Tax resident or non-resident: how does the French administration decide?

Working out where you are tax resident is a central question for anyone who lives, works or invests in more than one country.

It determines where your income is taxed, whether and how international tax treaties apply, how certain wealth transactions are treated and, in some cases, whether you face a tax audit or a dispute with the tax authorities.

Contrary to a widely held belief, tax residence is not a matter of personal choice or a simple statement. Under French law, it follows from a legal assessment based on specific criteria, set by statute and interpreted by the tax authorities.

The question comes up very often for expatriates, non-residents and people who split their lives between France and other countries. In Toulouse, many cases involve international taxpayers, executives, business owners or investors facing dual tax residence or complex cross-border dealings with the French tax authorities.

1. Tax residency and tax domicile: the applicable legal framework in France

Under French tax law, the key concept is tax domicile, as defined in Article 4 B of the French Tax Code (CGI).

A person is tax domiciled in France if they meet at least one of the three criteria in Article 4 B, 1 of the CGI:

• their home or primary place of abode is in France;

• they carry on their main professional activity in France;

• the center of their economic interests is in France.

Article 4 B, 2 adds a specific case: government employees posted to a country where they are not subject to a personal tax on their total income (see section 5).

These criteria are alternative: meeting just one of them is enough to make you a French tax resident. The tax authorities explain how they read them in their official guidance (BOFiP), an essential reference in practice.

Table of the Article 4 B CGI criteria

This table summarizes the administrative guidance and the case law it cites; each situation is still assessed on all the facts.

2. The criterion of home and primary place of abode

The tax home

The home is where the taxpayer’s family life is centered. It is usually where the spouse, partner or children live and where day-to-day life is organized.

For expatriates, this criterion is decisive when:

• the spouse and children stay in France;

• the family home in France is kept;

• trips back to France are frequent and central to the person’s life.

Even if you work abroad, keeping your home in France may be enough to make you a French tax resident.

The primary place of abode

Where the home cannot be clearly identified, the tax authorities look at the primary place of abode, based on the time actually spent in France during the year.

This is a factual test: number of days spent in France, regularity of stays, how personal life is actually organized.

As a general rule, French tax guidance treats a person who stays in France for more than six months in a given year as having their primary place of abode there. This threshold is not absolute: the primary place of abode may also be found where time spent in France is clearly greater than time spent in each other country. Above all, the “183 days” rule only applies to this criterion: spending less than six months in France is not enough to rule out French tax residence if the home, the main professional activity or the center of economic interests is in France.

3. Main professional activity

A person may also be French tax resident if they carry on their main professional activity in France.

This is assessed on the facts:

• time devoted to the activity;

• nature of the duties;

• place of effective management, for executives;

• relative weight of professional income.

Where a person has several activities, or the same activity in several countries, the main activity is the one to which they devote the most actual time, even if it does not bring in most of their income; failing that, it is the one that generates the largest share of their worldwide income. An activity carried on in France on a merely ancillary basis is not enough.

This criterion applies equally to employees on international assignment, self-employed people and directors of French or foreign companies.

In cross-border situations, the activity may be spread across several countries, which calls for a close look at the economic reality.

4. The center of economic interests: an often decisive criterion

The center of economic interests is one of the most sensitive criteria and one the tax authorities rely on most often.

It is the place where the taxpayer’s economic interests are mainly concentrated, including:

• their main investments;

• the management of their assets;

• their largest sources of income;

• the management or control of their business.

A person may therefore live abroad while keeping enough economic interests in France to be treated as a French tax resident.

This criterion often comes into play where a person:

• owns real estate in France;

• runs French companies;

• earns mainly French-source income.

5. Specific situations provided for by law

The French Tax Code also covers certain specific situations, in particular government employees working outside France who are not subject, in the country where they work, to a personal tax on their total income (Article 4 B, 2 CGI).

6. Being a tax non-resident: what are the practical consequences?

A person who is not tax domiciled in France is a non-resident for tax purposes.

That does not mean they pay no tax at all in France.

Non-residents remain taxable on their French-source income, under specific rules that may cover:

• real estate income;

• certain capital gains;

• certain salaries or pensions;

• specific withholding taxes.

How the income is taxed depends on its nature and on whether a tax treaty applies.

7. Dual tax residency and the role of international treaties

A person can be treated as tax resident by two different countries. This dual tax residence is dealt with by the bilateral tax treaties France has signed.

These treaties generally set out tie-breaker rules applied in order, including:

1. permanent home;

2. center of vital interests;

3. habitual abode;

4. nationality;

5. agreement between the tax authorities concerned.

These tests, taken from the OECD Model Tax Convention, apply one after the other: you only move to the next one if the previous one does not settle the question. For example, the France-Italy tax treaty (Article 4) first points to the country where the person has a permanent home; if they have one in both countries, to the one with which their personal and economic ties are closer; failing that, to the one where they habitually live; then to the country of which they are a national. Each treaty has its own wording: the list of tax treaties signed by France gives access to the text that applies.

Two practical consequences follow. First, the treaty overrides French domestic law: a person domiciled in France under Article 4 B may be treated as resident of the other country under the tie-breaker rules. Second, these tests are not the same as those in Article 4 B: the treaty’s “permanent home” and the “home” (foyer) of French domestic law do not mean exactly the same thing.

These analyses are complex and turn on a precise assessment of the facts. They often lead to tax audits or disputes, particularly when people move abroad or return to France.

8. How to Prove Tax Residence Abroad

Tax residence is not declared, it is proven by facts. When the French tax authorities challenge a move abroad, they rely on a body of evidence, and the taxpayer must be able to answer with consistent evidence of their own. A residence certificate issued by the foreign tax authority helps, but is not enough on its own if everyday life remains in France, as shown in our analysis of a recent ruling on a claimed tax domicile in Dubai.

In practice, a strong evidence file brings together, for each year in question:

• housing abroad: lease or deed of purchase, energy and phone bills in your name;

• family life: where your spouse or partner lives, your children’s school certificates;

• professional activity: employment contract or corporate appointment, payslips, employer’s statement on the actual place of work;

• physical presence: a calendar of days spent in each country, travel tickets, boarding passes;

• local tax and social security position: foreign tax returns and assessments, membership of the local social security system or health insurance;

• economic interests: bank accounts, assets and sources of income, in France and abroad;

• consistent steps in France: the tax return for the year of departure, change of address with the tax authorities, cancellation of contracts that are no longer needed.

Evidence pointing the other way should also be identified: a home kept in France and used regularly, family still living in France, mainly French-source income, public posts showing a life centered in France.

9. Tax Residence Certificate: How to Fill It In

The term covers two different documents, depending on which way the proof has to go.

You are a French tax resident and a foreign country asks you for a certificate

This happens, for example, when you claim the reduced treaty rate of withholding tax on foreign-source dividends or interest. In principle, you should use the treaty form provided by the foreign country. If there is none, or if that country accepts it, the French tax authorities certify your residence on the certificate of residence for individuals (form no. 731); businesses use form no. 730. According to the official instructions:

1. fill in your identity, occupation and full home address;

2. tick the type of request: a certificate for income taxable in the country of residence (stating the country the income comes from) and, where relevant, application of the treaty rate (stating the treaty concerned);

3. state the type of income (dividends, interest, royalties);

4. also complete the “Declaration by the French tax authorities” section, stating the calendar year in which the income is received;

5. send the form to your local tax office (service des impôts des particuliers), which signs it after checking your tax domicile, then pass it on to the foreign tax authority and keep a copy.

The tax authorities state that they only issue the certificate on the basis of the information on the form: an incomplete or incorrect request will not be signed.

You are a non-resident receiving French-source income

To have a treaty applied when French withholding tax is levied on dividends, interest or royalties, a non-resident cannot use form no. 731. Instead, they file a form no. 5000 for each type of income and each paying institution, together with form no. 5001, 5002 or 5003 as appropriate, and have their residence certified by the tax authorities of their own country.

10. Illustrative examples of international situations

The three situations below are hypothetical and simplified; they illustrate the method, not a solution for any real case.

• An executive posted to Singapore whose family stays in Toulouse. He spends more than 250 days a year abroad, but his spouse and children live in the family home in Toulouse: his home is in France within the meaning of Article 4 B. If Singapore also treats him as resident, the treaty will decide, starting with the permanent home test.

• A retiree who spends five months a year in France. She lives in Portugal for the rest of the year, but her main pension is French-source and most of her assets are in France. Spending less than six months in France is not enough: the center of economic interests criterion must be examined, then, if she is resident in both countries, the treaty tests.

• A consultant settled in Lisbon with his family, who rents out an apartment in Toulouse. His home, his work and most of his income are in Portugal: in principle he is not a French tax resident, but he remains taxable in France on the rent from the Toulouse apartment, which is French-source income.

11. Common errors in expatriation and non-residency situations

Some mistakes come up again and again in practice:

• assuming that you can freely choose your tax residence;

• keeping a family home in France without weighing the tax consequences;

• underestimating the weight of the center of economic interests;

• failing to plan for the effects of a gradual return to France.

These situations can lead to significant tax reassessments, sometimes several years after the events.