TLDR: The main criterion for tax residency of a legal entity in France is the place of effective management, i.e., the location where strategic management and industrial or commercial policy decisions necessary for conducting business are made. In cases of dual residency, this criterion is the sole determinant. Partnerships and economic interest groupings are also considered tax residents in France if their place of effective management is located there.
The place of effective management: the central criterion
The place of effective management is defined as the location where strategic management and industrial or commercial policy decisions necessary for conducting the company's business are effectively made. It is not merely an administrative or legal address, but the actual center of direction and control of the company's activities. This location typically corresponds to where the board of directors or the highest-level management bodies perform their functions.
Resolving dual residency conflicts
In cases of dual tax residency—when a legal entity is considered a resident in two contracting states—the place of effective management becomes the sole criterion for determining tax residency. The legal entity is then deemed a resident of the state where this place of effective management is located.
Legal entities concerned
Legal entities with their place of effective management in French territory are considered tax residents in France. This includes:
- capital companies;
- partnerships (general partnerships, limited partnerships);
- economic interest groupings (EIGs) and European economic interest groupings (EEIGs).
These entities are considered tax residents in France even if their profits are taxed at the level of their partners or members.
Non-resident legal entities in France
Legal entities whose registered office is located outside France are considered non-residents if their place of effective management is also located outside French territory, regardless of their nationality.
Place of corporate tax assessment
Corporate tax is established at the location of the legal entity's principal establishment. However, the tax authorities may designate the place where the company's effective management is ensured or the location of its registered office as the place of taxation.
Special cases and clarifications
A company may have multiple management offices, but it can only have one place of effective management. Determining this place is based on a factual assessment, analyzing strategic decisions and where they are made.