Moving from France to the UK in September - taxes and tax breaks given the different years?

Question

This is a specialisation of the How to handle moving between countries with different tax year dates question, for what seems like one of the specific edge cases from it.

France uses calendar years for tax years, while the UK for complicated historical reasons uses 6th April - 5th April for personal tax years. As I understand it, from the UK-France tax treaty, if you spend more than half of a year living and working in one of the two countries, then you'll count as a tax resident in that country but not the other.

What happens if you move from France to England in September though? For the sake of argument, let's say you move + change jobs on Saturday 6th September 2014. By this point, you'll have spent more than half of the French tax year (2014) in France. However, you'll also then spend more than half of the UK tax year (2014-2015) in the UK.

In such a case, what things do you need to pay tax on in France, what things do you need to pay tax on in the UK, and what things at the higher rate of the two? Secondly, what French tax-resident savings can you take advantage of / not, and what UK tax-resident savings can you / can't you take advantage of?

Answer 1

Since I am far from being a specialist and have no personal experience with this, this is more a comment than an actual answer but it's way too long for the comment box. Until someone else posts something better, I thought it could be useful…

My understanding is that you are not necessarily a resident for a whole tax year. You can be a resident starting on a given date or up to a given date, with different consequences depending on the country and just like with the earlier question about moving to France, it would seem to make the problem disappear.

Importantly, the six month/most of the time test is only a way to define who is a resident and who is not but if you do happen to stay in a country for long enough, you can be deemed a resident from the day you moved to the country, not for the past or coming tax year and not from the day you went over the six month limit (it's certainly the case in France, but I would think other countries have similar rules).

To see how it works out in your case, you would first look at the UK's definition of residence and at the French definition of residence and determine whether you are a resident on any given date during the year.

If by any chance, the difference in tax years or any other rule make you a resident in both countries for (long) parts of the year, the treaty should kick in.

For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein […]

Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules: […]

Nowhere does it say that it applies to a tax year or something like that. Based on this interpretation, if, on any given day during the year, you happen to be a resident in both countries, then the tie-breaker rules should apply. And if everything else fails, the same article provides that

if he is a national of both Contracting States or of neither of them, the competent authorities of the States shall settle the question by mutual agreement.

So it seems you could approach both tax offices with the question since, under the terms of the treaty, they should in any case ensure that you are not considered a resident of both countries for tax purposes.