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.
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)
KPMG LLP (KPMG) is pleased to invite you to a 60-minute webcast on the payroll tax deferral and employee retention credit. Professionals from the Compensation & Benefits group of the Washington National Tax practice as well as the Global Mobility Services and Accounting Methods & Credits Services practices will discuss:
For more information and to register, click here.
To subscribe to GMS Flash Alert, fill out the subscription form.
© 2021 KPMG S.A., société anonyme d'expertise comptable et de commissariat aux comptes, membre français de l’organisation mondiale KPMG constituée de cabinets indépendants affiliés à KPMG International Limited, une société de droit anglais (« private company limited by guarantee »). Tous droits réservés. Le nom et le logo KPMG sont des marques utilisées sous licence par les cabinets indépendants membres de l’organisation mondiale KPMG. Pour en savoir plus sur la structure de l’organisation mondiale KPMG, rendez-vous sur la page https://home.kpmg/governance (en anglais).
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.