Domicile (A Foot in Both Camps)

by Sue Busby, France Legal (original version published in France magazine)

“I am buying a holiday home in the Lot. I am going to look at schools just outside Paris for my daughter who is 7 years old because I may want to commute from Paris to London, where I work. This means I would have a house just outside Paris, another in London and a holiday home in the Lot. How does that work?”

This raises the whole question of domicile. Under English law, domicile means being linked to the legal system in England. If you are born in England or if your father is English, then you have English domicile. You continue to have English domicile if you stay in this country after the age of 16 or maintain a permanent connection with it such as having a home here.

The word domicile in French refers to residence, rather than domicile and this is what determines your tax liability to the French administration.

Article 4B of the Code General des Impôts states that a person’s fiscal domicile is in France if:

  • their main home (foyer) or main residence is in France
    and/or
  • a professional activity is carried on in France (whether paid or not), unless it can be shown that this activity is ancillary to another (eg carried on in England)
    and/or
  • the centre of their economic interests is in France

An agent of the state who is based in France but works abroad will also be considered fiscally domiciled there if they do not pay income tax in another country.

To have your foyer in France means that your main home is there. Even if you spend most of your time out of France, if your family live in France, or if you spend more time there than in any other country, your foyer is in France.

If you carry on professional activity or work in more than one country, then it will be that activity which brings in the most revenue that counts. Therefore, if you have a holiday home in France but live and work in England, even if you gave English lessons during your holidays in France, you are not likely to be considered as fiscally domiciled there, although you would be liable for tax on the income from the English lessons or for any rental income on your property.

To have the centre of your economic interests in France means that you make your main financial investments there, that your main place of business is there or that you manage your business affairs from France. Therefore, you could be fiscally domiciled in France even if you own no property there at all.

If the French state considers that you are fiscally domiciled in France, then you will be liable for income tax, wealth tax (if applicable) and other taxes in France. Also, you will be subject to French succession law on your assets wherever they are based, with the exception of real property (bricks and mortar) based in other countries. This means that you lose the freedom of testamentary disposition that you would have in England.

Your children are reserved heirs who cannot normally be disinherited and are entitled to a certain portion of your estate. If you wanted to leave half your estate to your favourite charity or to reward the kind aunt that looked after you as a child, this could be difficult.

If you want to live in France, then it seems reasonable that you must accept the French law and way of life. However, some people may want to retain a foot in both camps, such as those who are retired, own property in both countries and want to spend equal time in both. For those people, it might be worth giving some thought to exactly how they are going to split their time and where they make any investments if they want to retain their testamentary freedom and avoid fiscal domicile in France.

© France Legal