French Tax Residence: Why a Foreign Certificate Is No Longer Enough

I. Why do French courts always start with French law?

A. A treaty can override domestic law, but never provides the basis for tax

French tax courts follow an order of reasoning that taxpayers often overlook. Under Article 55 of the French Constitution, a bilateral double tax treaty can set aside French tax law on a given point. It cannot, however, in itself provide the legal basis for a tax assessment. The court must therefore first determine, under French law alone, whether the tax was validly assessed and on what basis, and only then, in a second step, whether the treaty prevents French law from applying. The Bordeaux Administrative Court of Appeal restated this framework expressly in a ruling of 21 April 2026 concerning a taxpayer who had moved to Hong Kong (CAA Bordeaux, 21 Apr. 2026, No. 24BX01371, para. 2).

A major practical consequence. A taxpayer who builds the entire defence on a foreign residence certificate or on the treaty is fighting on the second front, while the tax authorities attack on the first. If the court finds that the domestic criteria are met, the taxpayer is left with the treaty alone, whose tie-breaker rule, as we will see, often turns against them. The wording of Article 4 B of the French General Tax Code (Code général des impôts, CGI) in force since 16 February 2025 confirms this sequence: persons meeting one of the French domicile criteria cannot be treated as domiciled in France where, under the tax treaties, they are not regarded as French residents (CGI, art. 4 B, 1, last paragraph). The treaty therefore acts as a corrective, once domestic law has produced its effects.

B. Three alternative criteria, any one of which is enough

Article 4 B of the CGI sets out three alternative, not cumulative, criteria. A person is domiciled in France if their home or principal place of stay is there, if they carry on a professional activity there, employed or self-employed, unless they show it is ancillary, or if their centre of economic interests is there (CGI, art. 4 B, 1, a to c). The statute adds a presumption for executives of companies headquartered in France with annual turnover above EUR 250 million: they are deemed to carry on their main professional activity in France unless they prove otherwise. Meeting any one criterion makes the taxpayer domiciled in France and taxable on worldwide income (CGI, art. 4 A).

The home, a question of fact. The statute does not define the home (foyer). In light of the legislative history of the law of 29 December 1976 from which Article 4 B derives, the courts treat it as the place where the taxpayer normally lives and has the centre of their personal life, disregarding temporary stays elsewhere due to professional needs or exceptional circumstances. The principal place of stay can only determine tax domicile if the taxpayer has no home in France (CAA Bordeaux, 21 Apr. 2026, cited above, para. 3). In other words, spending more than six months a year outside France is not enough: if the home remained in France, the principal place of stay test is not even reached.

II. Home and centre of economic interests: lessons from the 2026 rulings

A. Hong Kong: a French home despite a divorce

In the Bordeaux case, a taxpayer claimed to have moved his residence to Hong Kong in 2014 and 2015. The tax authorities assessed him by default to income tax, social contributions and the high-income surcharge. The facts found by the court deserve attention because they defeat a common assumption. The taxpayer was divorced. His house in Bordeaux, which he owned, was occupied by his mother and adult son. His two minor children lived with their mother, also in Bordeaux. In the everyday sense, he was therefore not living with his family in France.

A body of evidence rebuilt through third-party information requests. The court nevertheless held that he had kept the centre of his personal life in France. Using its right to obtain information from third parties, the tax authorities had established that he kept receiving mail at his Bordeaux address, including water, electricity and gas bills showing regular consumption. He held several French insurance contracts, including a car policy at that address, and several French bank accounts, one of which he used regularly. The presence of his minor children in Bordeaux completed the picture. The court found a French home within the meaning of Article 4 B (same ruling, para. 4).

The lesson is twofold. First, the home is not the same as the household: a house kept and occupied by relatives, combined with children living nearby, can be enough. Second, evidence is now largely documentary and comes from third parties: energy suppliers, insurers and banks. A taxpayer who keeps a home in France should know that every utility bill is a potential indicator of that home.

B. Monaco: winning on the centre of economic interests

The Marseille ruling illustrates the opposite outcome: a taxpayer who wins. A French couple resident in Monaco had been assessed to French social levies for 2019 in the amount of EUR 290,212. The Monaco specificity lies in Article 7 of the France-Monaco tax treaty of 18 May 1963: French nationals who have moved their domicile to Monaco are subject to French income tax as if they were resident in France. The court held that this clause cannot by itself justify liability to social contributions, which are distinct from income tax, but that it does not prevent the tax authorities from establishing that these persons are domiciled in France under Article 4 B, and therefore liable to those contributions (CAA Marseille, 16 Apr. 2026, No. 24MA02294, para. 2).

A comparative method that made the difference. The tax authorities relied on a capital gain of EUR 1.59 million reported without any indication of foreign source. The court found that it came from the liquidation surplus of a Luxembourg partnership limited by shares, the vehicle of a real estate project carried out in Luxembourg and managed from Monaco. It held that this surplus did not originate in France, even though the Luxembourg company had no resources of its own and used a mail domiciliation service. It then compared French-source income (EUR 66,000 of pensions and directors' fees) with the surplus, and Monaco assets (EUR 13 million in bank deposits and EUR 10.5 million in real estate) with French assets (about EUR 1.5 million). Finally, it noted that the chart of the group run by the taxpayer did not show a business mainly carried on in France. The couple's assessment was discharged (same ruling, paras. 4 to 7).

The burden of proof, left open. The court ruled "assuming that the burden of proving the absence of a centre of economic interests in France lies with them" (para. 6, our translation). It thus avoided deciding whether the tax authorities or the taxpayer must prove the point. In practice, the lesson is clear: a taxpayer who documents, figures in hand, where their income and assets are located is in a position to win whatever the burden of proof. The trigger of the audit is also worth noting: a single capital gain reported without mention of its foreign source was enough to attract the tax office's attention.

III. A foreign residence certificate is evidence, not proof

A. Treaty residence requires liability to tax "by reason of domicile"

Treaties concluded by France on the OECD Model define a resident of a Contracting State as a person who, under the laws of that State, is liable to tax there by reason of domicile, residence or any other criterion of a similar nature. They exclude persons liable to tax in that State only on income from sources located there. This is the wording of Article 4(1) of the France-Hong Kong agreement of 21 October 2010 and of Article 4(1) of the France-Andorra treaty of 2 April 2013. Liability to tax is therefore at the heart of treaty residence.

Liability to tax is not actual taxation. The French Supreme Administrative Court (Conseil d'État) held, regarding a Dutch company, that whether tax was actually paid in the State of residence was irrelevant for the France-Netherlands treaty, and that a residence certificate issued by the Dutch tax administration was sufficient, in that case, to establish residence (CE, 30 Sept. 2025, No. 490793, Sté Lolie). This solution must not be misread. It removes the need to prove that tax was actually paid; it does not remove the need to show that the person is liable, by reason of domicile, to tax in the State of residence. A certificate is effective where it attests such liability; it carries no weight where it rests only on an administrative residence permit.

The Andorran case, clarified by the protocol. The France-Andorra treaty illustrates this distinction perfectly. Its protocol specifies that, in the case of Andorra, the term "resident of a Contracting State" includes any individual who stays in Andorra for more than 183 days in a calendar year, as well as any individual whose centre of economic interests or main professional activity is in Andorra. It expressly excludes individuals presumed to be Andorran tax residents solely by reason of Andorran nationality or of a residence permit granted by the Andorran authorities (Protocol to the France-Andorra treaty, point 2). A certificate issued on the basis of a mere residence permit, without more than 183 days of actual presence or a centre of economic interests in Andorra, does not therefore confer treaty residence. The treaty text is sufficient here: residence follows from real presence and interests in Andorra, not from an administrative document.

B. The tie-breaker: the permanent home decides first

Where a person is resident in both States under their respective laws, the treaty sets out a cascade of tie-breaker rules. The first is the permanent home available. If there is a permanent home in both States, the next tests are the centre of vital interests, then the habitual abode and finally nationality. Both the France-Hong Kong and France-Andorra treaties follow this sequence (France-Hong Kong agreement, 21 Oct. 2010, art. 4(2); France-Andorra treaty, 2 Apr. 2013, art. 4(2)).

Tax paid abroad is then irrelevant. In the Hong Kong case, the taxpayer argued, in addition, that he had paid tax in Hong Kong. The court did not dwell on this. It held that, given the presence in France of his children and of a house he owned, he had a permanent home in France, which was enough to treat him as a French resident under the treaty (CAA Bordeaux, 21 Apr. 2026, cited above, para. 6). Paying tax in the other State may help establish dual residence; it does not win the tie-breaker if the permanent home remained in France. Keeping a family house in France, even one occupied by relatives, means keeping the first criterion of the cascade.

C. A comparative view: nationality clauses and host State criteria

Two of the destinations studied include a feature that is rare in the French treaty network: a nationality clause. In Monaco, Article 7 of the 1963 treaty keeps French nationals who have moved there within French income tax, as if they were resident in France; the Marseille ruling shows that this clause does not extend to social levies. In Andorra, Article 25(1)(d) of the 2013 treaty provides that France may tax French nationals resident in Andorra as if the treaty did not exist, its implementation being subject to French legislation allowing it and to an agreement between the competent authorities. This clause, debated during ratification, is a reservation whose potential reach any French national considering Andorra should assess.

Host State law as evidence in its own right. The comparison also shows that tax residence abroad depends on the host State's own criteria. The France-Andorra protocol relies on more than 183 days of presence, the centre of economic interests and the main professional activity. The France-Hong Kong agreement excludes persons liable to tax only on local-source income, which calls for careful documentation of the basis of liability in Hong Kong. In each case, the taxpayer must be able to show, with supporting evidence, that they meet the host State's residence criteria, not merely that they hold a residence permit there.

IV. Planning a defensible departure

A. Before leaving: move the home and the centre of economic interests

A defensible departure is prepared in advance, criterion by criterion. The home first: keeping a residence in France, especially one occupied by a spouse, children or other relatives, is the heaviest indicator. Where the family stays in France, the departure of the taxpayer alone is, save very exceptional circumstances, bound to fail. Professional activity next: management roles in a French company, or a self-employed practice continued in France, should either be transferred or reduced to a demonstrably ancillary level, bearing in mind the presumption applying to executives of large companies. Finally, the centre of economic interests: the location of assets, income and controlled companies should be organised so that a quantified comparison, like the one carried out by the Marseille court, favours the host State.

Anticipating the consequences of departure. Moving one's tax domicile out of France is not tax neutral. Above certain thresholds, it may trigger tax on unrealised gains on shareholdings, change the treatment of French-source income and create new reporting obligations. These effects should be built into the departure timetable rather than discovered afterwards.

B. After leaving: build the evidence, year after year

Evidence of residence abroad is not assembled after the fact, when the audit starts. It is built every year. The taxpayer should keep proof of liability to tax in the host State (returns filed, assessment notices, certificates), not merely the residence certificate. They should be able to evidence their days of presence, especially where the treaty, like the France-Andorra protocol, uses a 183-day threshold. Finally, they should ensure their French filings are consistent: reporting French-source income as a non-resident, expressly stating the foreign source of income that qualifies as such, and avoiding any French address.

Thinking like the tax inspector. The 2026 rulings show that the tax authorities build their cases from third-party information: utility bills, insurance contracts, bank movements and the tax returns themselves. Taxpayers should therefore review their situation through the eyes of the tax authorities, listing every link that still ties them to France. A subscription left running, an insurance policy not transferred or a misreported capital gain is enough to open an audit whose outcome will then depend on the strength of the whole file.

C. The firm's position

We are convinced that tax residence should be handled as an evidentiary file, not as an administrative formality. A foreign residence certificate is useful, but it only protects if it reflects real liability to tax, consistent with the host State's criteria and the treaty. The battle is won first under domestic law, by showing that neither the home, nor professional activity, nor the centre of economic interests remained in France; the treaty only comes in afterwards, and its tie-breaker favours the State where the taxpayer keeps a permanent home.

For any departure, we therefore recommend a residence audit carried out before the date of transfer, followed by an annual evidence file. For taxpayers who have already left, a retrospective review makes it possible to identify weak points before an audit reveals them and, where appropriate, to regularise the position on the best terms.