The impact of COVID-19 on tax residence

As a result of the many uncertainties raised by COVID-19, the Non-Resident Tax Department has just specified that a temporary stay under confinement in France, or restriction of movement, does not allow the residence criteria to be met within the scope of Article 4 B of the General Tax Code.

Article 4 B of the CGI lists the criteria of fiscal residence which are as follows:

– The individual has a home or principal place of residence in France,

– The individual has carried out professional activity in France, whether paid or not, unless it is of an optional nature,

– The centre of the individual’s economic activities is based in France.

Furthermore, in a recent decision of the Council of State (Larcher decision of 3 November 1995, No. 126513), it was specified that the home is understood to mean the place where the taxpayer normally lives and where the centre of their family affairs is based, without taking into account temporary stays elsewhere due to profession or exceptional circumstances.

For example, the Conseil d’Etat considered that an applicant had kept his home in New Caledonia despite his stays in mainland France due to exceptional circumstances as his wife’s mother was ill. Thus, as long as the applicant’s home could be determined, the criterion of the principal place of residence was irrelevant to the determination of residence for tax purposes.

Within the scope of international conventions, a person who has had to reside in France on a temporary basis cannot, for this reason alone, be considered as having established their permanent home or as having their principal economic interests based there.

 

For more information on this rule, please email our team [email protected]