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Question Be a Tax Resident of One Country While Living in Another?

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businessLB

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Oct 30, 2022
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#1

Message​

Hi there,

I recently moved to Bulgaria from France (I’m French) to set up my business over there and pay only the 10% corporate tax (instead of the crazy amount France has).

The business is luxury property rental marketing, where I help owners develop their marketing strategy for their rental properties.

Now, I have a client who wants to give me their entire portfolio (in the South of France) and they are asking me to be in France all the time, in order to manage everything on-site.

They would provide a place for me to stay, and pay for cars and such.

My question is: is it possible for me to still be considered a Bulgarian tax resident (while basically living in France 100% of the time) and not pay the French corporate taxes?

If not, do you have any kind of solutions in mind that would help me reduce the amount of taxes I would pay? Of course, everything in a legal way (as always).

I’m happy to relocate my business pretty much anywhere, the only condition is that I need to be in France the entire time.

Thanks for your help!
 
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#2
If you want to do everything by the book, there's no way to do what you're trying to achieve. If there was, nobody in France would be paying taxes.

Now, if there's nothing in France under your name and you have everything in Bulgaria (including rent, company, etc.) it would be very hard for France to figure out that you're actually living there.
 
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#3
Correct, nothing in France would be under my name.
My client would be providing the accommodation, the car, the expenses, etc.

I would still have my apartment (my business address) in Bulgaria, my company would still be the same in Bulgaria.

I will talk to an international tax advisor to find the best solution but I figured I'd ask here too.

Thanks for your answer
 
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#4
QuentinLB said:
My question is: is it possible for me to still be considered a Bulgarian tax resident (while basically living in France 100% of the time) and not pay the French corporate taxes?
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No. Although you should separate personal tax residency with your company's tax residency.

If, for example, you had a fully fledged business in Bulgaria, with local staff, office, etc., and you were simply an employee working from France, your company could retain tax residency of Bulgaria.

However, if you are the sole employee/director/shareholder, and you live 100% of the time in France, your company would most likely be a factual tax resident of France.
QuentinLB said:
If not, do you have any kind of solutions in mind that would help me reduce the amount of taxes I would pay? Of course, everything in a legal way (as always).
Click to expand...
The usual, take advantage of any deductions you can (car, fuel, office space, etc.)
 
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#6
An employee residing in France for less than 183 days does not owe tax on income earned through their work in the country, as long as their remuneration is paid by or on behalf of an employer which is not established in France.

You are working for a French client and are working/living in France hence you are a tax resident.

If you were not a French citizen you could try to take the risk, as a French citizen, living and working in France but even thinking there is a way you can avoid paying tax in France, bonne chance!

Either you make sure you are seldom in France (<90 days) and have as you mention proof you actually live in Bulgaria or you pay personal income tax and corporate tax in France. Your Bulgarian company is operating from France so has its PE in France

Using a Bulgarian company will also raise a red flag with French tax authorities.

You are required to keep your accounting records for 10 years in France, so even you are just planning to do this temporary, they can always go back a long time is for some reason they find out you are working and living in France.

Stay out of France if you don't want to pay taxes there and have authorities going after you, that's the only advice one can give, especially since you are a French citizen.
 
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#10
Have you considered setting up base in Switzerland near the border? Taxes should be much lower. Maybe you could try to explain you live in Switzerland and only work part time from France. Still the risk is quite substantial.
They could audit your client, discover you were working for them and start asking for proof (receipts etc.) that you were really living in Switzerland and only going to France for work, but sleeping mostly in Switzerland.
 
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#11
Is there any way for you to avoid living in France? How important is this client to your overall business?

Because, for instance, you could set up a French subsidiary of your Bulgarian business and have that subsidiary pay French corporate tax on the income connected to this client. Your French subsidiary could hire an employee or two in France to take care of this client's properties, while you keep living in Bulgaria, with frequent trips to France, but without spending more than 183 days a year there.

With this solution you'll pay French corporate tax but only on a portion of your income, and you'll also get to keep paying personal income tax in Bulgaria.
 
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#12
scooterguy said:
Because, for instance, you could set up a French subsidiary of your Bulgarian business and have that subsidiary pay French corporate tax on the income connected to this client. Your French subsidiary could hire an employee or two in France to take care of this client's properties, while you keep living in Bulgaria, with frequent trips to France, but without spending more than 183 days a year there.
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183 days is meaningless in the context of France for determining tax residency: France - Individual - Residence

They will definitely consider you a French tax resident if you live and work there.

DTC between the two countries is old and only has the center of vital interest as the tie-breaking criteria, so again, in the case as presented would most certainly be France: https://nra.bg/wps/wcm/connect/nra....-bbeaf8a5-2836-4b5b-8161-6ca4b6b5758e-nSQoOdL
 
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#13
Larin said:
183 days is meaningless in the context of France for determining tax residency: France - Individual - Residence

They will definitely consider you a French tax resident if you live and work there.

DTC between the two countries is old and only has the center of vital interest as the tie-breaking criteria, so again, in the case as presented would most certainly be France: https://nra.bg/wps/wcm/connect/nra....-bbeaf8a5-2836-4b5b-8161-6ca4b6b5758e-nSQoOdL
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That's why I said don't live and work there... I am talking about setting up a French subsidiary of the Bulgarian company, hiring employees in France and staying in Bulgaria.

France won't consider you a resident in that case, and you'd only be liable for corporate tax on the income generated by the French subsidiary.
 
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#16
businessLB said:

Message​

Hi there,

I recently moved to Bulgaria from France (I’m French) to set up my business over there and pay only the 10% corporate tax (instead of the crazy amount France has).

The business is luxury property rental marketing, where I help owners develop their marketing strategy for their rental properties.

Now, I have a client who wants to give me their entire portfolio (in the South of France) and they are asking me to be in France all the time, in order to manage everything on-site.

They would provide a place for me to stay, and pay for cars and such.

My question is: is it possible for me to still be considered a Bulgarian tax resident (while basically living in France 100% of the time) and not pay the French corporate taxes?

If not, do you have any kind of solutions in mind that would help me reduce the amount of taxes I would pay? Of course, everything in a legal way (as always).

I’m happy to relocate my business pretty much anywhere, the only condition is that I need to be in France the entire time.

Thanks for your help!
Click to expand...
Why should you pay French corporate taxes from your Bulgarian company? You would however pay your French personal tax
 
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#18
It seems I missed the notifications but thank you all for your replies.

This client is extremely important and can be a key to very large things in the future, so I have no choice but to move to France myself.

Based on my research and what everyone said here, it seems not very plausible to get around it. So I'll just setup it up in the best way to minimize taxes.
 
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#20
businessLB said:
It seems I missed the notifications but thank you all for your replies.

This client is extremely important and can be a key to very large things in the future, so I have no choice but to move to France myself.

Based on my research and what everyone said here, it seems not very plausible to get around it. So I'll just setup it up in the best way to minimize taxes.
Click to expand...
If the client is important and can lead to very large things in the future, play it by the rules, I guess you don't want to end up being investigated by the tax authority while you are doing an important job. If you are young, it's more important to do things that open up stuff in the future, there is always time for Bulgaria or UAE :D
 
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