French tax residency
One is deemed tax-resident in France subject to the following:
- one has a home in France, or
- France is the place of one's main residence, or
- France is the principal place for one's business activities, or
- France is the centre of one's economic interests.
Given the scope of the above, it can be seen that establishing residence for tax purposes is quite easy to achieve. Many freelance contractors register as independent workers. Tax is due on French income and assets. The onus is on non-residents to declare their French income and in some cases the French tax authorities request that local representative be appointed and authorised to receive all correspondence relating to their tax affairs. Profits from professions carried out in France including self-employment are subject to tax regardless of whether or not the individual is resident.
Note should be made of French inheritance tax, if a non-resident has been resident in France for 6 out of the last 10 years, then tax applies to worldwide assets, regardless of the residence status of the deceased.
2003 Expatriates Tax Package
Effective 1st Jan 2004, the French government introduced tax incentives for foreign executives working in France such that they no longer pay income tax on bonuses derived from work abroad. In addition, pension and healthcare contributions, paid in their home country, also reduce taxable income.
Effective 1st Jan, 2008, the French government brought out a new law giving extended tax breaks to individuals directly employed by a French employer, but for a limited period. In order to qualify the tax payer must not have been resident in France in the 5 tax years immediately prior to the start of their employment. These provisions apply up to the 31st December following the 5th anniversary of their arrival in France.
