Determination of tax residency
Tax residency is not a matter of choice; it depends on internal regulations or reciprocal agreements and treaties.
Irrespective of nationality, you will be considered to be resident in France for tax purposes if one of the following criteria is met:
- Your permanent place of residence is in France, i.e. your habitual place of residence or that of your family (spouse and children).
- If you have dual permanent residence, the center of your financial and personal interests is in France.
- If your center of interests cannot be determined, your primary place of residence is in France (residence in France for more than 183 days in the same year).
- In the absence of any other deciding criteria among the above (primary place of residence or no place of residence in either country), your tax residence will be in France if you hold French nationality.
- Failing which, the tax authorities in the two countries may be asked to decide upon your tax residency.
People in France who are not tax residents are only taxed on income from French sources.
Residents of France are taxed on the entirety of their income earned from French sources or from foreign sources.
International tax treaties may also provide for specific arrangements.
The tax status of the director varies according to the legal status of their company (EURL, SARL, SA, etc.) and the type of income tax system chosen for the company:
- Company subject to corporate tax: corporation tax is a tax regime that separates the company’s profit from the manager’s income.
- Company subject to income tax: the director’s professional income is subject to the tax rate applicable to their income bracket, just like all their other income, and forms part of the taxable income of their tax household.