Your Place of Residence

For anyone with interests in various countries around the world, your place of residence can often be a major source of confusion.

This is because, in most cases, an individual may meet the residence criteria for more than one country. However, in reality, you should only be considered a resident of one country. Since your place of residence determines the tax rules and laws that apply to you, it is crucial to clarify any doubts.

Residence Criteria in France

In France, it is relatively easy for a person to be considered a resident, as you only need to meet one of four conditions:

• One condition is that you have a “home” in France.
• This means that anyone who owns a house in France could theoretically be considered a French resident, even if they spend very little time there.

UK Residence Rules

Similarly, people often mention that the UK authorities do not want to relinquish their claim to your residence if you are spending an average of more than 91 days per year in the country.

The Dilemma

Clearly, neither of these situations is ideal or logical. So, how do you decide which country has the strongest claim to your residence?

The answer is usually found in the applicable Double Tax Treaty.

What is a Double Tax Treaty?

A Double Tax Treaty is a bilateral agreement between two countries that outlines the following:

• Which country has the greatest claim on your residence.
• Which country has the right to tax different sources of income, assets, and, in some cases, inheritance.
• How to avoid being taxed twice on the same income or assets.

Most countries have signed bilateral Double Tax Treaties, with the exception of the majority of “Tax Havens.” You can find the list of treaties signed by France on the tax authority’s website www.impots.gouv.fr under “documentation” and then “international.”

France and the UK

France has signed two Double Tax Treaties with the UK:

1. One for income tax.
2. One for inheritance tax.

These treaties, with certain exceptions, allow the country with the strongest claim on your residence to tax all of your worldwide income and assets.

Determining Your Country of Residence

The criteria used to determine which country has the greatest claim on your residence are as follows:

1. Where is your “home”?
2. If you have a “home” in both countries, the next criterion is:
   • Where is your place of “vital interest”? (This is a more abstract concept.)
3. If this cannot be determined (which is often the case), the next criterion is:
   • Your place of “habitual abode”, meaning where you spend most of your time.
4. If you spend exactly the same amount of time in both countries, the final criterion is:
   • The country of your nationality, which then has the greatest claim.