The pandemic has meant, for many, being in lockdown in a different jurisdiction to their habitual place of residence. For most it was not a question of choice, but in some cases spending lockdown in France was a preferred option which could potentially lead to becoming inadvertently treated as a French tax resident.
Earlier this year, however, special provisions were put in place to neutralise the effects of lockdown in respect of cross-border workers, tied with the following territories: Germany, Belgium, Switzerland, Luxembourg and Italy.
The French Authorities, who had initially stated that they would make no exceptions in all other cases, recently published a reminder that the time spent in France is a criteria that is only really relevant if the place where an individual’s home is not conclusive. The notion of home can be quite subjective but essentially taken as the place where family members (spouse, partner, children etc) tend to gather. If the French Tax Authorities have enough evidence to argue that someone has transferred their home over to France, this may lead to a worldwide exposure to the tax system. As a reminder, the domestic law criteria of French tax residence are as follows, and only one is sufficient to find someone resident in France for tax purposes:
- If the individual’s home (foyer fiscal) is in France, or if this cannot be ascertained, if France is the place where they spend most of their time, or
- if an individual carries on his/her main professional activity in France, or
- if their centre of economic interest is in France.