Two obligations, one boundary

Camille moves to Lisbon in January, works there all year, and receives 18 000 € of rent from a flat kept in Bordeaux. Her partner and children never left France. She assumes she is a non-resident and declares only the rent. Before you read: what determines the extent of her tax obligation, and who settles it?

One sentence, two regimes

Article 4 A of the general tax code runs to two sentences and splits the whole subject. Persons whose tax domicile is in France are liable to income tax by reason of the whole of their income.

The second sentence sets the other regime: those whose tax domicile is outside France are liable to that tax by reason only of their French-source income. Two regimes, and nothing in between.

The phrase by reason of the whole of their income is the one that costs money when read too quickly. It covers worldwide income, whatever its geographic origin and whatever country has already taxed it.

Tax domicile therefore governs neither the rate, nor the bands, nor the allowances. It governs one thing only, but that thing comes before all the rest: the extent of the base. Getting the domicile wrong means getting wrong what there was to declare.

That is also why the question cannot be deferred. Every later step — which schedules to fill, which allowances apply, what a treaty might relieve — presupposes an answer to it. A return built on the wrong regime is not slightly wrong; it is built on the wrong base entirely.

A status established, never chosen

The code provides for no election. It states criteria, and a factual situation either meets them or does not. Nobody becomes a non-resident by declaring it, any more than one stays a non-resident by failing to report a return.

That is what makes the error silent. A taxpayer convinced of being a non-resident declares in good faith what a non-resident declares, and the gap appears only when the authorities establish that the criteria were met.

The tax administration puts it in the same terms on its page for non-residents: the question is not where one lives but whether one meets any of the criteria of article 4 B, which the next module sets out.

The treaty has the last word

Domestic law is not enough to settle it. Article 4 B says so itself: persons meeting at least one of its criteria cannot nevertheless be treated as domiciled in France where, under international double-taxation treaties, they are not regarded as residents of France.

The administration explains why that proviso exists. Applying each country's own domestic law alone can result in a person being treated as a tax resident of several countries at once, each applying its own criteria.

The treaty then acts as arbiter. It supplies criteria that override domestic legislation to designate a single residence, and those criteria vary from one treaty to another: there is no general rule to memorise.

The order of reading is therefore fixed. You apply article 4 B first; if it is met and another State claims the same person, you open the treaty concluded with that State. Skipping the first step makes the second unusable.

Nor does the treaty split the year in two by itself. It designates one residence for the purposes it covers, and the answer it gives is the answer for that treaty, not a general status portable to a third country that has its own.