10 misconceptions about tax residence in France

It is clear there are some common misconceptions out there regarding whether you have to pay tax in France or in the UK. I have seen this in my dealings with prospective and actual clients.

I am thinking in particular of people who fall into two broad groups:

  • You have always lived in the UK and then move to France; or
  • You live in the UK and rent out a second home in France.

These two groups represent the two main reasons why you may have to pay tax in France or in the UK. In a nutshell, having to pay tax in either country is triggered because:

  1. You are resident for tax there: you will probably pay tax on your worldwide income in your country of residence.
  2. You receive income (or capital gains) from there: you may have to pay tax in the country where your income comes from (for example rental income from a property in that country).

I have used expressions like ‘probably’ and ‘may have to’ as, in practice, things are not always straightforward.

For example, if there is a double tax treaty in place between the countries, this can override the country’s own law.

Also, in the UK there is a concept called ‘domicile’ (different from residence), which can affect whether you pay tax or not. This will not be relevant to the vast majority of UK nationals who will also be UK domiciled. In what follows, I am assuming that you are UK domiciled

One important note. Most people just want to get things right and ensure they do not have any nasty surprises. It is also clear to me at the start of our conversations that many have strong opinions on what they should do, often based on what they feel is common sense or fair. In my experience, if you wish to stay on the right side of the law in the UK and France, it is essential to put your personal opinions aside and follow the rules as they are written. In both countries, not declaring income you are supposed to is tax evasion and is considered a criminal offence. Getting it wrong may not only mean the hassle of trying to sort out a problem which could go back many years, but you may also face fines. In clear cases of deception, it may lead to imprisonment.

The following examples will give you a good sense of how the residency rules work in France and in the UK.

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