The complicated state of French taxation!

by mfefadmin on September 6, 2008

A simple question about whether a couple living apart, but still married, are able to file different tax returns – one in France and one in the Middle East – has opened up the French residency and taxation laws to great scrutiny!

In summary a husband and wife are still together but the lady has decided to retire to France permanently while her husband serves his last few years working in the Middle East, before he also retires to France. While there are many rules and regulations about residency in France and the issue of taxation it really seems as though the French authorities have covered every angle from a husband supporting his wife to the 183 day rule.

There are many comments about how the laws can be interpreted and how they pan out in practice but as long as there is some kind of connection between a husband and wife, the French government will look to tax the ‘family unit’ as one. This would negate somewhat the income tax benefits of working in the Middle East and in theory it could put the move to France in jeopardy in the short term.

The posts then goes on to cover the issue of medical insurance and the fact that non-EU citizens are required to take out private insurance which could cost thousands of pounds a year. Other matters covered include allowances from husband to wife, a pension from another EU member country and the fact that when you are ‘deemed’ to be a resident of France the government will tax all of your worldwide income.

Summary

While the EU has grown dramatically over the past decade and we are all deemed to live under the same rules in Europe, the French taxation system seems to be in a category of its own. Complicated is not the word!

The simple matter of a wife retiring to France, while her husband stays on in the Middle East to work for a few years, has prompted a great number of comments, advice and interesting information from forum members. On the surface the situation seems fairly straight forward in that the French authorities appear to have all of the angles covered!

It seems that a husband living outside of France is deemed to be a resident of the county for taxation purposes no matter where he may be living as long as he is supporting his wife financially, and seen to be funding and preparing a family home in the country. Even if the husband spends less than the 183 days a year limit in France he would still be caught by the fact that he is assisting in the financing of a home in France and supporting his wife – the issue of legal separation is different.

While there are some contradictory comments on the thread, the general trend is very similar and it seems as though anyone looking to retire or even move to France in their younger years will need to take very detailed taxation advice before they do so. Taxation throughout Europe is not straight forward but on the surface at least, French law seems a little more complicated than most!

Read the full discussion on the French taxation system.

{ 1 comment… read it below or add one }

Mark October 11, 2008 at 8:42 pm

I am a retired American with British dual citizenship and am looking to relocate to France for a year. My income is entirely derived from my savings in the US which is obviously taxed there. How do I find out how the tax authorities in France will treat that income. If it is earned before I come to France, is it taxable?

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