In France, fiscal residency and legal residency are two distinctly different concepts for purposes related to taxation and legal rights. Here is an explanation of the key differences:
French Fiscal Residency
Fiscal residency refers to an individual’s tax status in France. It is mainly used for taxation purposes, and it determines which country’s tax laws apply to an individual’s income and assets.
In France, you will be considered a fiscal resident under any one of the following conditions:
- You have your primary residence in France, meaning you spend more than 6 months a year in France or you spend more time in France per year than in any other country.
- You have your main professional activity in France.
- Your spouse and children reside in France.
- The center of your economic interests* is in France.
* (What are “economic interests”? In the determination of French fiscal residency, the “center of economic interests” is a crucial criterion. It considers various ties to France, like investments, economic activities, family connections, and financial relationships. If this “center of economic interests” is deemed to be in France, an individual is considered a fiscal resident and taxed on global income. It is a subjective evaluation based on multiple factors, not just one. Seek advice from tax professionals or French authorities if your fiscal residency isn’t clear-cut based on primary residence or professional activity.)
Once you are considered a fiscal resident in France, you are subject to filing a French tax return on your worldwide income, which includes income earned both within and outside of France. This status also affects various other tax obligations.
French Legal Residency
Legal residency, also known as “domicile” or “residence” for legal purposes, is primarily related to an individual’s legal status and rights within the country. It is important for matters concerning immigration, social security, social services, healthcare, education, and other legal entitlements of French residents.
To be considered legally resident in France, you typically need to have a residence permit, such as a long-stay visa or a residence card (“titre de séjour”), authorizing you to reside in the country.
Summary
It is essential to understand that while there is a significant overlap between fiscal and legal residency, they are very distinct concepts. You can be legally resident in France without being fiscally resident, and vice versa. For instance, some individuals might have a legal right to reside in France but may not meet the criteria for fiscal residency because they do not meet the tax-related criteria listed above.
Determining your fiscal and legal residency status in France is important, as it affects tax obligations, social benefits, and legal rights. It is advisable to consult with tax professionals or legal experts when dealing with these matters, especially if you are a foreign national living in France under complex circumstances.
How we can help:
Your Renestance consultant can connect you with trusted accountants, financial advisors, or immigration lawyers with lots of experience in advising foreigners in France. Recommendations may be made during your project consultation or when unexpected complexities appear, for example during a residency assistance or micro entreprise setup project.
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All articles by: Gabriele
