Are you running a business between France and the UK? Your tax residence is more than a technicality—it determines how and where your personal income is taxed. A poorly anticipated status can lead to costly consequences. Here’s everything you need to know to avoid dual taxation and make informed choices.
Understanding Tax Residency Criteria in France and the UK
In France: Defined by the French General Tax Code (Article 4 B)
You are considered a French tax resident if you meet any of the following criteria:
- Your main home or primary place of residence is in France (more than 183 days/year).
- Your principal professional activity is carried out in France.
- The center of your economic interests is located in France.
In the UK: The Statutory Residence Test (SRT)
Tax residency is determined by:
- The number of days spent in the UK (typically over 183 days/year).
- Availability of accommodation.
- Personal and professional ties with the UK.
Depending on your circumstances, you may qualify as a tax resident in both countries—a complex situation with major tax implications.
What Does It Mean for Your Taxation?
Worldwide Income Is at Stake
- As a French tax resident: you’re taxed in France on your global income.
- As a UK tax resident: you’re also taxed on worldwide income, with special rules for non-domiciled individuals.
The Risk of Double Taxation
When both tax authorities consider you a resident, they may each claim the right to tax the same income. The France-UK tax treaty provides relief, but only if your status is clearly documented and justified.
Real-Life Impacts for Directors
- Income such as salaries, dividends, or capital gains may be treated differently depending on your country of residence.
- Dual reporting obligations (two tax systems, two administrations).
- Increased risk of audit or reassessment if your status isn’t clearly established.
Strategies to Avoid Dual Tax Residence
1. Perform a Clear Personal and Professional Audit
Ask yourself:
- Where does your family live?
- Where do you primarily work?
- Where are your business interests and investments managed?
2. Track and Manage Your Days Accurately
Keep a detailed calendar of your travel and stays to avoid surpassing residency thresholds in the unintended country.
3. Align Your Centers of Interest
Ideally, concentrate your professional, economic, and personal interests in one country to clarify your tax status.
4. Apply the France-UK Tax Treaty
The treaty outlines tie-breaker rules in case of dual residency:
- Permanent home
- Center of vital interests
- Habitual abode
- Nationality
5. Anticipate Life Changes
Relocation, new executive roles, family changes—all can impact your tax residence. These should be anticipated and planned for.
Relocating to France or the UK: Get Professional Support
As a business lawyer, I support company directors in defining and managing their tax residence strategy. My approach includes:
- Personalized assessment of your personal and professional circumstances
- Anticipation of income tax and wealth planning implications
- Coordination with local experts for compliant and optimized relocation
- Securing the legal and financial stability of your personal and corporate interests
In Summary
Choosing your tax residence between France and the UK is a strategic decision. With a clear plan based on objective criteria, you can:
- Avoid double taxation
- Optimize your tax structure
- Protect your long-term business and personal interests
Need tailored advice? Let’s schedule a consultation to assess your situation.
