Pensioners Tax domicile precision
Pensioners Tax domicile precision.
Pensioners Tax domicile precision.
To escape a too heavy taxation, certain taxpayers, whose many pensioners, will be established abroad. But it is not always obvious to be domiciled out of France. The Council of State has just brought new precise details on the subject.
A pensioner who lives abroad on his pension perceived in France is regarded as domiciled in France. The Council of State has just handed down a judgment in this direction (CE 17-6-2015 n°371412). The concept of tax domicile can sometimes cause various interpretations. What says the legislation? To determine if yes or no your tax domicile is located in France, the administration examines whether you have there your ordinary residence or your occupation or the center of your economic interests. Thus whatever your nationality, you will be regarded as having your tax domicile in France if you fill one of the following criteria (article 4B of the General Tax Code):
. Your home (or the place of the principal stay) is in France: it is the place of the ordinary residence being permanent;
. You work in France. If you practice several activities, it is the main activity which is taken into account. An activity practiced on a purely additional basis is not concerned. The main activity is the one which you devote the most effective time or the one that gives you the essence of your incomes. The center of your economic interests is in France: it is the place where you carried out your principal investments, where you have the head office of your business from where you manage your affairs.
In this ruling, the Council of State considers that if a retirement pension constitutes for his living abroad recipient the only income source, “ this one must be looked like having preserved in France the center of his economic interests and, for this reason, as having fiscally domiciled in France ”, is specified in the fast Leaf Francis Lefebvre of July 23rd, 2015.
What changes the ruling of the Council of State.
Many French pensioners changed main home to profit from more favorable tax conditions. It is for example the case of those who choose Portugal. A circular of August 3rd, 2012, coming into effect on January 1st, 2013, provides that all the European pensioners of the private sector who settle for the first time in Portugal are exonerated from taxes on the pensions perceived in their country of origin. Do they have to worry about their tax statute taking into account the ruling of the Council of State of June 17th, 2015 in connection with a French pensioner living in Cambodia? “ We should not jump to conclusions of this decision, comments on to Me Xavier Rohmer lawyer associated with the August & Debouzy office. It concerns only the residents of countries who did not enter into tax convention with France. In fact, there exists a convention between France and Portugal and thus it is the criteria planned in this treaty are applicable and not those and only those coming from the French internal rights. It is also the case of many other States such as the United Kingdom, Belgium, Luxembourg, Switzerland, the United States, Israel…) ”.
If the decision of the Council of State, which concerned in fact a resident of Cambodia, does not change anything to the statute of French residing in Portugal, the fact remains that the Administration is very attentive to the compliance allowing to be domiciled out of France.