For anyone who has interests in various countries of the world, your place of residence can be a major cause of confusion.
This is because, in the vast majority of cases, an individual will find that he/she fulfils the internal residence criteria for more than one of those countries. In reality, however, you should only be considered resident of one country. Since it is your place of residence that will define the tax rules and laws that affect you, it is important to try to dispel any doubts.
For France, it is very easy indeed for a person to be considered resident, since you only have to fulfil one of four conditions to qualify. Since one of those conditions is the fact that you have a “home” here, it is obvious to see that anyone who has a house in France could, in theory, be considered resident of France, even if you spend very little time in France.
Likewise, we hear people say that the UK authorities do not want to relinquish their right to your residence, because you are spending an average of more than 91 days per year in the country.
Obviously, neither situation is logical, so the question is to decide which country has the greatest claim on your residence?
The answer to this question is normally found in the appropriate Double Tax Treaty.
These are bilateral agreements, between two countries, which set out the rules for:
- Which country has the greatest claim on your residence
- Which country has the right to tax different sources of income, your assets and, in certain cases, inheritance
- How to ensure that you are not taxed twice on the same amount
The majority of countries in the world have signed bilateral Double Tax Treaties, with the notable exception of the majority of “Tax Havens”. The list of treaties signed by France can be consulted on the tax authority’s web site www.impots.gouv.fr, under “documentation” and then “international”.
France has signed two Double Tax Treaties with the UK, one for income tax and the other for inheritance tax, which basically, with certain exceptions, allow the country which has the greatest claim on your residence, to tax all of your worldwide income and assets.
The criteria for determining which country has the greatest claim on your residence are the following:
- Where is your “home”?
- If you have a “home” in both countries, the next criterion is where is your place of “vital interest”? This is obviously a relatively nebulous concept.
- If that cannot be determined (and it rarely can!), the next is your place of “habitual abode”, which basically means where you spend the most time.
- If you spend exactly the same amount of time in each of your “homes”, it is the country of your nationality, which has the greatest claim.
