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Centre of economic interest


Jeff

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I am an English man working abroad (where I pay taxes on my income). I spend some time at my girlfriends house in France and some time in the United Kingdom, however the majority of the year I reside in the country I’m working in. I do not own

property in France.

 

My understanding of the law is as follows. A taxpayer is deemed to be tax resident in France if any one of the following tests is satisfied:

- They spend 183 days or more each year in France.

- Their principal business activity in France.

- Their habitual residence is in France.

- Their "centre of economic interest" is in France.

 

I do not believe I fall into any of these categories, but I am unsure of how far "centre of economic interest" is taken. For example, I have some material possessions (clothes, etc) at the girlfriends house - would this be enough to deem that France is my centre of economic interest?

 

Am I correct that as I am paying taxes abroad and do not fall under the categories above that I do not have to complete a French tax form, or am I missing something?

 

Any help would be appreciated,

 

Jeff

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Sunday Drive is just about correct on this but centres of Economic Interests have taxed even the most brilliant of legal brains but again take professional advice (in the UK). There was once a law case in the Court of Appeal where centre of economic interest was recognised when a guy resident in France came over for Royal Ascot and his wife resident in the UK served a writ on him for divorce. He squealed the CA found against him for he had always but always come over for the Derby and Ascot.

So it is not simply a few rules but SD is as I say is on the button. You are more of a traveller but where do you think you centre of economic interest is - nowhere? That is not possible.
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How can Jeff be 'more of a traveller'?  He lives in country X and works and pays his taxes there, the same as my son and daughter who live in the UK and work and pay their taxes there.   

He occasionally comes to France to visit his girlfriend, the same as all the folk who come across from the UK to visit family over here.  Why on earth would he need to take professional advice in the UK to determine whether leaving a few clean pairs of underpants and a handful of CDs at his girlfriend's house establishes a centre of economic interest in France?

 

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Thanks for the replies!

My main issue is with the terminology. Is centre of economic interest related entirely to business or monetary investments? My understanding of the word "economic" would leave me to believe that it could apply to almost any avenue of your life.

I know that it may initially appear a daft question, but my Girlfriend is also requesting to put me down on her tax report - and in order to do so I would have to declare my revenue in France, which I think would lead the tax department to tax me on monies that I have already paid tax on. Irrespective of double taxation agreements, if I spend most of my days in the country I work and pay taxes there, I believe I should not have to fill in a tax form for each and every country I may (or may not) have a girlfriend in........ ;-)

My girlfriend claims that because I live with her that she has to declare me on her tax form and has requested to know how much I earn. I highlighted that she doesn't have to declare me but she claims she does.

Maybe she's just a golddigger trying to find out if i'm worth investing her time in or not......hehe.

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Mr Driver's right and better at this than me to boot, but I can see what your girlfriend might be getting at.

She certainly does have to declare total household income (she might even be better off as a result, but not for sure!) and the number of people living in her home.  But if your main home is elsewhere then to my mind she's stretching it a bit if she says you live there - maybe she wants you to commit to her? - for the time being at least, you are just a visitor, not living there permanently. 

Maybe the two of you have a different view of your relationship, and perhaps your problem is not one of where your centre of ecomomic interest is, but something else altogether?[:)]

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As a summary, I guess she should not include me on her tax return form as I am a traveller and not fiscally resident in France. I spend more than 200 days out of France every year, I work and pay my taxes in the country where I hold residence and I have no income from French sources (or sauces).

Thankyou all for your replies - I stumbled upon this forum quite by accident and the information contained throughout is amazing. You should all pat yourselves on the back!

Lastly, I am glad to see how my issue with legally obscure text such as "centre of economic interest" can transform a forum dedicated to resolving French financial issues into an agony aunt section ;-) . I guess I should indicate to my girlfriend that i'm the kind of man who is always on the roam. Wherever I lay my hat, that's my home..... :-D

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[quote user="Jeff"] I am glad to see how my issue with legally obscure text such as "centre of economic interest" can transform a forum dedicated to resolving French financial issues into an agony aunt section ;-) . I guess I should indicate to my girlfriend that i'm the kind of man who is always on the roam. Wherever I lay my hat, that's my home..... :-D[/quote]

Or even musical, not to mention humourous, her name's not Carla by any chance?;
I got six Cadillacs, five Lincolns, four Fords, six Mercuries, three T-Birds, Mustang, ooooooohhh [8-|]

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[quote user="Jeff"]

Thanks for the replies!

My main issue is with the terminology. Is centre of economic interest related entirely to business or monetary investments? My understanding of the word "economic" would leave me to believe that it could apply to almost any avenue of your life.

I know that it may initially appear a daft question, but my Girlfriend is also requesting to put me down on her tax report - and in order to do so I would have to declare my revenue in France, which I think would lead the tax department to tax me on monies that I have already paid tax on. Irrespective of double taxation agreements, if I spend most of my days in the country I work and pay taxes there, I believe I should not have to fill in a tax form for each and every country I may (or may not) have a girlfriend in........ ;-)

My girlfriend claims that because I live with her that she has to declare me on her tax form and has requested to know how much I earn. I highlighted that she doesn't have to declare me but she claims she does.

Maybe she's just a golddigger trying to find out if i'm worth investing her time in or not......hehe.

[/quote]

 

Jeff this seems to be a statement you are not contesting (even if you may be "living" in several other locations) and it is this that will require her to include you on the tax return.

 

For what it is worth I have a similar situation, albeit married.

 

OH lives in France for more than 183 days and this is our permenant home.

I work in Germany and am fully taxed (as a family) there.  I commute at weekends and spend perhaps 140days in France

We also declare for income tax in France.  Because of the Double taxation treaty between France and Germany we pay no income tax in France.  Similar rules may protect you.

Your situation may be one of those that tests the system, and yes the wording at times can be (deliberately) open for debate.  I have heard that economic interest can include regularly spending time at a residence in France for family celebrations such as but not exclusive to Birthdays, Christmas, Easter etc..

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Your lady friend will only have to include your income on her French tax form if you are married or in a legal partnership (PACS). I don't think you need to worry about having the 'centre of economic interest' contested because yours is clearly in that unnamed country (why the mystery?) where you live most of the time, work, and pay tax. Even if there is no double taxation agreement between that place and France you are clearly not taxable in France.

Our situation has been rather more complicated than Andyh4's, but with the exception that we actually pay quite a lot of income tax in France, as well as UK (and have had a French tax investigation because they wanted us to pay even more), the same principles apply.

Incidentally, the '183 day rule' does not exist, as such, in French tax law. Despite what I said above, just having a residence in France can be enough to make you taxable there, but unless you get married or PACSed it will not affect you. This, which I believe ANOther has posted here before, is probably about the best and most easily understood basic guide to whether or not you are French tax resident, but even that doesn't cover all the options.

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