Ensuring you are paying tax in right place

Regular readers of this column will know that I often talk about reviewing your tax planning for France, so that you can take advantage of the tax mitigation opportunities available here. 

However, the very first step, before you start re-organising your assets, is to make sure you understand the tax residence rules of both France and the UK (or wherever you have financial interests). You need to be certain which country you should be paying tax in, and on which assets.

This is even more important with today’s greater global tax transparency through the ‘Common Reporting Standard’.

With the next tranche of countries making their first ‘automatic exchange of information’ in September 2018, there are now 100 jurisdictions sharing information on taxpayers around the world.

Paying tax in the wrong country can prove costly, including back taxes, interest, potential fines and even a tax investigation. HM Revenue & Customs (HMRC) has just introduced tougher UK penalties for undeclared offshore income and gains. From October 1 – coinciding with the time HMRC receives its next wave of information from abroad – potential punishments include an unlimited fine and up to six months in prison.

Tax residency is more complex than people realise. It is not just about day counting; we often meet people who think they are resident in one country when they actually meet the tax residency rules of another. ...

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