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Tax warning for second-home owners with French carte de séjour

British second-home owners in France who have acquired a post-Brexit carte de séjour are being warned of potential tax problems.

Tax warning for second-home owners with French carte de séjour
Photo: Sebastian Bozon/AFP

The post-Brexit carte de séjour was intended for Brits already living in France before the end of 2020 as a relatively easy way to regularise their status. However in the case of some second-home owners, this could lead to trouble with the French tax man.

Who’s affected?

We’re mainly talking second-home owners here, but it covers anyone who spends a significant amount of time in France without actually living here.

Brits who are not full-time residents in France but who visit regularly must now either get a visa or limit their visits to 90 days in every 180. 

EXPLAINED How does the 90-day rule in France work?

The post-Brexit carte de séjour is intended for people who have France as their full-time address. However it seems that some second-home owners – perhaps after receiving misleading advice or through a misunderstanding of the system or even the belief that they have found a loophole – have acquired a post-Brexit residency card.

Those who live full-time in France are perfectly entitled to get a carte de séjour – indeed it is now a legal requirement to have one.

Slightly confusingly, there is also a different card known as a carte de séjour visiteur which is open to second-home owners – find out more about this here.

But the post-Brexit card, sometimes referred to as a WARP (withdrawal agreement residency permit) or referred to by the French authorities as an Article 50 TUE (referring to article 50 of the Traité sur l’Union européen or EU treaty) is only for people who have had their full-time residence in France since at least December 31st 2020.

There’s no official data on this, but various Brexit-focused Facebook groups have reported that some second-home owners have been able to get a post-Brexit card and The Local has also been contacted by people who have either done this or know someone who has.

How has this happened?

When the time came to regularise the situation of the roughly 200,000 Brits living in France before Brexit, France opted for a fast-track system that made the process as straightforward as possible.

Many long-term residents were surprised at how simple the process was and how few supporting documents were needed – but this was a deliberate choice by French authorities, intended both to make the process simple for their own administrators but also to ensure that vulnerable residents – such as pensioners on low incomes – were not incorrectly denied the right to stay in a country that had become home.

Very few residency applications were turned down. Those that were denied were almost all on the grounds of serious criminality.

But while the system came as a great relief to many who had been desperately worried about being able to remain, it did also mean that people who owned property in France – and therefore had documentation like French utility bills and bank accounts – were also able to register for residency.

Is this a problem?

It could eventually become a problem. The post-Brexit carte de séjour, is a residency card so by requesting it the person in question is telling French authorities that they are resident in France – which is why they are no longer constrained by the 90-day rule.

But if that person is in fact a second-home owner, then they are in reality a resident of the UK.

So what could happen?

Ultimately, Brits who own second homes in France and own a carte de séjour are telling different governments different things. They are telling the French that they live in France and the British that they live in the UK. This is likely to cause some problems in the future.

It’s not a question of French authorities breaking down doors and snatching back the carte de séjour, but interactions with officialdom will likely eventually become a problem if you’re telling different stories.

And the first issue could be with the French taxman.

Taxes

All residents in France are legally required to file an annual tax declaration – even if you do not earn any money in France. 

READ ALSO Who has to make a tax declaration in France?

By acquiring the carte de séjour, you have told France that you live here, so by not filing the annual return you are breaking the law.

People who realise they have made a genuine mistake and go to the tax authorities are generally treated pretty leniently, but if you continue to not do the declaration despite declaring yourself as a resident you could be facing fines and a lengthy investigation by the tax office.

When making the tax declaration you also make a sworn declaration that your main address is in France (non-residents who have income in France use a different form). Making a false declaration is a criminal offence with a maximum penalty of one year in prison and a €15,000 fine. This penalty can increase up to three years in jail if the false declaration is made to a public official.

It’s perfectly legal to file tax declarations in both France and the UK – indeed it’s required for many people who have economic activity in both countries – but remember that providing false information on a tax return is a criminal offence in both France and the UK.

Find full details on the French tax declaration HERE.

It’s important to note that being ‘tax resident’ of a country is not the same as having residency for immigration purposes.

Other issues

Time out of France – you can lose your residency status if you spend too much time out of France. This is not generally an issue for full-time residents, but if you don’t really live here then your time in the UK could end up disqualifying you. Different cards have different limits – full details here.

Healthcare –  If you are, according to French authorities, living in France then you should apply for a carte vitale in order to register in the French health system. This requires another sworn declaration that you live in France in a “stable and regular manner” or work in France. 

All in all, if you own property in France and want to spend time here, it’s better to either stick to the 90-day limit, get a visa for longer visits or make the move to France so that you are genuinely resident here.

People concerned about their situation would be advised to seek independent advice.

Member comments

  1. I question if it’s necessary to be “full-time” resident, as stated above, to qualify for a CDS. For the “50-50” people, making the French home the primary residence, getting the CDS and spending 183+ days a year in France seems a valid way to go. But yes, logically it would also mean paying taxes in France instead of the UK.

  2. The article above is helpful but when you write 10 months max time outside France in the link I presume that doesn’t mean 10 months total in 5 years?! It is consecutive? The 183+ rule was what I was aware of but I have not seen this anywhere in black and white and in French relating to withdrawal agreement residency. Can anyone point me in the right direction? Thank you.

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TAX DECLARATION

Late fees, fines and charges: What you risk by missing French tax deadlines

The deadlines for the annual French tax declaration are upon us, but what are the penalties if you either miss the deadline or fail to file your return at all? We take a look at the sanctions.

Late fees, fines and charges: What you risk by missing French tax deadlines

The annual Déclaration des revenues – income tax declaration – involves virtually everyone in France filling out a form giving detailed information on their income to French tax authorities.

If you live in France, it’s almost certain that you will have to complete this – even if you’re a salaried employee and your tax has already been deducted at source, or if all your income comes from outside France (eg a pension received from the UK or USA).

There are only a very few exemptions to the requirement to fill out the tax declaration and they are listed here

Declarations for the 2021 tax year opened in April 2022 and the deadline is either late May or early June, depending on where you live – find the full calendar here

But what happens if you miss the deadline?

For most people there is a staggered system of late charges.

If you are less than 30 days late your overall tax bill can be increased by up to a maximum of 10 percent.

Once you receive a notice of late payment, the overall bill can increase by up to 20 percent, or 40 percent if you have still not filed within 30 days of receiving the later payment notice.

You will also be charged interest on late payments.

What if I don’t pay income tax in France?

If you have no taxable income in France – for example your only income is a pension from another country – then you still have to fill in the declaration.

If you file late the increases cannot be applied, since your tax bill is €0, but you can instead be liable for a late fee of €150.

What if I have exceptional circumstances?

If you know that you will not be able to file in time, you can ask the tax office for a remise gracieuse (remission) in order to avoid late fees and penalties.

You will need to outline your reasons for not being able to file in time and while there isn’t a list of accepted excuses, the reason must be exceptional circumstances such as serious illness or the death or a loved one.

If you have previously missed deadlines, the tax office will be less likely to accept your request.

The request should be made by June 29th either in person at the tax office or through the messaging system in your online tax page.

What if you don’t declare everything?

If you have not declared income which is subsequently discovered by authorities, the increase in your overall tax bill can be up to 80 percent – the maximum penalty is usually reserved for people who have deliberately tried to hide parts of their income.

We have a full guide to what you need to declare HERE, but the basic rule of thumb is that you need to declare everything, even if it is not taxable in France, eg income from a rental property in another country.

France has dual taxation agreements with countries including the UK and USA so if you have already paid tax on income in another country you won’t need to pay more tax in France – but you still need to declare it.

What about foreign bank accounts?

Another item that frequently catches out foreigners in France is overseas bank accounts.

If you have any non-French bank accounts, you need to list them on your tax declaration, even if they are dormant or only have a very small amount of money in them.

This also applies to any foreign investment schemes you have, such as life insurance policies. 

The penalty for not listing accounts is between €1,500 and €10,000 and that applies for each account you fail to declare. 

What if I made a mistake on my declaration?

In 2018 France formally enshrined the ‘right to make mistakes’, giving people the right to go back and correct their declarations without attracting a penalty.

So if you realise you have missed something off or added the wrong info you can either go back into your online declaration and correct it or, if you file on paper, visit your local tax office.

However the ‘right to make a mistake’ does not extend to late filing.

What if I didn’t make a declaration?

The French tax system is often confusing for foreigners, with many people wrongly assuming that if they are not liable for tax in France then they don’t need to fill in the declaration.

For people who persist in not making the declaration, even after the arrival of the notice of default, tax authorities can make an estimate, based on earnings and lifestyle, and present the bill.

However for new arrivals in France it’s likely that they will not be registered with the tax office and will therefore never receive a notice. 

In this instance it’s always better to come clean – if you have made a genuine mistake and you approach the tax office  (rather than waiting for them to watch up with you) you will usually be dealt with quite leniently. 

How can I get help?

If you’re struggling with the system, there are ways to get help.

The tax office has an English language information page here, and a dedicated helpline for internationals on + 33 1 72 95 20 42.

You can also visit your local tax office, every town has one and you can simply turn up without appointment and ask for help (although if the office is small and your query is complicated you may need to make an appointment for the full discussion). Surprising as it may sound, employees at the tax office are generally pretty friendly and helpful and can guide you through the forms you need to fill in.

If your tax affairs are complicated and/or your French is at beginner level, it may be better to hire an accountant to ensure that everything is in order. You can find some tips on getting professional help HERE.

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