3. Liability to French Income Tax
- 3.1 Basic Rule on Liability to Income Tax
- 3.2 Are you Resident or Non-Resident?
- 3.3 What is your Fiscal Household?
- 3.4 What Income is Taxed in France?
3.2. Resident in France or Non-Resident?
- 3.2.1. Resident in France
- 3.2.2. Non-Residents
3.2.1. Resident in France
To be ‘fiscally resident’ in France only one of the following three conditions need apply:
- It is considered you have your main home in France;
- You carry on a professional activity in France, either self-employed or as an employee;
- Your centre of ‘economic interests’ is in France, e.g. investments, business.
In order to assist with the determination of resident status the general rule that is applied is that, if you spend 183 days per calender year in France, then you are deemed to be resident.
But you would also be deemed to be resident if any one of the other conditions stated above applied.
If you arrive in France with an intent to becoming resident, then you become resident when you step onto French soil.
In some cases you can actually be resident in both countries, and the terms of the double taxation treaty between your home country and France would determine the rules that applies in these cases.
In particular, as cross-border working and living within Europe becomes more commonplace, it has become something of a game of chance for the various tax authorities to interprete the circumstances of all cases in a consistent manner.
Thus, there can be uncertainty about the status of families who relocate to France, but where the breadwinner countinues to work outside of the country.
In such circumstances the general rule is that, whilst your family will be considered to be tax resident, you will be taxed in the country where you are employed, and you will also pay social security contributions in the country of employment.
In other words, within the EU, your rights and obligations relate to where you undertake your professional activities. If it is based outside of France, then that is where you will pay your tax and social security contributions.
This rule applies to employed and self-employed persons alike.
That said, since 2009 if you are based in France, but earn business or salaried income from both the UK (or other country) and France, and you are taxed in the UK on your UK income, then this income is subject to the payment of health insurance charges. The charge is 5.5% on salaried income; for business income it is 2.4% up to €34,308, and 9.6% between €34,308 and €171,540 (2008 income).
The rule only applies if you are affiliated to the French social security system in France, which would normally be the case if you were earning business or salaried income in France.
Even though you will pay tax in your country of employment, some local French tax offices insist that you complete a tax return. You will not be taxed twice on your income earned outside of France, but this income will be taken into consideration in calculating your liability to tax on any French earned income e.g. rental income.
Top Tip!
If you have any doubt about your status then, in order to minimise the risk of being considered fiscally resident in France, you should own a home in the country where you work and spend at least 183 days a year there.
If you do clearly become resident then you should visit, or drop a line to the local tax office (called Centre d’impôts) to advise them. If you do not, they are likely to contact you anyway!
If you do finally relocate to France, in the year you become resident you will be taxed separately on the basis of your actual residence in each country.
The UK Customs and Excise Office have published some guidance to assist with determining the resident status of those living between two countries.
We would be interested to hear your experiences, as we are aware there is varying practice between the different tax offices in France, and by the UK tax offices!
3.2.2. Non-Resident
If you consider you are non-resident, but you earn income from France (e.g. rental income, interest), your liability to taxation is going to depend on the terms of any double taxation treaty between France and your home country.
In general, under the terms of most double taxation treaties, rental income is liable to taxation in the country where it is earned.
However, depending on the terms of any double taxation treaty between your home country and France, you may well then be entitled to partial relief or exemption against potential tax liablity in your home country.
In the case of UK nationals, under the terms of the double taxation treaty, partial relief on rental income is granted against liability to UK income tax.
What this means is that, if the tax you pay in France is greater than that you would pay in the UK, then no further taxation is payable in the UK.
Conversely, if you pay less in tax than you would pay in the UK, then you will get a tax credit against income tax paid in France.
We have separate pages on the Taxation of Rental Income in France.
As a non-resident, in order to declare your French earnings you need to contact the Centre des impôts des Non-Résidents (CINR), 10, rue du centre, Noisy-le-Grand (93).
The e mail address of the office for non-residents is cinr.paris@dgi.finances.gouv.
You can also download the tax declaration by visiting Déclaration De Revenu (Non Résident).
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Finance & Taxation