One could be pardoned for wondering on which planet the French administration thinks we, and indeed the Swiss, are.

Article 24 of the previous UK French DTT of 22nd May, 1968 stipulated an exemption for British residents, not domiciliaries but residents, from the three times annual rental income assessment under article 164C CGI on properties they have at their disposal in France. Possesion in this context can includes rental.

It read: Art. 24. - c. "Un résident d'un Etat contractant qui possède une ou plusieurs résidences dans l'autre Etat contractant n'est pas assujetti dans cet autre Etat à un impôt sur le revenu calculé d'après un revenu fictif basé sur la valeur locative de la ou des résidences."

The use of the term "ficitif" is more than revealing, as it is clearly an admisssion of a breach of EU rules on freedom of movement of capital  If it's a fiction it just ain't so.

Note that the term "résident" is used, rather than the French equivalent of resident "domicilié".

As usual, the French administration has again got its underwear in a knot about British non-doms, and appears to be arguing, as they did in Swiitzerland, that any form of forfeitary assessment or partial assessment to income tax renders the resident non-resident for the purposes of the Treaty.

Without pouring too much scorn on the French capacity for withdrawing Treaty benefits from those entitled to them, it is worth noting that this article 24 exemption was withdrawn on renegotiation by both Treaty parties on France's swearing blind that article 164C  could not be applied to British residents under the EU freedom of movement of capital provisions. HMRC swallowed it. Some joke,as the French then proceeded to assess British residents with second homes in France under article 164C immediately, flagrantly ignoring the EU princples they had cited!

That aside, a British resident, but non-dom, couple owned a property in France, and were assessed in 1999 to the three times annual rental value assessment on their house there. Whilst the Conseil d'Etat did strike all the contrary lower court's judgements down,  that was only on the basis that there was insufficient opportunity given during the procedure for "débat contradictoire", rather than on the basis that the term used in article 24 of teh then applicable Treaty was "résident".

Conseil d'État, 3ème / 8ème SSR, 07/05/2014, 360845, Inédit au recueil Lebon

The French do not understand Trusts, they do not understand our concept of domicile as going to the legal status of the person rather cthan merely their fiscal status, and therefore choose to treat these issues as being British legal hypocrisy that merits extra flagellation by taxation to exrocise the uncivilian demons.

.In short, there is absolutely no legal analysis of the concept of domicile as a part of the British legal system and it is being reduced by uncivilian ignorance to a mere tax régime, rather than a consequence of a legal status.

It is pointless hoping that the International Treaty negotiators at HMRC would give a toss either.

However the basic principles of French treaty interpretation need to be born in mind. These pieces of OCDE paper are there for the purposes of avoiding double taxation, rather than giving taxpayers rights. In the event that a taxpayer is not subject to tax, and there is no double taxation, then according to the French the Treaty may not apply.

 

Anyone thinking of bringing back Schedule A assessments?