will contain rules for determining which country you are deemed to be resident in for tax purposes.  Everything else flows from that.  For each kind of income, the treaty determines which country has the right to tax it.  Nobody has "discretion" - that's the whole purpose of the tax treaty.

If there isn't a tax treaty, I don't pretend to know the answer.

[Will]

Yes you certainly can be tax resident in more than one country. HMRC booklet IR20 is quite clear on this, see para 1.4 and section 9. Residence and domicile should not be confused. See also recent rulings on Britain's so-called '90 day rule'.

The double taxation agreement will normally determine where any particular item is taxed. If there is not a double taxation agreement there will normally be special provisions to ensure that income is taxed, but not taxed twice.

Remember that it is the tax authorities who have the say on whether or not you are counted as resident. Qualifying as tax resident in France, for example, does not exonerate you from paying tax in Britain in the same tax year should HMRC deem you have also been UK tax resident; and vice versa. If you count as French tax resident you must declare all your worldwide income in France, but income already taxed elsewhere is entered as such and hence not taxed again under the double taxation agreement.

[allanb]

[quote user="Will"]Yes you certainly can be tax resident in more than one country. HMRC booklet IR20 is quite clear on this, see para 1.4 and section 9.  [/quote]The HMRC booklet you mention is written in general terms to cover anyone who may meet the residence rules in more than one country (it says "you might be affected by a tax treaty...")

In the case of France and the UK there's no doubt about it; there is a tax treaty, and if you're in that position you are affected by it (and HMRC is bound by it).  This is what it says:

(1) 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...

 

(2) Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then this case shall be determined in accordance with the following rules:

(a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (centre of vital interests).

(b) If the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode.

(c) If he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national.

(d) If he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

So I think what I said is essentially correct.  Under the treaty rules, you will be treated as a tax resident in one or the other, but not both.  Perhaps instead of saying "you can't be tax resident in more than one country" it would have been more accurate to say "you can't be taxed as a resident in more than one country."

[quote]Residence and domicile should not be confused.[/quote]I agree.  I was talking only about residence.  You can be domiciled in the UK even though you are resident in another country, as you obviously know.  

To the best of my knowledge, "domicile" as a status different from "residence" is a concept that doesn't exist in France, and I don't believe it's even mentioned in the treaty.

[Will]

I am tax resident in both Britain and France.

Is that clear enough? Plenty of people pay tax in both France and Britain.

[BJSLIV]

So by applying the rules (as above or from the appropriate tax treaty) one can determine in which country a person is tax resident, say UK or France.

Once that has been decided, and you can only be resident in one, then the double taxation treaty decides how certain incomes will be taxed, based on the residence of the person concerned.

However some income is always taxed in the country in which it arises, irrespective of residence, eg employment earnings.

So Will could  be tax resident in France, as his main residence, and wife are there, and perhaps he spends most of the year there .However his UK wage slaving will always be taxed in the UK, irrespective of his tax residence. But he wouldn't be tax resident in the UK.

Discuss.

[allanb]

[quote user="Will"]I am tax resident in both Britain and France.  

Is that clear enough? Plenty of people pay tax in both France and Britain.[/quote]

Are you saying that the treaty doesn't apply to you?  You imply that if you pay tax in Britain you are therefore tax resident in Britain.  Not true.   The treaty provides that even for someone deemed to be tax resident in France, some kinds of income are taxable in Britain, and vice versa.

I am personally affected by three different French tax treaties, and I can tell you: this is how it works.  Honestly.   They're not all identical, of course, but they have certain principles in common.

BJSLIV has it right, except perhaps for the bit about earnings.  I think they too are covered by the treaty, although I haven't researched it.  (Since I am old and don't have earnings any more, this point doesn't affect me.)  Of course, the result may be the same anyway.

[Will]

I am tax resident in UK because the residence qualifications and double taxation agreement determines that. I am also tax resident in France because the French tax system determines that. I don't consider myself as French resident, but I do not have the choice in taxation matters. It is not a common situation, but certainly not unique.

Double taxation agreements can never cover every eventuality when different countries do things so differently. What they are intended to do is determine where tax is paid on any partcular item (and they have to cover capital gains, inheritance, company taxes as well as individual income). This they tend to do very well.

I do not intend to get into an argument or a detailed discussion about my personal life in a public forum. I know my situation, the tax authorities and accountants know it and are happy with it, and so am I. I take what HMRC and les impôts say as valid, rather than what somebody says on a forum.

It's largely a matter of semantics anyway, because the system ensures that due tax is paid, and it is paid in the correct country. If you really want to get into semantic arguments, then consider other statuses like 'resident but not ordinarily resident' status, which do not exist in France but do in Britain.

 

[andyh4]

Allanb

as another person who has in the past had dual tax residency, the tax treaty ensures that any tax paid to one country is taken into account by the other country where the tax treaty applies.  Nothing more than that

So I pay tax and NI in the UK.

I also have to declare the earning in France.  The French tax authorities take account the UK tax has already been paid when assessing if any tax is due in France.

And vice versa for French income being taxed in the UK.

 

That is all the treaty does.  It does not absolutely fix your tax residence in one place.

[allanb]

[quote user="andyh4"]

... the tax treaty ensures that any tax paid to one country is taken into

account by the other country where the tax treaty applies.  Nothing

more than that ...

That is all the treaty does.  It does not absolutely fix your tax residence in one place.

[/quote]It does quite a bit more than that.  I appreciate your taking an interest, but have you read it?  What do you think is the purpose of the sections I quoted, if not to "fix" your tax residence?

I concede that (as Will said) the argument is to some extent semantic.  It has a practical effect, though.  Your tax liability in both countries is based on your deemed country of residence - and that's fixed by the treaty.

Incidentally, employment income is covered also (in Article 15), and its treatment isn't automatic - it depends on a version of the famous 183-day rule, among other things.

[quote user="Will"]I do not intend to get into an argument or a detailed discussion

about my personal life in a public forum. [/quote]No, and it isn't my intention to provoke that kind of discussion.  If you're happy with your situation, that's fine.

[quote]

I take what HMRC and les impôts say as valid, rather than what somebody

says on a forum.[/quote]

It may not make any practical difference to you, but since people (for better or worse) sometimes use this forum as a source of information, I feel justified in repeating that (a) the treaty exists, (b) it determines tax residence, (c) it determines which country taxes which kind of income, and (d) it has more authority than either HMRC or les impôts. 

If you still don't agree with (b), all I can say is: please read the quotation again.  You don't think I'm making it up, do you?

[Will]

I am sure you are not making it up. From what you are saying, it sounds as if you consider that the French tax authorities are wrong to regard me as resident there (because I fulfil the UK residence qualifications under the agreement). So that's OK then. Some bloke on a forum says I don't need to fill in the French tax return that they wil be sending (and which we have spent time on over the weekend sorting out information for the accountant) - with all due respects of course but I think you should be able to see my point?

If you want quotes from official documents, try this one for size:

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. Where, however, you are resident both in the UK and a country with which the UK has a double taxation agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement.

Note that it says 'may be special provisions...' rather than 'will be...'.

I can't really accept (d) - that an agreement drawn up between HMRC and the French equivalent wil be regarded as having a higher authority than either organisation. 

I think we will have to agree to differ on the interpretation of this.

As far as other readers of the forum are concerned, by advice to them will be as it always has been. Don't get bogged down in detail in taxation documents - which we always acknowledge - and any apparent contadictions.

If your tax affairs are anything other than the simplest, get advice from a qualified professional. Be aware of things you read about on forums, but don't rely on them.

 

[allanb]

I think this discussion has gone beyond what is useful for most people, but there are some interesting points in it and I don't mind pursuing it if you don't.

First point:

[quote user="Will"]Some bloke on a forum says I don't need to fill in the French tax return that they will be sending...[/quote]Which bloke was that?  Not me.  I never said you didn't need to fill in a French tax return.

Second point:

[quote]If you want quotes from official documents, try this one for size: 

Where, however, you are resident both in the UK and a country with which the UK has a double taxation agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement.

Note that it says 'may be special provisions...' rather than 'will be...'.[/quote]So it does.  But this document refers to residents in any other country in the whole world.  Our discussion is about residents in Britain and France, and - as I keep saying - for them there is a tax treaty, and there are (not "may be") provisions for treating you as a resident of only one of the countries.  I have quoted the provisions to you; you say that you do not suspect me of inventing them; why do you keep on saying that they may not exist?  They exist.

Third point:

[quote]I can't really accept (d) - that an agreement drawn up between HMRC and the French equivalent wil be regarded as having a higher authority than either organisation.[/quote]Well, here you are just flat out wrong.  The tax treaty is not "an agreement drawn up between HMRC and the French equivalent".  It is an agreement between two national governments, and it is binding on all government departments and state agencies in the two countries.  Any lawyer will confirm this for you.

Fourth point:

[quote]If your tax affairs are anything other than the simplest, get advice from a qualified professional. Be aware of things you read about on forums, but don't rely on them.[/quote]Now there I can agree with you.

[Will]

I give up. There is no point in carrying on this discussion as you will not even agree to differ.

[allanb]

Why should I?  You quote me as as saying things I didn't say, and you have no reply to my comments.

Readers can judge for themselves.

[Eslier]

I feel obliged to contribute that Will's explanation is exactly as I have understood these matters.  The big problem with quoting official documents which are produced by the UK government is that they only apply in the UK. The French authorities are extremely good at putting their very own interpretation upon something, showing total disregard to whatever another county, or even EU law for that matter, may imply. Theoretical argument is all very well but, in this case Will speaks from personal experience - and I also know that his French firm of accountants are highly respected and extremely unlikely to be misleading him in any way.

[Will]

Quite right Eslier. The reasons I am not prepared to argue this rather inconclusive point any further are that it has no bearing on either the original question in this thread or where one pays tax - in that I agree 100% that the latter is determined by the double taxation agreements and the tax authorities and how many places you are or can be tax resident (be it one or five hundred) is irrelevant.

[allanb]

Will, I would be quite happy to let this drop - you are taking advice from qualified advisers, and if you trust them and take their advice, the theory doesn't matter much - but then along comes Eslier with this:

"The big problem with quoting official documents which are produced by the UK government is that they only apply in the UK. The French authorities are extremely good at putting their very own interpretation upon something, showing total disregard to whatever another country, or even EU law for that matter, may imply."

Should this go unchallenged?  It's nonsense.  The "official document" I quoted is a treaty between two governments, and it has the force of law in both Britain and France.

The various tax treaties (conventions fiscales) are routinely quoted by the French tax authorities in the statements they make about taxpayers with overseas connections - see, for example, form 2041 GG, available on the French government website.  

On two occasions, when I have visited the local tax office to clarify something, the official has pulled his copy of the relevant tax treaty off the shelf and used it to find the answer, giving me the article number as a reference.

Sorry, but Eslier's comment reminds me of the old joke: "I've made up my mind - don't confuse me with the facts." 

[Evianers]

Oh please folks - let it drop. Peace and harmony and brotherhood. We have deviated a very long from my original question. But thank you, all you knowledgible people who have given positive input.