If you are a French tax resident (within the meaning of Article 4(B) of the French General Tax Code (CGI), and for various reasons (whether personal, professional or other) you decide to live abroad, remember you need to take certain steps to ensure that you don’t find yourself in an uncomfortable situation which could lead to double taxation (between your old and new countries of residence).
If you were to decide to leave on 1 July 2020 to settle in another country (let’s take Malta for example), one of the first steps you need to take is to contact the public tax office relevant to you as a French tax resident notifying them of your decision to leave France. To be certain that they have been informed and take this into consideration, in our opinion it is prudent to send a letter with acknowledgment of receipt including your personal information (address, surname, first name, and tax number), indicating very precisely your address in France, specifying the date until which you were resident there, and providing your new address in Malta and your date of arrival there.
Make sure you keep a copy of the letter, in addition to sending it by registered post with acknowledgement of receipt.
For additional security and in order to ensure that your SIP (tax service for individuals) will process your request, it is advisable to access your personal space on the official website « impot.gouv » and notify your change of address directly using the messaging tool. You should receive a response to your online message fairly quickly (it must be acknowledged that waiting times are much shorter when this type of online service is used).
When you arrive in Malta, the first thing to do is obviously to contact the Office of The Commissioner for Revenue, who will register you from the date of your arrival and will assign you a tax number.
If you have accepted a salaried job in a Maltese company, your employer (or your employer’s accountant) will be able to deal with this straightforwardly.
The agreement entered into between Malta and France on 25 July 1977, as amended on numerous occasions, provides at Article 4 that: “1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is subject to tax in that State on account of his domicile, residence, place of management or any other criterion of a similar nature, but does not include persons who are taxable in that State only in respect of the income which they derive from sources situated in that State or in respect of the wealth which they own in that State.»
Therefore, by transferring your domicile to Malta you will no longer be considered as a tax resident in France as from your transfer of tax domicile since it is stated “that a resident of a Contracting State” means any person who, under the laws of that State, is subject to tax in that State, on account of his domicile, residence, place of management or any other criterion of a similar nature.”
Therefore, if you have carried out all the preliminary steps, whether you have a domicile or if you at least reside in Malta, you should have no difficulty in the event of a tax audit (by the French tax authorities) in justifying this point, especially if you now work for a Maltese company and your income is derived from Maltese sources and no longer from French sources.
In order to evidence your residence in Malta, consider contacting Identity Malta upon your arrival in Malta, in order to obtain your Maltese residence card. This must be obtained within 6 months of your arrival in Malta, so that you can legally reside on Maltese territory for more than 6 months. If you have previously been resident in France and are a French national, the procedures (as for any EU citizen) are fairly quick and simple.
Therefore if on 1 July 2020 you reside in Malta and from that date you work in Malta for a Maltese company, in 2021 you will be taxed as follows (there is always a time difference between the year of receipt of income and the reporting year).
For the period from 1 January 2020 to 30 June 2020, in 2021 you will have to make declaration no. 2042 in France in order to declare your income from French and foreign sources received during this period, in your former capacity as a French tax resident.
If after 30 June you continue to receive income from French sources, you must declare this on form no. 2042 NR.
Do not forget that when you are a French tax resident you are subject to an unlimited tax obligation (Article 4A of the CGI). In these circumstances you are taxed on your income from French and foreign sources, and when you are not or are no longer a French tax resident, you are only taxed on your income from French sources.
Being resident in Malta, in 2021 you will have to declare in Malta income received from 1 July 2020, noting that Malta implements deductions at source; therefore if you are employed by a Maltese company, normally your tax should be deducted from your payslip every month. Declaring your income in 2021 in Malta allows you to confirm if you have received other income and allows a correction in the event that you have paid too much or not enough tax.
Please note that the 2020 tax rates for France are as follows:
|
Taxable Income Bracket |
Taxation Rate |
| From €0 to €10,064 |
0% |
| From €10,065 to €25,659 |
11% |
| From €25,660 to €73,369 |
30% |
| From €73,370 to €157,806 |
41% |
| From €157,807 |
45% |
Please note that the tax rates (for single persons) in 2020 in Malta are as follows:
|
Taxable Income Bracket |
Taxation Rate |
Allowable Deduction |
| From €0 to €9100 |
0 % |
€0 |
| From € 9101 to € 14,500 |
15% |
€1365 |
| From €14,501 to €19,500 |
25% |
€2815 |
| From €19,501 to €60,000 |
25% |
€2725 |
| From €60,001 |
35% |
€8725 |
Therefore if between 1 January 2020 and 30 June 2020 you have only earned €30,000 in salary as an employee in France and have no subsequent income from French sources, you will be liable for the sum of €3018 (after the tax reduction); if you receive €30,000 in Malta for the period from 1 July 2020 to 31 December 2020, your tax amount should be approximately €4700 (to obtain a precise figure we invite you to contact a local expert; we have rounded up the latter based on data obtained from various online simulators).
This comes to a total of around €7718 due for the year 2020.
If you had been resident for the whole of 2020 in France and had received €60,000 in salary in France, your tax amount due would have been €12,018, after the tax reduction provided.