The determination of domicile

To avoid double taxation of income, tax treaties could be concluded between France and various countries. If a tax treaty exists, it will prevail on the principle of law inte rn French.

The list of tax treaties and their content is on http://www.impots.gouv.fr

The purpose of such an agreement, which sets its own criteria definition of domicile is assigned to one of the two countries on the person's home, so the extent of its tax liability. Thus, according to the country you are an expatriate, the rules of elimination of double taxation they vary with the tax agreement has been reached so you do not pay tax twice on the same income or even good.

To determine the tax residence, the Convention will make a certain number of criteria. Just one of these successive criteria is met for the fiscal domicile is fixed. So he should watch the second criterion only if the first is not met, and so s ollowing.

Be tax resident in a foreign country is not enough to take advantage of the tax treaty with that country. Indeed, to qualify for some of these benefits, you will need to use formula ires established by the two Contracting States (Form RF). You can find these forms at the tax non-residents.

Local tax non-residents
10, rue du Centre - 93465 Noisy The Great
Tel. : 01.57.33.83.00
Email: nonresidents@dgi.finances.gouv.fr
Internet: http://www.impots.gouv.fr - R ubrique Individuals / Your concerns.

Your tax home is now determined, you will be subject to:

* A limited duty (tax on your income only source françai is) if you are a non-resident under French tax law.
* An extended obligation (tax on all your income from French sources or foreign) if you are French resident.

The determining the method of taxation

The tax agreement will specify the locations and method of taxation. Four situations are then possible (see your agreement for determining the applicable method).
Exclusive taxation abroad The tax treaty may provide that the imposition of the property or income that will occur in the country of residence.

In some cases it will be applied the rate rule effective.

Foreign taxation, withholding tax in France

The withholding tax is an advance on tax levied on French source income paid to persons resident abroad for tax purposes.

For example, when there is a tax treaty, paying wages a person's occupation in France and pensions of any kind from French sources are subject to a successful e to the source, the rates vary between 0%, 12% and 20% based on a scale of three slices.

Caution: If you are in the last installment, you will also need to file a declaration with are non-residents.

Concerning dividends, they are subject to withholding tax in principle, fixed at 25%, which most often reduced to 15% under the tax treaty.

This head withholding tax on dividends, is discharged from the income tax, the revenues collected are then excluded from your taxable amount subject to tax schedule on income.

Example: Mons ur Dupont Italian tax resident, received dividends of EUR 10 000 per year from a French source (paid by a company which is headquartered in France). Article 10 of the Convention provides that dividends are taxed in the country r esident of Mr. Smith with a withholding tax in France to 15% on the amount of dividends received.

Foreign taxation and France: the rule of the effective rate

If you are exempt from tax in France, at the rate of c ome foreign source income, you will be subject to your other taxable income in France at the effective rate rule.

By this method, the amount of income taxed in another state is not included in the ASSI ette of the French tax but is taken into account for determining the tax rate.

Example: Mr. Smith is a French tax resident and receives a state pension and a Belgian pension withdrawal e French private. The Belgian state makes a withholding tax on the pension will not be taxable in France.
To avoid double taxation, the agreement provides for the application of the rule of the effective rate for calculating the im posit French.
So we will take into account the Belgian pension and private pension for the calculation of the marginal tax rate in France. The base will be composed solely of private pension.

Tax excluded sive in France

International Tax Convention may provide that the property or income shall be taxable only in France.

Real estate, for example, are taxed in the country of location of the object. Thus, for all goods im movable property in France, the taxation of income shall be only in France.

In all cases we recommend that you refer you to a tax advisor and / or a lawyer specializing in international taxation in order to etermine precisely what tax will be applicable.


[20-01-2011]