Implications of UK Business and Spending Time in France

[Allie Gee]

Hi,

I have just joined your forum this afternoon. We have a second home in the Charente which we have owned for 2 years but we have only spent the odd week here until now. We came over a week ago and intend to spend 3 months, maybe longer here - its a 'suck it and see' kind of thing. We have a business in the UK which we have Managers running for us, so all our income is generated in England.
I have 2 main questions:
Is there a time limit to how long we can stay in France and do we have to complete any paperwork?
How does having our business and income in England impact us in France (and England) in terms of tax and healthcare and again what paperwork should we be looking to complete?

Any advice gratefully received,

Allison

[Bevdeforges]

Hi and welcome to the forum.

To try and answer your questions - first of all, there is no particular limit to your stay in France and no paperwork to fill out (at least not to "register" yourselves in France) as long as you are UK nationals. (Or nationals of the EU.) That's the easy one.

Now, your getting your income from the UK may make things a little complicated on that front. As far as France is concerned, once you set up housekeeping with the intent to "reside" here, you fall under their jurisdiction for taxes. Practically speaking, if you spend more than 183 days in a calendar year in France, there is the presumption that you are "resident" here.

As far as you income from your business is concerned, it may depend exactly what your role is in the business and in what form you draw out your income (i.e. salary, dividends, interest, etc.) and how the UK taxes that income - and whether or not the UK takes anything in social insurances from your income. If you continue to pay your social insurances through the UK, you'll need the appropriate forms to transfer your health care to the French system.

Once you are resident in France, you will be expected to file a tax declaration, including all your worldwide income. There is a space on the form for telling them what income you are paying taxes on in the UK, and then they will make the appropriate adjustment so that you aren't being taxed twice on the same income.
Cheers,
Bev

[Allie Gee]

Originally Posted by Bevdeforges

Hi and welcome to the forum.

To try and answer your questions - first of all, there is no particular limit to your stay in France and no paperwork to fill out (at least not to "register" yourselves in France) as long as you are UK nationals. (Or nationals of the EU.) That's the easy one.

Now, your getting your income from the UK may make things a little complicated on that front. As far as France is concerned, once you set up housekeeping with the intent to "reside" here, you fall under their jurisdiction for taxes. Practically speaking, if you spend more than 183 days in a calendar year in France, there is the presumption that you are "resident" here.

As far as you income from your business is concerned, it may depend exactly what your role is in the business and in what form you draw out your income (i.e. salary, dividends, interest, etc.) and how the UK taxes that income - and whether or not the UK takes anything in social insurances from your income. If you continue to pay your social insurances through the UK, you'll need the appropriate forms to transfer your health care to the French system.

Once you are resident in France, you will be expected to file a tax declaration, including all your worldwide income. There is a space on the form for telling them what income you are paying taxes on in the UK, and then they will make the appropriate adjustment so that you aren't being taxed twice on the same income.
Cheers,
Bev

Hi Bev,

Thanks for your reply, that is really helpful.

So, if we go back to the UK before the 183 days are up we will not be classed as resident so the tax complication etc is avoided is that correct? How soon after the 183 days can we return to France?

For your info both myself and my other half are Company Directors of a Limited Company, small salary supplemented by dividends, all taxes, NI etc still currently being paid in the UK (but we have only been here a week - I am just planning forward and trying to get all the knowledge now).

Thanks again for your advice,

Allison

[frogblogger]

If your six months less one day start on January 1st, then once the 182 days are up then you cannot return before January 1st of the following year.

As Bev says the French tax year runs Jan 1st to Dec 31st.

However if you arrive in the middle of the year, say July, and the 182 days run through to Dec 31st, then you can start the next 182 days straight away from Jan 1st.

Plus it can be cumulative - the 182 days can be taken over several stays.

[Allie Gee]

Originally Posted by frogblogger

If your six months less one day start on January 1st, then once the 182 days are up then you cannot return before January 1st of the following year.

As Bev says the French tax year runs Jan 1st to Dec 31st.

However if you arrive in the middle of the year, say July, and the 182 days run through to Dec 31st, then you can start the next 182 days straight away from Jan 1st.

Plus it can be cumulative - the 182 days can be taken over several stays.

Sorry I am getting a bit confused here - I don't know if I am missing a post here or something, but I didn't see anything about Jan 1st. We arrived in France on 26th April 2009 so please can you advise how this affects us.

Many Thanks,

Allison

[Bevdeforges]

The tax year in the UK runs from April 5th to April 4th (I think it is). In France, the tax year runs from Jan. 1 to Dec. 31st - and thus your stay in France is based on how many days in the tax (i.e. calendar) year you are present.

But be careful because the 183 days is only a rule of thumb. There are other factors that can determine where the French will consider you "resident." Basically, your residence is determined by your "primary center of interest." And that can be determined any number of ways - including where you spend the most time, where you have your family or personal affairs organized, where you receive your mail, have your bank accounts and the bulk of your medical treatment.
Cheers,
Bev

[frogblogger]

Originally Posted by Allie Gee

We arrived in France on 26th April 2009 so please can you advise how this affects us.

Many Thanks,

Allison

To add to Bev's explanation, to avoid French residency in your case you will need to leave sometime around October 20th this year (1)... but you can return to France on Jan 1st and start the next 182 day period, as 2010 is a new French tax year.

(1) I'm assuming that you haven't been out of France from April 26th to approx 20th October, because if you have then any period you spend outside France is not counted for tax purposes, and you can extend your stay by this/these period(s).

But as Bev says the laws are complex (family etc), so the above is only an indication, best to get advice from an expert always...

[ken9ccu]

Hi

Now I'm early retired we've been spending a bit less than half a year in rural France for quite a few years - usually we arrive in May/June and leave for the UK in September/October but always less than 183 days. Our main 'interests' are in the UK - residence, working after retirement, investments, family connections, most medical help, postal address and so on. We have a bank account in France but its marked with our UK address as are our French utility bills. As UK citizens and thus EU citizens there's nowadays no requirement to obtain a carte de sejour. The advice in the other replies is generally right about the day limit and that it's a bit more complicated that simply the day limit but it's never been a problem for us. You may need expert advice depending on your own circumstances.

I've found the main problem (apart from prices increasing and the Euro/£ rate!) is long stay medical insurance cover as one gets older beyond what you get with the NHS-equivalent card. Our car insurance, UK house insurance and MOT date all fall in the UK part of the year so that it's easy to manage those things. We pay extra UK house insurance for the house not being occupied (and reclaim any excess on return to the UK).

We know a few people who do the same. Most UK people we've met in France though are fully resident in France (often making visits back to the UK) and their arrangements differ of course. Some seem to return to the UK after a while (death of a partner, getting bored in rural areas, job and money problems, can't live on the pension etc) and others stay.

We thought about becoming resident but we think what we're doing is about right for us - we get a blend of relaxation and stimulation from France and the UK and we go to other countries too - in fact that was one point we decided on when we first bought the French house: that we would never regard it as our only holiday destination.

Hope this helps,

ken9ccu

[parsnips]

Hi,
Contrary to popular belief there is no "183 day rule", although this could in very rare circumstances be used as a rule of thumb.
According to the Treaty, tax residence (ie. in UK or France )is determined ,where necessary, by the relevant authorities by considering four criteria in a descending order of importance
1. Where is the principal residence?- for many people this is straightforward -they only have one permanent home available.
2. If they have a permanent home available in both countries (as has the OP ,I believe), then where do they have their centre of economic interest and professional activity?- in this case the UK.
3. Only if it is impossible to determine the centre of economic interest-where is their habitual abode?( This is where the famous 183 days may come in)
4. If they have a habitual abode in both countries -or neither- then their nationality decides.
5. If it is still impossible to decide then the tax authorities decide after mutual consultation.
From the above it would appear that the OP ,so long as he maintains a UK permanent abode and the UK is his centre of economic interest, remains UK tax resident, and can come and go as he pleases. If at some time the french authorities approach him (fairly unlikely) he can use the above arguments to prove his residence status.

[ken9ccu]

Parsnip's comment is very helpful. The treaty is of course the last word and this explains where the 183 day point may have arisen.

ken9ccu