Question: I have just bought a holiday home in Picardy that is in need of renovation so will be spending quite a lot of time in France next year. What is the maximum amount of time I can spend in France without giving up my UK tax resident status? Also, is there a minimum amount of time I need to spend in the UK during this period to ensure my status? Gordon O’Donnell, Picardy
Answer: Being a tax resident of France or the UK is a statement of fact and not choice and is usually determined by the provisions contained in the UK/France Double Tax Treaty. To understand how this may affect you let us first look at the rules for residency in France only.
The tax residence (domicile fiscal) of an individual is determined by three main criteria: 1) if your home (foyer fiscal) or principal residence is in France, you are a French tax resident. The concept of home is determined by the stability and permanence of your situation. For example, if your spouse and children live with you in the home (stability) or if you spend more than 183 days in a French tax year in the home (permanence) you are considered a French tax resident. You should also note it is irrespective of the type of accommodation you occupy, eg mobile home while renovation is being carried out; 2) if you are employed in France; 3) if your centre of major economic interests is in France. This usually affects those whose main source of income is generated in France.
Having said the above we now come to the tricky part. To be considered a UK tax resident, one of the criteria is that you would need to spend more than 183 days in the UK in a UK tax year. You can also be considered a UK tax resident if you average 91 days or more in a UK tax year.
I am assuming you will spend 91 days or more in the UK in a tax year and consequently you could now be considered a tax resident of both the UK and France.
The question of where you are resident for tax purposes will be determined by the UK/France Double Tax Treaty, which has tie breaker rules if it is considered you are a tax resident in the UK under UK rules and a French tax resident under French tax rules.
The agreement states: 1) you are resident in the country where you have a permanent home available to you. In your case, this is not conclusive, since you have a property in both countries; 2) if this is not conclusive then where is the centre of your ‘vital interests’? This criterion is rarely conclusive, as there is no obvious definition of your ‘vital interests’. The authorities therefore prefer to move on to the next criterion; 3) if neither of these is conclusive, you are considered resident in the country where you have your ‘habitual abode’. This is taken to mean the country where you spend most of your time; 4) if you spend the same amount of time in each country you are considered to be a tax resident in the country where you are a national.
Thus, from the information you have provided, it would appear that the French authorities would have the right to claim your residence, if you were in France for more than 183 days, due to the provisions of the third criterion.
In the past, the authorities have accepted that UK nationals, in a similar situation to yourself, should retain their UK residence, despite spending 7 months of the year in France, under the provisions of the second criterion. However, there is no guarantee that this would be accepted in your case.
The above I hope will provide background information but it is no substitute to taking professional advice according to your personal circumstances.