France Tax Optimization

[Mercury]

Resident of France for tax purposes

" You have your tax residence in France if one of the following criteria is met:
- You have your household there or, if you do not have a household, it is the location of your main abode ...
- You have a professional activity in France, as an employee of otherwise, unless this activity is secondary ...
- The centre of your economic interests is in France ... "

Cyprus – France Tax Treaties

1. For the purposes of this Convention, the term “resident of a State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both States, then his status shall be determined as follows:

a. he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

b. if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

c. if he has an habitual abode in both States or in neither of them, he shall be deemed
to be a resident of the State of which he is a national;

d. If he is a national of both States or of neither of them, the competent authorities of the States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.

 

[JustAnotherNomad]

Any possibility to not be considered tax resident in France with following criterias?
- You have a company in Cyprus
- You live 6+ months in Cyprus
- But you take a CDI (french unlimited employee contract)
- For work, you have to stay in France 3.5 months per year

Or is it possible to keep the taxation for the company (and other investments like stocks etc to take advantage of nice dividends incentive) in Cyprus & for the employment in France.

I don't know the FR-CY tax treaty, but typically, you would remain tax resident in Cyprus.
For the employment, it would typically work like this:
Employment income from a French job would also be taxable in Cyprus, except for work carried out physically in France. This would be taxable in France.
You would have to declare your total income in both countries to be taxed at the correct rate (e.g. if you earn €200k in total and €50k of that was earned in France, then you only pay tax in France on the €50k, but your tax rate will be calculated as if you earned the full €200k in France).
You send the employer a form A1 to prove that you are covered by social security in Cyprus, and then the French employer will have to pay for your social security in Cyprus. This is where it can get tricky, because it's an additional compliance issue for the employer and additional bureaucracy (they will have to deal with the CY social security office). That's why some employers may prefer to work with an EOR company like Deel to handle this for them. I would suggest that you don't mention this to them until after you have signed the contract.
Also, payroll taxes: Your French employer should probably only withhold payroll taxes at a lower rate, and then pay out the remaining salary tax free - it would probably be your responsibility to make sure the rest of the income is taxed correctly in Cyprus. But it's also possible that Cyprus says they should also pay payroll taxes in Cyprus, which would be an additional hassle for them.
More importantly, there is a risk that the French employer may withhold too much in payroll taxes because they don't know how to do this. Then it can take quite some time for you to get this refunded with your French tax return.

Also, your tax rate in Cyprus would also be calculated based on the full 200k, but you would only pay tax on the 150k earned outside France.

The 200k would be your total taxable income, including dividend income from other companies. Your dividend income would in other words not be taxed in France, but it would increase the tax you pay on the €50k that were earned physically in France.