Residency has always been an area of confusion, however, with Brexit, this has become more convoluted, due to EU rules, local laws of each country and Schengen rules. Of course, UK nationals, as EU citizens, never had to worry about the right to stay more than a few weeks, as we simply had the right to do so. For British nationals, the loss of EU citizenship, means that life is now more complicated.
Firstly, we need to know the difference between the right to be somewhere i.e. temporarily reside there, and becoming fiscally resident, so changing where you declare your global income, gains and assets for tax purposes.
I will start with what makes us French resident, since this, by itself, remains an area of considerable confusion. You only have to take a quick look at the expat online forums to see pages of heated debate on the subject.
It is important to note that the basis for defining residency is not the same in France as it is in the UK, thus the number of days spent in a country is not the only consideration. In fact, the main French laws defining residency do not even discuss the number of days spent in this country.
The residency rules are clarified both in Article 4B of the French tax code and Article 3 of the UK / France Double Tax Treaty. The first of the definitions highlighted is the “foyer ou le lieu de séjour principal”, thus where your main residence or home is situated.
The Double Tax Treaty states “He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him”. This may be accommodation that you own or is (officially) rented. What is essential is that it is available for your use and under your control, so if the property is owned by you, but is rented out, this is not deemed to be a home. Also, you may not use the address of siblings, parents, friends etc. Therefore, if your only property is in France, you are considered French resident from the day you disposed of your other property.
If you can demonstrate that a property outside France is used by you as your permanent home; (such as the bills are in your name at that address) then you can argue your residency either way on this rule.
The next main rule is where you spend ‘most of your time’. Many ancillary laws (both French and in the tax treaty) refer to 183 days, however it is important to understand that:
If you spend less than this time in France, but it is where you have spent ‘most’ of your time, you will still be considered resident.
Once you have spent 183 days in France, you are not deemed resident from the 183rd day, but from the day of arrival.
There are other less significant rules applicable where the position is less clear, down to the nationality of the individual, however, most people will fall into the above, either the main home test or the time spent test.
Gaining residency of France, does not confer the right to residence elsewhere in the EU or Schengen, just that one country.
With that out of the way, next we need to consider the right to stay.
For countries in the Schengen area, such as France, the rules are clear, thus you may spend up to 90 days in any 180-day period. These rules have nothing at all to do with tax or fiscal residency; it is merely how long you are permitted to be there. It does not mean that you may not stay longer, however, to do so you will need a visa or permit .
We come across many people who would avoid becoming fiscal residents of France, by merely popping over the boarder to Spain, Italy or Portugal, even having holiday homes there. This does not work anymore because these counties are also in Schengen, so staying there continues to use up your available days. You might think that there is always Switzerland; definitely not in the EU.
Regardless of being non-EU members, Switzerland is in Schengen, so staying there is not a solution to stopping the clock!
Schengen is the largest visa free zone in the world, covering 26 countries, so aside from the UK, you need to go as far as Croatia to escape; which ends the quick pop over the border.
In conclusion, if you thought navigating French fiscal residency was complicated, being free to move around just got a great deal harder.
As said earlier, those who wish to stay longer might try gaining a long-term residency permit, known as a “visa de long séjour valant titre de séjour” or VLS-TS. This is valid for between 4 and 12 months, so, at best, needs to be renewed every year. Happily, this can be applied for (and renewed) online at https://administration-etrangers-en-france.interieur.gouv.fr. I will add that the right to these is not normally automatic apart from exceptional circumstances.
I would argue that, for people avoiding French residency, if you really want to spend time in France, why not simply take up residence? This would ultimately give you a ten-year residency permit, allowing you to move freely between the UK and France, whilst being mindful of your 90 days maximum in the rest of Schengen, simplifying life significantly. Many avoid it because they believe it will be complicated or that the consequences of moving would be prohibitive. Maybe they even believe that, post Brexit, they cannot (this is simply not true). Often, these conclusions are drawn with neither proper data or analysis.
This is why it is best to take professional advice and find out all your options, including taking up residency of France. You might find, as do many people we speak to, that you are far better off than you imagined.
This article was first published in the Connexion in January 2021