Nomad Digital and Tax Resident in France
At the end of our 11-month world tour, we decided to leave our salaried jobs for good to become self-employed and continue to travel while working for a living. The objective is for us to design our ideal lifestyle, to work to live and not to live to work while waiting for retirement. We live in an incredible time where borders almost no longer exist (for lucky people like us who have a French passport), buying a plane ticket is done in 3 clicks, the same goes for renting accommodation on Airbnb, ..
In short, beyond the psychological barrier, being digital nomad has never been so simple and you can work from anywhere in the world without your client knowing you’re at the beach.
Nevertheless, one aspect remains rather complex and poorly documented: that of taxation.
While reducing our tax burden isn’t at all the objective of our lifestyle change, we saw it as an opportunity that we have studied.
As a result, there is a lot of fantasy about the issue, which isn’t at all as simple as some people try to make it seem.
I have therefore consulted my accountant, a tax lawyer and my tax center and I propose to share the lessons learned through a small FAQ.
Disclaimer I am not an expert in the field at all. Each situation is different and deserves to be studied specifically. This article is a simple sharing of experiences and isn’t intended as advice. I strongly encourage you to consult specialists to study your case.
What do you live on?
We created a small SEO & SEA agency. We are both partners in this company created under SAS status. Through this company, we sell consulting services to our clients, most of which are medium and large French companies.
Why a SAS instead of a SARL or the status of auto-entrepreneur?
This isn’t necessarily the purpose of the article but the status of auto-entrepreneur has a constraint in terms of turnover ceiling that we exceed (more info)
The director of a limited liability company is affiliated with the self-employed workers’ plan (RSI). Having had a very bad experience a few years ago, it is for me prohibitive. The RSI is an absolute scandal and the current government has decided to abolish it in the coming months.
The SAS status that suits us perfectly remains by elimination. There are two of us (the minimum number of associates required), that’s perfect!
Where do you live?
Everywhere and nowhere at the same time.
In the lifestyle we have chosen: we change city every month and usually country. We live in seasonal rentals (usually Airbnb, sometimes hotels), accommodations for which there is no lease.
We do not have a principal residence and therefore meet the definition of homeless. Luxury homeless but homeless anyway.
So you don’t pay your taxes in France?
This is the whole purpose of this article 😃.
Indeed, many articles state that it is enough to live less than 183 days in France to no longer be considered as a French tax resident.
Some go even further, explaining that if you do not reside in any country for more than 183 days, you are “tax stateless”. Paradise!
It isn’t at all that simple, the place of residence being only one of the criteria for determining tax residency.
How NOT to be a French tax resident?
In order not to be considered as a French tax resident, you must provide proof of your tax residence in another country.
Usually, you have to live at least 183 days in another country, which is rarely the case for digital nomads.
Even in this case, make sure that there is a tax treaty between France and your country of residence to avoid double taxation. It would be a pity to pay taxes twice..
In which case are you considered as French tax residents?
If you cannot provide proof of tax residence in another country, it is Article 4 B of the French General Tax Code that will define whether you are a French tax resident.
This article defines 3 alternative criteria (i.e. it is sufficient that only one of the criteria is met) for you to be considered as a French tax resident.
A/ “People who have their home or main place of residence in France”
This criterion is quite clear, you fill it automatically as soon as France is the country where you reside the longest.
B/ “Those who exercise a professional activity in France, whether salaried or not, unless they can justify that this activity is exercised on an ancillary basis”
Here again it’s quite clear, if you are an employee or manage a company whose head office is in France and it’s your main activity, you meet this criterion.
C/ “Those who have in France the center of their economic interests.”
The “center of economic interests” isn’t a perfectly defined notion. It takes into account land income, pensions, income from financial investments, agricultural or commercial profits, ..
So… you are a French tax resident?
And yes! We clearly meet the B and C criteria.
In the last 18 months, we’ve only spent two months in France, but even if we hadn’t set foot there, we would still be considered French tax residents.
What types of taxes do you pay?
Our lifestyle has many advantages but none from a taxviewpoint.
Our company pays corporate tax and we pay income tax, as if we hadn’t left France.
Where did you declare your tax address?
This point is a bit of a puzzle. On my last tax return, I put our traveler’s mail address. This address was refused by the tax center because it is a post office box, not my place of residence.
My exchanges with my various interlocutors have turned a little bit to a deaf dialogue:
-“But what is your main address? »
-“I don’t have one”
My return was transferred to the non-resident tax department who again asked me where I lived, …
In the end I agreed with them to put my mother’s address and so my declaration was transferred again .
I just hope it won’t raise my mother’s housing tax… (EDIT: in 2020, the housing tax was almost abolished, so it’s no longer a topic).
Note that if this solution does not suit you, you can declare yourself as homeless at the CCAS (Centre Communal d’Action Sociale) of your town hall. You will then have a postal and fiscal address. I’ve never done this before, feel free to share your experience if you declare yourself as homeless
I hope this article will help you to see a little more clearly, the subject is complex.
In any case, don’t limit yourself to the information available on blogs (even this one!) and consult a specialist if you have any doubts about your situation.
It’s better to lose a few hundred euros in advice than to make choices that you might regret at some point.