The petroleum engineer, by virtue of his role, is often called upon to work abroad, sometimes in different countries each year, and for very variable durations depending on the missions assigned to him.
Several questions then arise for the tax lawyer: how to determine the place of tax residence of the petroleum engineer? In which country does he have to pay taxes? Can he benefit from an exemption?
Maître Nicolas Rozenbaum, tax lawyer in Paris, is very regularly confronted with this type of problem, with clients working in particular for companies like Petrolisor Techni-task consulting.
This article takes stock of these different questions.
How to determine the place of tax residence of the petroleum engineer
As detailed in our article entitled “how to become a non-resident for French tax , l'article 4 B of the General Tax Code provides in particular that taxpayers are French tax residents:
​- who have their "home" or their main place of stay in France.
- OR who carry out a professional activity in France, whether salaried or not, unless they can justify that this activity is carried out there on an ancillary basis;
​- OR who have the center of their economic interests in France
The household within the meaning of Article 4 B is distinct from the notion of tax household for the purposes of the income tax return.
It is defined by case law as the place where the taxpayer normally lives. It is therefore a subjective notion which was gradually constructed during the evolution of case law (the number of jurisdictional decisions is very large, which demonstrates that the tax administration is very vigilant on this issue.)
The analysis of this question therefore requires a good command of case law.
The main place of stay only applies when no household can be determined[Larcher judgment, Council of State, Larcher, Section, of November 3, 1995, 126513, published in the Lebon collection].
Most of the time, the petroleum engineer will not meet the last two criteria. On the other hand, it happens that his home, or in the absence of a home, his main place of stay is in France.
In such a scenario, the petroleum engineer will be considered a French tax resident from the point of view of French domestic law.
However, it very often happens that the petroleum engineer is also considered a tax resident of his country of expatriation.
He then finds himself in a situation of dual tax residence.
Tax treaties make it possible to resolve double taxation conflicts
In order to resolve double taxation conflicts, France has concluded more than 120 tax conventions.
These conventions most of the time contain a clause stipulating that in the event of a conflict of residence, it is first necessary to focus in particular on the criterion of permanent residential home , then the center of vital interests, then the main place of stay.
The reader is invited to read the article entitled “how to become a non-resident for French tax » for more information.
However, the fact of being a French tax resident does not mean that thepetroleum engineerwill exclusively pay his taxes in France and that the country of expatriation will not be able to levy any tax.
Indeed, most of the time, the domestic law of the countries in which the petroleum engineer will carry out his mission provides that income from the exercise of an activity on their ground are taxable, even if they are carried out by non-residents.
Fortunately, tax treaties make it possible to remedy this double taxation.
Indeed, depending on the case, either the tax conventions will remove from the country in which the activity is carried out the right to tax income, or they will authorize it, but France will be obliged to grant a tax credit to avoid double taxation.
What if there is no tax treaty?
In the absence of a tax convention with the country of expatriation (this is for example the case with Angola), the risk of double taxation remains.
However, the petroleum engineer will be able to benefit from an exemption in France on his income from his country of expatriation thanks to the article 81 A of the General Tax Code.
This article provides in particular that “persons domiciled in France within the meaning of article 4 B of the General Tax Code who carry out a salaried activity and are sent by an employer to a State other than France and that of the place of employment; establishment of this employer may benefit from an income tax exemption for the salaries received as remuneration for the activity carried out in the State to which they are sent.
With regard to the petroleum engineer, this article requires in particular:
that he works in his country of expatriation for at least 183 days or that he has paid in the country in which he carries out his mission a tax at least equivalent to 2/3 of what he would have paid in France (if these conditions are not met, the petroleum engineer can nevertheless benefit, under certain conditions, from a partial exemption)
whether his employer is located in a member state of the European Union or in another state party to the agreement on the European Economic Area having concluded an administrative assistance agreement with France with a view to combating tax fraud and evasion.
Thus, article 81 A can prove very useful to the petroleum engineer, particularly when the latter is sent on a mission abroad to a country that does not have concluded tax conventions with France.
Me Nicolas Rozenbaum, tax lawyer in Paris, and lecturer in international taxation, is at your disposal for any information.
You can contact him by clicking here.< /a>
​ Please note that this information, up to date as of September 18, 2023, has been voluntarily simplified and summarized for educational purposes and does not constitute a legal consultation.