Individuals who are not resident in France are frequently concerned about transferring money into or out of France, and whether there is any risk of requalification by the French administration.

It is worth while remembering that the French Tax Code is remarkably well defined, and cannot be taken to extend beyond the scope and limits of the article concerned. That interpretative line drawn applies particularly where it is a deeming mechanism.

The couple in question, M et Mme B.  moved from Ireland to France in June 1994, and it was not contested that they became resident in France as from 1st July, 1994. Before they did, the husband brought in money from Switzerland. When he arrived at the Frontier on 3rd June, 1994, he was in possession of cash and cheques. At that date, they were technically not resident in France.

The French tax administration also chose to attempt to treat their income for tax years 1993-1994 as taxable in France, despite not proving that they were resident in France during those years, and also attempted to treat money transferred to one of their French bank accounts prior to that date as being income of an undeterminable nature.

Although this was not in issue in this case, the French Courts are not prepared to give the Tax administration any leniency where there is a possibility of infringement of the movement of payment and capital rights within the EU, and to the extent that these rights apply to transfers into and outside of the EU.

 

Conseil d'État, 9ème et 10ème ssr, 01/07/2010, 309363

The decision can be summarised as follows:

The result of the provisions of article 4A, 166 and 1649 quater A of the code général des impôts (CGI), is that individuals whose fiscal domicile is outside France can only be taxed in France on their French source income, and not on amounts transferred into France from abroad;  or from out of France to abroad.  It follows that an Administrative Court of Appeal commits an error in holding that the presumption of the existence of income laid down under the provisions of article 1649 quater A applies to any individual, whether or not they are fiscally domiciled in France.

 

Note that, in any event, things have changed in other areas since 1994, and that there is a non-tax requirement to declare cash and paper assets to customs when crossing a border. As a result of that,  such peregrinations, and the method used by the couple in 1994 would certainly be caught under the customs rules.

However, the principle applies to banking transfers into and out of France. It is also comforting to know that despite the posturing of certain of their politicians, there are some elementary principles that they cannot simply ignore.

It did however take six years to obtain justice against a presumption, which does make one wonder if it the current position of the innocent majority that they have nothing to hide, remains a valid one to take in relation to the current administrative trend of assumptions.

Whilst one  could question the wisdom of taking money and cheques across the Swiss French border, the question remains, why can't you move your money? The answer may soon be that it is no longer yours.