What are the criteria to be considered as a French tax resident? Do tax treaties have an implication on this?

Determining one individual (or company) tax residency is essential for the proper taxation of their income. In France, tax residency is determined based on four criteria, as defined by the French tax code:

• Household: A person is considered a tax resident if his main home is in France. Generally, judges consider the presence of the family (spouse, children) on the French soil to determine whether this criterion is verified.

• Number of days spent in France: A person who spends more than 183 days in France in a calendar year is considered as a tax resident, regardless of whether they have a home or center of interests in France.

• Principal working activity in France: A person who earns a major part of his income in France is considered as a tax resident, whether it be from a dependent or independent activity.

• Center of economic interests: A person is considered as a tax resident if his center of economic interests is in France, even if they do not have a home or work in France.

It is important to note that these criteria are not cumulative. If even one of these criteria is met, a person is considered a tax resident in France.

Tax treaties, on the other hand, may have an impact on the determination of tax residency. These treaties are designed to prevent double taxation and provide guidelines for determining tax residency when a person has connections to more than one country. In general, tax treaties establish a hierarchy of criteria that considers the taxpayer’s permanent home, the center of their personal and economic interests, their habitual residence, and the location of their assets.

For example, if a taxpayer is only considered as a resident of one country under the national tax code, then that country will have the exclusive right to tax the income. However, if the taxpayer is considered as a resident in both countries, then the tax treaty will provide guidance on how the income should be taxed and which country has the right to tax it. It is importante to note that the distribution of taxation will depend on the nature of the income. For example, salary income is not treated the same as dividend income for tax purposes, and different rules may apply, depending on tax treaty provisions. This is yet another reason why it is important to seek the guidance of a tax lawyer to ensure compliance with French and international tax laws and conventions.

A tax lawyer can provide a detailed study of one’s residency situation and assist in resolving any issues that may arise. At AGN Avocats, our experienced lawyers can assist taxpayers in regularizing their situation in France if they have failed to declare any income, despite being obliged to do so based on their French residency status.

In summary, determining tax residency in France is based on four criteria, and tax treaties can have an impact on tax residency for taxpayers who have connections to more than one country. It is crucial to consult with a tax lawyer to ensure compliance with French tax laws and any applicable tax treaties, and AGN Avocats can assist taxpayers in regularizing their situation in France if necessary. If you need assistance, please contact our qualified lawyers on www.agn-avocats.com