My family and I moved to France at the end of 2014 where we planned on opening a family business. A few months later due to things being more expensive then we were told I returned to working abroad in the oil and gas industry. I went to Kurdistan and worked there for approx. a year and a half finishing in September 2015. Before I started working there we went to accountants, the local tax agency and spoke to anyone we could to make sure that we were correct in understanding the Law with regards to people working abroad (also known as Article 4 B of the General Tax Code (copied below).
My wife (since being the only “resident”) then submitted all the Tax returns as the main household Taxable person – using a Chartered French Accountant to fill out the forms, for 2014, 2015, 2016 and using another accountant submitted 2017.
I completed my contract in Kurdistan, where I was a resident- with proof sent to the Tax lady and solicitor, in September 2015 and in May 2016 I returned to UK to work as we had put all our money into renovating a barn into a gym for the local community, by hiring local trades (to keep all our new friends happy). Since then I have lived and worked in the UK.
Just shortly before 2017 ended we received news that we would be audited and to submit all our worldwide bank statements, UK tax forms, etc. which my wife did. We were then informed that this tax lady believed that we owe 238,000 Euro!!!! for taxes not paid between 2014 and 2015, including late penalties etc. My wife had meetings with her to show that due to my employment abroad and (even to this day) never being in France long enough to be able to be classed as a resident, and that the Law article specifically tells us about the Exemptions of which I followed (showing all flight tickets, days of pay, etc) and that since the Tax lady decided 3 years previous that my wife was the taxable person of the household, that this was incorrect.
I have many colleagues who work in oil and gas and live in France (some for well over 20 years) and everyone has told me that as long as you adhere to the rules (183 days, 120 days a year etc) that you are non-resident and therefore do not pay tax.
We hired a solicitor (after paying out over 5,000 Euro) to argue our case but last week we had the final decision from the tax lady who said we still owe this money (she will not back down due to the commission she would get). Our solicitor believes that there is not a lot we can do now as we have informed her of everything.
I have always tried to teach my family that being 100% honest is the only way to have a peaceful life. We have never tried to cheat anything and now I may end up having to pay a tax bill which we and many others believes is incorrect. We have been affected by this and my wife ended up in hospital and is diagnosed with stress, sleepless nights etc mostly due to the fact that after all the precautions we took, now we are in this position. My family and I are so scared and stressed with this that our marriage is unstable, my wife has severe bouts of depression, my son (an ex-rugby player for Scotland) is constantly in tears, and I can only try to bring in enough money to pay what we have to currently. We did finally manage to open a gym in September 2017 but now may end up having to close it down. Please help me with this issue, I have copied the Law extract out below.
Article 4 B of the General Tax Code provides that a person is considered
tax resident in France when it is in one of four cases listed below:
- The person has his home in France,
- The person has his principal place of residence in France,
- The person carries on a business in France
- The person has the centre of its economic interests in France.
If your tax home is located in France, you are liable to tax in France
all of your income.
If you are not tax resident in France, you are subject to limited tax liability,
that is to say, you owe tax on your own income from French sources (eg
income received in the course of paid employment carried on French soil, rental income).
Section 81 IA of the General Tax Code provides for the benefit of employees only
tax residents in France, that the remuneration of the activity abroad is
totally exempt from French tax in two cases:
- When subjected, in the State where the activity is carried to a tax on income
least two-thirds of that in France and bear it as:
- Their activity abroad is longer than 183 days during the twelve months
consecutive, provided that the employee works in the following sectors: construction sites
construction or installation, installation of industrial plants, their startup,
their operations and engineering relating thereto, research or resource extraction
natural, and finally navigating vessels on the register
- Their activity abroad is longer than 120 days in twelve months
consecutive, provided that such activity is in connection with the exploration
L’article 4 B du Code général des impôts précise qu’une personne est considérée comme
résidente fiscale en France lorsqu’elle se trouve dans l’un des quatre cas indiqués ci-après :
- la personne a son foyer en France,
- la personne a son lieu de séjour principal en France,
- la personne exerce une activité professionnelle en France,
- la personne a le centre de ses intérêts économiques en France.
Si votre domicile fiscal est situé en France, vous êtes passible de l’impôt en France sur
l’intégralité de vos revenus.
Si vous êtes non résident fiscal en France, vous êtes soumis à une obligation fiscale limitée,
c’est-à-dire que vous êtes redevable de l’impôt sur vos seuls revenus de source française (ex :
revenus perçus à l’occasion d’activité salariée exercée sur le sol français, revenus locatifs).
L’article 81 A I du Code général des impôts prévoit, au bénéfice des seuls salariés
résidents fiscaux en France, que la rémunération de l’activité exercée à l’étranger est
totalement exonérée de l’impôt français dans deux cas :
- lorsqu’elle est soumise, dans l’Etat où s’exerce l’activité, à un impôt sur le revenu au
moins égal aux deux tiers de celui qu’elle supporterait en France et que :
- soit l’activité à l’étranger a une durée supérieure à 183 jours au cours de douze mois
consécutifs, à condition que le salarié travaille dans les secteurs suivants : chantiers de
construction ou de montage, installation d’ensembles industriels, leur mise en route,
leur exploitation et l’ingénierie y afférente, la recherche ou l’extraction de ressources
naturelles, et enfin la navigation à bord de navires immatriculés au registre
- soit l’activité à l’étranger a une durée supérieure à 120 jours au cours de douze mois
consécutifs, à condition que cette activité soit en rapport avec la prospection