Residence under tax treaties and burden of proof

In a decision dated 26 November 2019 (no. 418593), the French Conseil d’Etat says there is no need to adjudicate the case given the full tax rebate pronounced by the Minister during the proceedings. In this case, in which employees were recruited abroad to work in France, the tax authorities had reinstated additional remuneration that they intended to subject to the withholding tax provided for in Article 182 A of the French tax code.
Frenkel & Associés argued, in particular, that although the tax authorities considered, on the basis of the tax treaties, that the employees were foreign residents, they had never attempted to establish – for example, by resorting to international administrative assistance – that those employees, who were domiciled in France for tax purposes because they carried on a non-ancillary professional activity, were in fact subject to tax in their country of origin. Frenkel & Associés deduced from this that in application of the LHV case-law of the French Conseil d’Etat (November 9, 2015, no. 370054), the administration could not rely on the provisions of the tax treaty.