Do you know which country you are resident in?

By Spectrum IFA
This article is published on: 25th August 2014

In my travels I meet lots of people who claim not to know where they live.  This isn’t an age or an alcohol problem, and to be fair it would be better to describe them as not knowing where they reside, or are resident.  In many cases a few minutes explanation, or a paragraph in a report, does the trick.  There are a number of die-hards however who really don’t want to recognise the obvious.  And then sometimes it isn’t really all that obvious at all.

The problem is that the central argument is so convoluted that it is far too long to cover completely in this article, and of course we also need to look at what the French regard as the deciding factors in French residence.  So what I’m going to do here is dip into both pools and see if I can point you in the right direction, with the clear risk that I might confuse you completely.

The French side of the equation is quite easy to understand (if you want to, that is).
You are resident in France if:
a) Your home is in France, which includes where your main home is or where your family lives.
b) Your principal place of residence is in France. This applies if you spend more than 183 days in France per year.  Even if you spend less than 183 days per annum in France but have a permanent home available in France, you’re ‘in’.
c) Your business activities in France, whether salaried or otherwise, are managed from France unless you can show that this business activity is incidental to your main employment.
d) The centre of your economic interests is France, meaning that you have your main investments in France or they are managed from France or that you derive the majority of your income from French sources.

So many times I hear ‘but I have a UK address and no-one can tell how much time I spend in France’.  A dead give-away in anyone’s language that.  It’s nearly subtle, but really it’s the same as the difference between tax avoidance and tax evasion, and it’s the wrong side of the coin.  In the modern days of passport scanning it is also plainly incorrect.  If you really want to ignore all of the points above and claim to be non French resident, you must really be claiming to be UK resident, mustn’t you?  So let’s look at how HMR&C have ‘clarified’ UK residence.  Please note we are ignoring UK domicile here, That’s another can of worms altogether.

Here’s what it takes to be a guaranteed UK resident. 
You need any of these factors:
a)  You spend 183 days or more in the UK.
b)  You have only one home and that is in the UK (or more than one home and all are in the UK).
c)  You work full time in the UK, ie, a continuous period of 9 months and at least 75% of your duties are carried out in the UK.

Now for most of the people I meet this presents a bit of a problem.  Ever helpful though, HMR&C do recognise that there can be people who qualify for UK residence that can’t claim any of the above, so to help them they have come up with a list of ‘connecting factors’.  I call them ‘back door passes’.

Connecting factors

• If you have family in the UK – spouse/civil partner and/or minor children.
• Whether there is available accommodation in the UK.
• Substantive employment in the UK (40 or more days).
• UK presence in previous years – if you have been UK resident for more than 90 days in either of the previous two UK tax years.
• More time spent in the UK in the tax year than any other single country.

Pay attention here, – it’s getting complicated!  To be counted as UK resident, and therefore not French resident, you need to combine days spent in the UK with the connecting factors as shown below:

There, easy isn’t it?  Alternatively of course, one could take one’s head out of the sand and go legal as a French resident…

If you have any questions on this, or any other subject, please don’t hesitate to contact me.

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