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✎ EN Tax Advice in France

Discussion in 'France' started by Tax&Residency, Jan 28, 2013.

  1. Tax&Residency

    Tax&Residency Member

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    I moved to Paris less than a year ago and am very confused about the fiscal residency / tax rules that may apply to me. I have consulted with 3 accountants and neither of them know the right answer because in my situation it could be a bit tricky.

    I am an Indian citizen - living in France on a resident permit which is renewable yearly, basically I moved on the basis of being able to prove "independent means of income" and initially moved on a long stay visitor visa which is in the process of being converted to a carte de sejour currently. All my income and economic interests are currently in India and basically I earn my income from rents on properties I own and some interest I receive on bank deposits. I do not run or manage any business from France and all my income / assets in India were settled before I moved to France. ALso I only have a permanent home in India right now and live in temporary rented apartments in Paris however I might be buying a permanent home in France too.

    As per the tax treaty between India and France - if a person has permanent homes in both countries then their fiscal residence will be in the country of their most vital and economic interests....which I think is India as I have no business or income in France currently...but I need someone to confirm this. Is it possible even if I am spending more than 183 days a year in France - I can still remain fiscally resident in India because all my income is passive income and sourced from India only. I am paying all my taxes in India. If I can remain fiscally resident in India then at what point does this change? If I decided to settle down in France forever and just kept my income out of India mainly then can I remain fiscal resident in India forever? What if I invest in some business / properties in France and create a french income too - but my income in India is still much more than France then also am I still fiscal resident in India?

    I hope someone here can answer my questions.

    Thanks a lot.
     
  2. Cyrilexpat

    Cyrilexpat Moderator
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    The standard and main rule is the 183 days. If you spend more than 183 in France, then you are taxable in France and not in India.
    In anycase, in order to get a resident visa you need to show enough resources, in that case apparently coming from property rental business in India.

    However as you pointed out your case is a bit tricky as you are still living in a temporary accormmodation. However as soon as you buy your property in France (along with the 183 rule) then no doubt you will become taxable in France.

    However I am not sure I understand everything here as in another post you are claiming to go to Belgium.
     
  3. Tax&Residency

    Tax&Residency Member

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    What you say about 183 day rule is not correct at all - this is the STANDARD which is further dependent on each country wide tax-treaty that France has signed with other countries. This is why I have been confused and even accountants I paid in France to get advise are confused about it. Please read this part of the Indo-French tax treaty which talks about establishment of fiscal residency
    If you read above even if I have permanent homes in both countries I will be fiscally resident only in the country where my personal and economic relations are closer...the 183 rule is not the only criteria - and this is what I thought also before that staying 183 days or buying a property in france makes me fiscally resident in france but apparently it doesn't and I am not sure anyway - need someone to confirm it.

    Yes I am thinking of moving to Belgium too - and if the tax laws are better there then why not? I heard that "unearned" or "passive" overseas income is not at all taxed in Belgium. However I prefer to stay in France and it all depends on how I am taxed in France. I already have the resident visa for France - it's the long stay visitor visa which I obtained by proving enough personal resources to live on but I had no Idea I would have to deal with taxation issues because even when I applied for the visa the consulate never mentioned anything about being tax resident in France....this visa has no benefits - we have to get private health insurance and pay for everything, there is no right to work and no state benefits at all.
     
  4. Cyrilexpat

    Cyrilexpat Moderator
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    I am not a tax advisor, so I won't argue.
    However I said the 183 is the standard rule, which does not mean that there is no exception (for tax purposesm the first coming to mind is the US tax rule, when all income worldwide must always be declared for US citizens).
    You might see that in order to decide whether you are residing in France, the 183 day rule may apply... because as i read (and as it is commonly considered) the "centre of vital interest" can also be were your family lives, where you live and do things most of the time...etc. Unfortunately the definition is widely at the appreciation of the tax officer, and that might be why tax advisors find it difficult to define.
     
  5. Tax&Residency

    Tax&Residency Member

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    http://www.frenchentree.com/fe-legal/di ... p?id=15003

    please read that article if you can - it explains why the 183 day rule means nothing really - it all depends on the treaty rules between countries. As per Indian tax laws - I am fiscal resident in India even if I live outside India forever - this is where the double tax treaty tie breaker rules come in. Income that arises out of India is taxed in India making me fiscal resident in India so as per the treaty I should not bother with french taxes?? I just need a professional to confirm this now.
     
  6. Cyrilexpat

    Cyrilexpat Moderator
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    That's not me, I'm not a tax professional. ;-)

    In the example (link) you gave, that is what I explained. It is all in the definition of "centre of vital interest". As the children of Mrs Smith are not living in France, one can assume that she does not have her centre of vital interests in France, and that's why she could avoid tax in France. Same thing for Mr Davis when the most important is to define where is the centre of vital interest.
     
  7. Tax&Residency

    Tax&Residency Member

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    Let me ask you another question - suppose I do want to change my fiscal residence to France and pay taxes in France eventually then can you tell me how the following will be taxed -

    1) Property rental income in India.
    2) Interest income in India.
    3) Capital gains in future when they arise in India.

    How does all this work if I am already supposed to pay 33% tax in India on all the income above? I should at least get a tax credit on the taxes I am paying in India so how much more would i need to pay in France exactly? If all my income is from the above sources in India then do I need to pay any social charges in France at all? Also if I moved to Belgium how much would I save in taxes exactly compared to France?

    I don't think I am fiscally resident in France yet - but in 2-3 years it might change because by then I would have spent considerable time in France and built a social life.

    Thanks a lot!!!
     
  8. Cyrilexpat

    Cyrilexpat Moderator
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    As I said, I am absolutely NOT a tax expert, so you need professional advice (you can ask directly particuliers@assistance.impots.gouv.fr ). However, as there is a tax agreement, either you will stop paying tax in India and pay everything in France, or the tax you pay in India will be deducted/tax credit if it applies.
    This is just a guess as again I'm not an expert. In term of social chergesm I assume that you are talking about CSG in France. While you need to pay CSG on property income in France I don't know how it is calculated for income from abroad.

    The best thing is probably to ask directly the Tax centre in France.
     
  9. Tax&Residency

    Tax&Residency Member

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    Thanks yes i will contact the tax office directly think its better.

    .
     
  10. Cyrilexpat

    Cyrilexpat Moderator
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    I've just read that in France, even if you are living in another country (non-resident), you have still to pay tax in France on your income coming from renting properties in France.

    Therefore I assume this is the same for India, in view of the tax agreement: you will carry on paying your tax on renting income in India and you will pay only tac in France on other business and income generated in France.
     
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