Understanding Tax Residence Rules in France and UK

The Code General des Impôts provides four tests, and you will be deemed a tax resident of France if you fulfil any one of them:

• Test 1 – If your main residence or home is in France
  The rule most relied upon by the French authorities is whether your main home or ‘foyer’ is located in France. Defined as the home where your closest family (spouse/cohabiting partner and dependent children, but not parents) habitually live. If you are single and without children, it is where most of your personal life is connected. You don’t necessarily have to spend most of your time in France for your ‘foyer’ to be located there.
• Test 2 – Your lieu séjour principal
  Translated simply as your principal place of abode, this test is usually satisfied by those who spend more than 183 days in France per calendar year. However, it can also apply if you spend more days there than in any other country. The authorities are increasingly using this due to ‘tax nomads’ who cannot prove they have tax residency elsewhere.
• Test 3 – Having your principal activity take place in France
  This third test is pretty straightforward. If your primary occupation is in France (paid or unpaid), or your primary income is sourced there, for example.
• Test 4 – Your centre of economic interests
  You will fulfil this criterion if most of your substantial assets (such as principal investments) are based in France, your assets are administrated in France, or your business affairs are conducted there. Drawing most of your income in France will also determine it as your centre of economic interests.

Note that the French tax authorities consider it your responsibility to make yourself known to them and declare all of your income and assets.

The UK also has a system to determine tax residency – known as the Statutory Residence Test.  It’s important to understand this if you spend time in both countries or retain ties in the UK. You could be deemed a UK tax resident without realising it.

• Automatic overseas test
  You will be deemed non-resident in the UK if you spend less than 46 days a year there and have not been resident for the previous three tax years. If you were a resident during those previous years, just 16 days could deem you a tax resident. If you work overseas, spending less than 90 days in the UK, you will not be considered a tax resident.
• Automatic residence test
  If you work full-time in the UK and have your main home located there, you are deemed a tax resident.
• Sufficient ties test
  If the above cannot be satisfactorily determined, your ties with the UK will be considered and how many days you spend there.

What happens if you meet criteria for both the UK and France?

Meeting the criteria for being a tax resident for both countries will invoke the tie-breaker rules outlined in the double tax treaty between France and the UK. If residence still cannot be determined, your nationality is the deciding factor.