Did the pandemic make you come back to France in 2020 while you were working or spending your retirement abroad? A change that is not without consequences for your taxation. Here are some tips depending on your situation.
The pandemic has changed the situation…. even for your tax return. If you were living abroad for your job or to retire there, in 2020 you may have decided to return to France. A choice that is not without consequences for your tax system.
Thus, it is possible that in 2020 you will be considered a French tax resident. Result: if your income can still be taxed in the country in which you worked, French tax law requires you to declare all your income, French and foreign, and it is indeed to French taxation that your capital gains will be subject to transfers of shares, inheritances or donations.
You still need to know under what conditions you are considered a French tax resident. Attention, puzzle in perspective….
You returned to France in your residence
You usually work abroad and, during the first confinement, you returned to France in a residence that you own. The fact of returning to France more or less permanently can change your tax residence.
“However, there are recommendations issued by Bercy to say that if you are in France because of the crisis and temporarily, in this case it is considered that this presence in France does not necessarily entail taking up residence in France. France ”, warns Xavier Rollet, associate lawyer at Racine law firm.
In this situation, you must then prove that your installation in France is indeed temporary, for example by indicating that you have returned several times to the country in which you usually work. We then speak of clues.
“In 2020, I think the tax administration will need to have a flexible approach to these criteria,” says the lawyer. And thus limit the cases of questioning of residence abroad. " Even more so if you continue to be taxed in your former country of residence. Double taxation is not possible, thanks to the game of tax treaties.
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You were hired in 2020 by a foreign company but you have not left France
Despite finding a job with a company overseas, you haven't packed your bags. You stayed in France where you telecommute. Under these conditions, with regard to the tax authorities, what is your situation?
"If you work in France, even for a foreign company that does not have a subsidiary in France, you will generate tax in France", analyzes Xavier Rollet.
There will then be chain repercussions. By being considered as resident in France, you should have been deducted at source. However, since this was not the case, you will have to pay your taxes in full at once.
You have returned to France but do not have your own residence there
Take the example of a French employee who went to work in London. He returned to France at the first confinement and was hosted by his family. However, he will not have his residence in France.
“He could be considered a French resident, but in reality in 2020, there is room for maneuver and flexibility to assess tax residency, it is still quite possible that he will remain an English resident, Judge Xavier Rollet. But if in 2021 he continues to live in France, then it is highly likely that he will become a French resident. It’s in time that we will appreciate the situation. "
But to estimate whether or not you are a French resident, different criteria are taken into account. For example, a single person who worked abroad and who returned to his parents may be considered as a non-resident in 2020. But if it is a family that has educated their children in France, then, even if she lives in a home that has been loaned to her, she could, from 2020, be considered a French resident in the eyes of the tax authorities.
“Each time, you have to look at the personal situation to know if you have settled in France in a long-lasting and lasting manner. The family aspect is very important ”, analyzes Xavier Rollet.
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You are retired living abroad and returned to France
For this situation, we will be using the same kind of criteria as for assets. “The difference is that he does not have a professional activity, which is an element of attachment to a country,” notes the lawyer. And the source of income, the pension, comes from France. In this case, it is necessary to see if you have been obliged to return for health reasons and that, since, you have remained stuck in France.
“If you cannot return to the country in which you lived because you are refused entry because of the pandemic, this is a reason that can be put forward to explain that you never wanted to stay in France but that you are technically unable to return to the country in which you usually live ”, advises the expert. You must therefore prove that you cannot return in order not to become a French tax resident. So, for your 2020 tax return, you can continue to remain a non-resident.
Source: www.capital.fr
