The French tax authorities have clarified that, in their view, a temporary stay in France, due to confinement or travel restrictions related to the coronavirus is not likely to result in an individual acquiring a tax residence in France under either French domestic rules or treaty rules.
The French tax authorities have recently published guidance1 on their website as to whether an individual’s presence in France due to COVID-19-related travel restrictions and confinement impacts that person’s residency status in France.
The French tax authorities’ guidance provides welcome relief in cases where individuals have had to spend additional time in France due to the COVID-19 outbreak and there is concern about a change in their residency status.
Article 4 B-1 of the General Tax Code provides that individuals are domiciled in France if they:
This, of course, is subject to the provisions of the tax treaties that France has signed with many countries.
The French authorities have clarified that, in their view, a temporary stay in France, due to confinement or travel restrictions is not likely to result in an individual acquiring a tax residence in France under either French domestic rules or treaty rules.
If a person is temporarily prevented from leaving France due to COVID-19, i.e., a case of force majeure, it is not likely, for this reason alone, that the authorities will consider that that person has established a home in France or has his or her centre of vital interests in France. This is in line with the OECD’s call for an exceptional level of coordination and co-operation between countries, notably on tax issues, to mitigate the potentially significant compliance and administrative costs for employees and employers.2
This guidance will be welcomed by employees (and their employers) who are concerned about the impact on their French residency position of having to spend additional time in France due to COVID-19. Each person’s situation should be carefully analysed to establish whether indeed the reason for the (over)stay in France was solely COVID-19-related.
1 See (in French) the following webpage “Résidence fiscale et confinement crise Covid” on the www.impots.gouv.fr website.
2 See “OECD Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 Crisis” (3 April 2020), published online by the OECD.
The information contained in this newsletter was submitted by the KPMG International member firm in France.
30 April 2020, 2:00 PM (EDT, GMT -5)
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