In the United States, when there is ambiguity about a tax law, if enough accountants and people ask about, the IRS will give guidance which then means people will have to, at least from that time forward, act accordingly. For example, when crypto came into its own some years ago, the IRS gave guidance for how to deal with it. That guidance is publicly listed on an official government website so everyone knows.
Just a few days ago, Emma Pearson of The Local wrote a very helpful article sharing new guidance on remote working in France. While I am unclear as to why the French Tax office would choose to “exclusively clarify to The Local” a rather important tax rule, instead of publishing and publicizing it themselves on a government website, we are grateful for Emma’s work regardless, as the guidance is clear.
This is the key quote:
“The French tax authorities (DGFiP) consider that work is carried out in France when it is physically performed from French territory, regardless of the employer or location of the clients. So if you’re an employee or freelancer working for a company based abroad, but physically carrying out your tasks from France, this constitutes work carried out in France for tax purposes.”
Our position at TAIP for many years has been that since we have guided many people through successful visa applications in which a letter from employers stating that the applicant was remote working, that as far as immigration authorities are concerned, remote work in France is legal. That is still our position. The ruling of the tax authorities cannot overrule another equivalent (or possibly higher) department of the government: immigration. A ruling or clarification would still need to come from there.
However, this clarification from the tax authorities makes such visa applications now impractical, as once you get here, the tax authorities play an oversized role in your ability to stay in France. Various attestations, including the P-237 which I had to submit for my French citizenship application, all need to come from them and you want to be in their good graces. You couldn’t be in their good graces in the face of this new clarification.
Practical Effects
What does this mean for you? Here are some scenarios we have considered as of today, when we are officially amending our advice on visitor visa applications:
Current Visitor Working Remotely
Our advice is for you to transition to a Profession Libérale visa, freelancing in the field you already work in. This may be straightforward in some fields. For example, if you are a bookkeeper, you could simply set up a French bookkeeping practice with this visa, and your now-employer could then transition to using a foreign contractor. On the American side, this will be relatively painless, as they don’t have to enter the French labor market. They are simply hiring a foreign freelancer. The tax implications are on the freelancer. You can start working on the paperwork now (we have courses and consultations to assist), and then when renewal comes, you can simply apply for a “change of status” and present your application then.
Hopeful Visitor Who Wanted to Work Remotely
As we noted above, this door is now officially barred so you’ll have to consider Passeport Talent or Profession Libérale as alternatives, and our website is full of advice on both.
Person Who Decides to “Risk It For the Biscuit”
Okay, so you’ve done your own French taxes for years, and you’ve correctly reported your foreign-sourced income. There’s no real way for the tax authorities to know you work remotely, as we’ve always noted (there are no tax authority digital police roaming around, no matter what the Karens say…or believe!). But your long-term future in France doesn’t offer solid possibilities. To get a ten-year card you will need to prove financial anchorage in France, which you can’t do with mostly (or entirely) foreign-sourced income (N.B.: we have seen exceptions to this principle made for retirees). The bar is even higher for citizenship. So, you can potentially get away with this indefinitely, but you’ll be stuck with only ever getting one-year cards forever. Not a pleasant prospect.
Reflections
Other nations like Croatia and Spain have created much more progressive visas in which immigration and the tax authorities work together, so there could never have been any ambiguity about visas because one department considered remote working legal and the other illegal. That’s neither good nor bad, as every country has a right to run itself as it sees fit, but it’s unfortunate for those who would like to live in France but don’t wish to start a business, get into a relationship with a French person, or have the particular set of skills that would lead a French company to pay a one-time bounty + a percentage of every paycheck indefinitely just to hire you when they could hire a European. This ruling from the tax authorities excludes many people from France who would otherwise have come to the country, paid into the economy, possibly learned French, and made friends (and maybe found a spouse).
In a time of global uncertainty, such a stance cannot be considered welcoming from a country that prides itself on hospitality and showcasing its treasures. And why the tax authorities have chosen to effectively speak for French immigration, I’ll never know. However, it’s not our duty to like official rulings, but to comply with them and advise our clients to do so, as we always have here on TAIP.
Photo courtesy of Wikimedia Commons.
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