Daft Question?

[bixy]

How do you know when you are resident in France (for tax purposes)? We have houses in both places and for the next nine months or so will be moving backwards and forwards, before finally settling in France. Let me put it another way when would be the most advantageous time of year to become resident. My guess would be January, since that is when the French tax year starts. But perhaps someone can confirm this.

Patrick

[Sunday Driver]

In simple terms, you become tax resident in France if your principal residence is here, or your main family base is here, or you are employed here, or your centre of economic interest is here.

The most advantageous time to arrive in France is the day after the current tax declarations were due to be filed.  However, it depends upon your actual date of residence as defined above - you can't choose to defer your tax status once you're resident here.

 

 

 

[Teamedup]

The most advantageous time to arrive in France is the day after the current tax declarations were due to be filed.  

 

Sorry, I don't understand that.

[andyh4]

I think SD is suggesting it gives a full year to get your act together.

 

But as has already been said you cannot choose when you become tax resident.  The rules dictate that and bar perhaps a couple of weeks steering one way or the other that is bout as much leeway as there is.

[Albert the InfoGipsy]

I can understand Bixy's situation. Just within the UK I've been it the position of effectively having two homes for a while, due to overlapping completions and the like. My feeling is that if you're roughly splitting your time 50:50 and there is no other factor, like getting a job in France, then you may as well decide based on convenience or things like the effect of making your first tax return.

Unfortunately, from a financial point of view there could be arguments both ways. It depends on what your circumstances are and the fact that UK and French tax years are different could be significant.

[bixy]

You're absolutely right Albert. Since there are no forms to fill in, no formal process to establish residency and one can wander backwards and forwards between the two countries, then surely it is one's own decision when one becomes resident. I realise that if in any year I am resident in the country for more than six months then that  establishes  my principal residence, but I'm  really talking about the period  before that, while we still have the two houses. In asking these questions I am not seeking to gain any financial advantage - I just wish to make the transition with the least hassle possible. So if we did make the move to become resident in January, when would the first tax declaration need to be made?

Thanks for the answers so far.

Patrick

[Will]

You are supposed to notify, using the appropraite forms, the authorities in at least the UK when you become, or cease to become, tax resident. The authorities in either country can ask you to justify your claims as to your whereabouts at any particular time by way of travel tickets, mobile phone bills and the like.

HMRC's booklet IR20 (that's at least the third time I've referred to that today) explains residency from the UK point of view - Sunday Driver's post gives the basic principles that the French apply.

[Llwyncelyn]

Bixy the 183 day rule was challenged by the IR with the Special Commissioners of the Inland Revenue and the bar limit was reduced to 90 days including travelling days.  However this was in respect of a Seychelles based business man who lots of assets and money and who used to come across for Henley Wimbledon that sort of thing.  His wife also used to visit on a very frequent basis.  The decision is being challenged probably in the High Court or the Court of Appeal.  Obviously Mr Brown wanted some of Mr Seychelles money.

Teamed Up description of residency centre of economic interests is absolutely spot on.

[Gluestick]

This is perhaps a useful source.

http://www.taxationweb.co.uk/forum/discuss.php?id=4620

 

 

[Sunday Driver]

To answer your timing question more specificallly:

If you settle here permanently in nine months time, ie October 2007, then you will submit your first tax declaration in April 2008 for your income for the period October to December 2007.  You will receive your tax bill in September 2008.

If you settle in January 2008, then your first tax declaration will be in April 2009 for your income January to December 2008.  You will pay the tax in September 2009.

 

[bixy]

Sunday Driver, thanks for a very clear answer. It addresses exactly the point I was concerned with. I did not want the hassle of having to do a tax declaration for just a short part of the year. I would rather wait and do a whole year's worth.

On the question of residency I'm still no clearer. If we have no economic activity (retired), we have a house in both countries and spend roughly equal time in each for a period of six to nine months (this is likely due to personal and family circumstances), then where on earth are we deemed to be resident? Perhaps there is no straight answer to this and it will depend on interpretation.

Patrick

[KathyC]

[quote user="Sunday Driver"]

To answer your timing question more specificallly:

If you settle here permanently in nine months time, ie October 2007, then you will submit your first tax declaration in April 2008 for your income for the period October to December 2007.  You will receive your tax bill in September 2008.

If you settle in January 2008, then your first tax declaration will be in April 2009 for your income January to December 2008.  You will pay the tax in September 2009.

 

[/quote]

So, if we move to France this spring (March/April) does the exact timing of this make any difference?

[Will]

It's a bit of a red herring really, because if you go to any country with the intention of taking up permanent or long-term residence, for example to work, you are deemed to have taken up residence on the day you arrive. SD's timings refer to when you make your first French tax declaration rather than when you actually become resident.

Of course, there is scope for discussion if you have two homes and are forever flitting back and forth, or you do not work. But the decision is invariably in the hands of the authorities, not you.

To add yet another complexity, the social security authorities may well apply different residence criteria from those of the tax authorities, which is unfortunate from the point of view of those who may have hoped to apply the UK's 90-day rule to allow them to pay NI instead of French cotisations.

[chessfou]

[quote]if you go to any country with the intention of taking up permanent or

long-term residence, for example to work, you are deemed to have taken

up residence on the day you arrive.[/quote]

A small (possible) correction. We were advised that French tax residency is deemed to commence the day after arrival.

[Sunday Driver]

KathyC

Same principal applies to you.  You have to file your tax declaration in the spring following the January - December tax year in question.

So, if you become permanently resident on (say) 15 April 2007, then your first "tax year" runs from 16 April to 31 December 2007.  You actually file your first tax declaration next spring - the forms are available from early April 2008 and they have to be in by 31 May 2008.

If you work on the effective date of residency as being when you sign the acte de vente and take possession of the keys to your new (permanent) home. 

 

[Sunday Driver]

Bixy

Doing a French tax declaration is no hassle at all if you're retired, and if everything else is fairly straightforward, then it's a five minute job.  If you do some research, you may well find that it's more advantageous to be taxed in France rather than in the UK. 

You may find you end up paying no tax at all.....[:D]

 

[Will]

[quote user="chessfou"]A small (possible) correction. We were advised that French tax residency is deemed to commence the day after arrival.
[/quote]

Yes, I think you are probably right. 'Travelling' days have historically tended not to count for tax purposes, though following an important fairly recent case the UK tax law changed slightly and what tends to be counted now are nights spent in the country. So you can now be deemed to have become resident on your first night. I don't think France follows the same convention though.

 

[Le petit pet]

don't register for tax - just stay maison secondaire. once you get locked into the french tax system you will never escape. no one can prove how long you are in the country anyway so the 183 days is an anachronism

[Russethouse]

Le petit pet, I hope you are not relying on the fact that no one can ever prove how long you are in the country stuff. As far as I am aware (could be wrong) it is up to you to prove you were either there or not, at your own expense.Furthermore at least one member here (Val 2) discovered that the French authorities knew exactly when they traveled to and from their home.

[Sunday Driver]

[quote user="Le petit pet"]don't register for tax - just stay maison secondaire. once you get locked into the french tax system you will never escape. no one can prove how long you are in the country anyway so the 183 days is an anachronism[/quote]

A stunning first post from le petit pet (another troll, methinks?)

Not worth responding to "the little f*rt".......

 

 

[Dick Smith]

A troll who doesn't really understand what an anachronism is, either...

[Bugsy]

[quote user="Le petit pet"]don't register for tax - just stay maison secondaire. once you get locked into the french tax system you will never escape. no one can prove how long you are in the country anyway so the 183 days is an anachronism[/quote]

That's so wrong it's almost funny. Unless you and your family get 'beamed' back and forth, you are logged every time you travel. Credit card usage is also monitored. You are definately being watched and you will get caught out eventually.

Enjoy it while you can.....................................[:)]

[Quillan]

I sent the UK tax people a letter 5/6 years ago when I left the UK to say I was going, never told them where mind. Three years latter I got a registered letter from them to my current French address saying I had not completed a tax return for three years and that they had added interest on to the fine and I should pay up.

When I phoned them up (I told them I had writtn to them before I left and could send a copy if they wished) they said that I had to write a letter back saying when I came to France and that I was resident here and a tax payer here. I offered to send them copies of my French tax forms but they said not to bother unless they specifically asked for them. Got a letter back, not saying sorry but that on this one and only occasion and out of the kindness of their heart they had cancelled the fine and interest and to inform them if my situations changes. One of the most condicending official letters I have ever had. Six months latter I got a revised bill with a total payable of zero.

To my mind this definatly proves France and the UK 'speak' to each other because how did they know exactly where to send the bill and why didn't they want proof that I was paying tax here? My attitude is do it right and you can't get in to trouble because they (the system) will find out sometime or another, may be weeks, months or even years but they do find out.

[bixy]

I agree with the disapproval shown to Petit Pet but I know personally of two couples who have not declared themselves resident; one through ignorance, the other through a couldn't care less attitude. In both cases I made gentle hints that they needed to do something about their situation, but I got the very clear impression that my advice was not welcome. I rather suspect there must be many others like them.

Patrick

[cooperlola]

[quote user="bixy"]I agree with the disapproval shown to Petit Pet but I know personally of two couples who have not declared themselves resident; one through ignorance, the other through a couldn't care less attitude. In both cases I made gentle hints that they needed to do something about their situation, but I got the very clear impression that my advice was not welcome. I rather suspect there must be many others like them.

Patrick
[/quote]I know one or two also.  I've wasted enough breath trying to explain the pitfalls of trying to dodge the system.  In the end, no matter how much you do not want to see people you like falling foul of the system, you (sorry, I) begin to develop a sneaking desire to see them get caught.  Not least because of the amount of effort honest people put in to doing things properly.