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Determination of tax residency

Thématiques

Key points Taxation

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Tax residency is not a matter of choice; it depends on internal regulations or reciprocal agreements and treaties.

Irrespective of nationality, the French law considers the following persons to be resident in France for tax purposes:

  • Persons whose the household or their primary place of residence is located on France.
  • Persons who carry out a professional activity, whether salaried or not, in France, unless they can prove that this activity is carried out on an ancillary basis.
  • Persons whose the centre of economic interests is established in France.

When a person is considered a tax resident by several countries, including France, tax treaties may provide for other criterias to determine tax residence. Tax residence is considered to be in France if one of the following conditions is met:

  • The permanent place of residence is in France, i.e. the habitual place of residence or that of the family (spouse and children).
  • In the case of dual permanent residence, the center of financial and personal interests is in France.
  • When this center of interests cannot be determined, the primary place of residence is deemed to be 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), the tax residence will be in France if the French nationality is held.
  • Failing which, the tax authorities in the two countries may be asked to decide upon the 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.

 

 

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For further details, please see the list of bilateral tax treaties that France has signed.

Click here

 

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 director’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.

View our publication Make a French Start: Setting Up Your Business in France

Doing business in French overseas departments and regions

 

In addition to access to the full range of support measures for companies operating throughout France, the government has its own provisions for investment aid in the overseas departments and regions (Guadeloupe, Martinique, French Guiana, Reunion Island and Mayotte), an innovation tax credit and a research tax credit at higher rates than in mainland France, and specific measures for exemption from social security contributions.

Companies setting up in the overseas departments and territories (Guadeloupe, Martinique, French Guiana, Reunion and Mayotte) can benefit from special tax measures and in particular:

  • An allowance for the company director subject to income tax:
    • 30% for a company established in Guadeloupe, Martinique or Reunion Island, not to exceed €2,450;
    • 40% for a company established in Guiana or Mayotte, limited to €4,050.
  •  Tax reductions or tax deductions for productive investments in overseas France;
  • Tax credits for productive investments in overseas departments.

For more information, please visit the website impôts.gouv.fr and the BPI website

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