Tax residence: when a simple TRC is not enough
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In a ruling handed down on November 5, 2025, the Paris Administrative Court of Appeal reiterated an essential principle in international taxation: tax residence is not proven by declarations or certificates, but by a body of corroborating evidence!
The case concerned a couple claiming to have transferred their tax residence to the United Arab Emirates as of 2016, while continuing to maintain close ties with France. The Court ultimately ruled that the tax residence remained French, despite the production of elements linking them to the Emirates, notably an Emirati TRC.
Before going any further, a word on vocabulary
The Tax Residence Certificate (TRC) is a document issued by a state's tax administration certifying that a person is considered a tax resident of that country for a given year. In practice, it is often used by expatriated taxpayers to justify their tax residence abroad, particularly within the framework of international tax treaties. But as recent case law reminds us, this document has neither absolute value nor automatic effect regarding tax residence.
Recall of the facts
In the United Arab Emirates
TRCs issued by the Emirati authorities in 2016 and 2017
Uncertain real estate presence (water and electricity consumption not establishing a personal and continuous occupation, rental period too short to characterize a permanent home, etc.)
Issuance of a driver's license
Taking out local insurance
In France
Apartment in Paris occupied on a long-term basis
Rent receipts in the taxpayer's personal name
Active electricity contract with consumption patterns indicating an actual presence
Healthcare reimbursements by French social security
Marriage celebrated in Paris
Effective management of a French company
The Court's reasoning
Step 1: Classification of residence under French domestic law
The Court begins by strictly applying Articles 4A and 4B of the French General Tax Code. In accordance with these provisions, an individual is deemed to be tax resident in France as soon as they meet just one of the following criteria:
Having their home or principal place of residence in France
Carrying on a non-ancillary professional activity
Having the center of their economic interests
At this stage, the judge does not yet rule on the tax treaty: French tax residence is only characterized under domestic law. In this case, the Court held that the taxpayers had their home in France, relying on continuous and consistent material evidence.
Step 2: Classification of residence under the tax treaty
It is only once this French residence has been established that the Court examines the provisions of the tax treaty between France and the United Arab Emirates. The production of UAE tax residency certificates and the existence of certain material connections to Dubai led the Court to accept that the taxpayers could also be regarded as residents of the United Arab Emirates within the meaning of the treaty.
Please note: a foreign tax residency certificate is neither a totem of tax immunity, nor an automatic instrument for neutralizing French taxation.
The TRC (Tax Residency Certificate) is only one indicator among others and cannot, on its own, prevent the application of French domestic law.
Step 3: Resolution of conflicting residence
In accordance with the treaty provisions, the Court proceeds to identify the State with which the personal and economic relations are closer ➜ THE CENTER OF VITAL INTERESTS. The Court determines the center of vital interests by carrying out a global and concrete assessment of the taxpayers' situation. It does not rely on declarations of residence or on the administrative documents produced alone, but looks for the place with which the personal and economic ties appear, as a whole, to be the closest.
On a personal level, it notes that the family home remained in France, characterized by the long-term occupation of a Parisian residence and by the location in France of important life events, in particular the marriage of the spouses after the alleged tax departure date.
On an economic level, the Court attaches decisive importance to the location of the income-generating activity, the exercise of effective management and the origin of substantial financial flows, all established in France. It notes that the company generating the income was French, that strategic decisions and management were exercised there, and that the disputed income, of a significant amount, had its source exclusively in French territory. After balancing these factors against the connections claimed with the United Arab Emirates, which were deemed to be occasional and insufficiently structured, the Court concluded that the center of vital interests remained in France, notwithstanding the existence of foreign tax residency certificates and administrative ties abroad.
The issue at stake in qualifying someone as the "master of the business"
Beyond the question of tax residence, the ruling is also of major interest regarding distributed income, through the characterization of the taxpayer as the "master of the business." Indeed, it is up to the tax administration to establish not only the existence and amount of the distributions, but also the fact that the taxpayer actually received them. When the taxpayer is deemed to have sole possession of the broadest powers within the company, allowing them to use its assets as their own, they are presumed to have personally received the distributed income. The characterization as master of the business thus carries a presumption of receipt of the distributions, exempting the administration from having to prove actual collection and shifting the burden of proof onto the taxpayer.
It is precisely to escape this presumption that the taxpayers argued that control of the company was not exercised exclusively by Mr., pointing to the existence of an indirect co-partner holding a 50% stake, via the holding company RZ Finance Emirates Limited, who allegedly had access to the bank accounts and, consequently, an actual capacity to dispose of the corporate funds.
The Court dismisses this argument following a strictly factual analysis. It notes that Mr. alone used the company's payment methods, that the manager did not have the wire transfer codes, and that there was no evidence to establish that the co-partner had bank signing authority, actual access to the accounts, or a real operational role.
The Court deduces from this that Mr. was to be characterized as the sole master of the business for the years 2016 and 2017, triggering the application of the presumption of receipt of the distributed income and justifying their direct taxation in his hands, without the administration having to demonstrate actual collection of the disputed sums.
Summary
Through this decision, the Court recalls that tax residence is not deduced from an administrative status. It is demonstrated by the lasting concordance between the actual place of life, the center of personal interests, and the center of economic interests.
