TAX RESIDENCY RULES
We have a second home in France and wondered what advice you could give to people who decide to stay in France, in our case Charente, rather than coming home within the ‘180 odd’ day rule. Is it exactly 180 days or 183? If people opt to stay longer in France than in the UK what would they have to do to comply with French law, taxes, paperwork, etc? We believe our pension would have a 16% tax rating which would be better than the UK. What action/ paperwork is necessary to comply at the present time? I believe if we choose principal ownership in France now and secondary in the UK, it might be an answer to Brexit uncertainty. JUDY HASTINGS
The tax residence rules in the UK and in France are complex and you have to look at each country’s legislation to determine which one has the right to treat you as tax resident. As a general rule, the country that you are resident in has the right to tax you on your worldwide income.
The main test in France is not actually time-based; instead, you are considered tax resident if your main home is in France. This embraces ideas of permanence and stability and ignores temporary absences, and is the rule the French authorities will most rely on. The foyer is the place where your close family (i.e. spouse and minor children) habitually live. You are also considered to be French resident if you spend more than 183 days in France per calendar year or if your principal activity is in France, e.g. occupation is in France (whether salaried or not), or your main income arises in France. Finally, you may be considered resident if France is the country where most of your substantial assets are located (centre of economic interests).
You also have to consider whether you remain UK tax resident under the UK Statutory Residence Test. The UK rules are even more complex than the French ones and depend on various different factors which are too wide to be covered here.
It is possible that you are considered resident under both the UK and French rules. In this case you have to refer to the UK/France double tax treaty to determine which country has the primary right to tax your income.
If you do become French resident, most types of income will be taxable in France and some types of income may be taxable in both the UK and in France. You may in fact have to submit tax returns in both countries depending on your sources of income. As you can see, it is important that you understand how the tax residence rules apply in your circumstances. It is a common mistake to assume that you can choose where to pay your taxes. This can be an expensive mistake and you should seek specialist tailored tax advice. ROB KAY
Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.