Online Business Abroad: Tax Residence, Micro-Enterprise, and Selling Online

Selling services or products online while changing countries does not exempt you from knowing where you are taxed or under which status you work. This article helps you identify the tax residence criteria, understand what you declare depending on whether you remain a French tax resident or leave, and review the obligations of a micro-enterprise and an online store. It does not cover residence permits or the compliance of social media accounts: these points must be checked separately, country by country. In tax matters, no situation is certain in advance: confirm yours with your tax office.

Tax residence: where are you really taxed?

Your tax situation in France depends on your tax residence, which the tax authorities determine based on your circumstances. It defines what is taxable in France, and it is the first question to settle when you work from several countries.

• Tax residence in France: you are taxable on all your income^[1].
• Tax residence outside France: you are most often taxable only on your income from French sources^[1].

Tax treaties can modify this principle. Their purpose is to avoid double taxation of income that has its source in one State and is received by a person who is tax-domiciled in another State^[2]. To find out what the treaty provides for your category of income, check with the tax office for non-resident individuals^[1].

Each country applies its own criteria. In Italy, a person is a tax resident if, for the majority of the tax year (more than 183 days, with partial days counted), they meet one of these conditions: physical presence in the territory, habitual residence, or domicile in Italy^[3]. In Bulgaria, tax residence is based on other criteria, including physical presence of more than 183 days in any 12-month period^[4]. The same 183-day threshold is therefore calculated differently in the two countries.

Case No. 1: you remain a French tax resident

Subject to international tax treaties, you are considered tax-domiciled in France if you meet one or more criteria. Two apply directly to nomads.

• Your household (spouse or civil partner and children) remains in France, even if you stay temporarily in another country, or for most of the year, for professional reasons^[2].
• Your main center of economic interests is in France^[2].

The center of economic interests refers to the location of your main investments, the headquarters of your business, the center of your professional activities, or the place from which you derive most of your income^[2]. A freelancer who mainly invoices French clients from a coworking space abroad should examine where their activities are based and where their income comes from: depending on their situation, they may remain a resident in this case.

You are then liable for tax in France on all your income, including the pay for your work abroad^[2]. You file your return with the tax office on which your main residence depends^[2].

Paying your taxes in France does not settle everything: also check with the tax administration of the country where you live what your obligations are regarding the income to declare and the taxes to pay^[1].

Case No. 2: you move to live outside France

If you leave France, inform the Centre des Finances Publiques you depend on of your new address abroad as early as possible, without waiting until you file your return^[2]. You can also do so from your online account, through the secure messaging service^[1].

In the year of departure, two returns may be necessary, and you may have to file both:

• form no. 2042, which covers all income received from January 1 to the date of your departure; state your new address and your departure date, even if you have already informed your tax office^[2];
• form no. 2042-NR, which only includes your taxable income from French sources in France, from your departure through December 31 of the year you leave^[1].

Income earned in the year of departure is declared in April or May of the following year^[1]. If you received foreign income between January 1 and your departure date, it is declared on form no. 2047, then carried over to form no. 2042^[2].

Once you are a non-resident, you are taxed under the progressive scale, with a minimum tax rate: the tax authorities calculate the tax using the scale, perform a second calculation using the minimum rates, and apply whichever amount is higher^[1]. You may request an average rate calculated on your French-source and foreign-source income; it only applies to your French-source income if it is more favorable to you, and the request is made in your income tax return^[1].

According to Service Public, if you have no French-source income, you have no obligations to the French tax administration for income tax purposes^[1]. This does not cover the obligations specific to a micro-enterprise that remains registered (CFE, Urssaf declarations, VAT), described below.

Micro-Enterprise: What Follows You Abroad

Micro-entrepreneur status doesn't disappear just because you change countries. If you are registered in France, its reporting obligations continue to apply. For the numerical thresholds, check entreprendre.service-public.gouv.fr.

• Periodic declaration: filed with Urssaf every month or every quarter, depending on the frequency you chose. You pay, in a single payment, the tax and social contributions corresponding to the declared income^[5].
• Annual declaration: for activity income, you also file form 2042 C PRO each year, in addition to your annual income tax return^[5].
• VAT: the micro-entrepreneur is in principle exempt under the base regime, does not charge VAT, and has no VAT return to file^[6]. If they exceed certain revenue thresholds, they become subject to the real VAT regime, which requires charging VAT, collecting it, and remitting it^[6]. In trade within the European Union, they may also have many VAT obligations, even under the base exemption^[6].
• CFE: the micro-entrepreneur is subject to the business property tax (cotisation foncière des entreprises), whether they operate from a professional premises, from home, or at their clients' locations^[6].

Selling Online: Rules to Follow on the Customer and Site Side

If you sell to consumers, the e-commerce framework applies, wherever you work. Pre-contractual information is generally grouped in terms and conditions of sale (CGV) accessible on the site^[7]. Failure to comply with this disclosure obligation is punishable by a €3,000 fine for sole proprietors, including micro-entrepreneurs, and €15,000 for a company^[7].

The right of withdrawal allows the consumer to cancel an online order within 14 days, without having to justify their decision and without any costs other than possible return shipping fees^[7]. You must also provide a feature that allows them to exercise it free of charge before the end of the period^[7].

If you build customer files, you must comply with the obligations related to the protection of internet users' personal data^[7]. The legal identification notices now fall under article 1-1 of the LCEN, according to a law firm^[8]. Cross-check this information against official pages before drafting your legal notices.

Pitfalls and Points of Vigilance

Don't Assume You're a Non-Resident by Default

A household that stayed in France, or the center of your economic interests in France, is enough to maintain your tax domicile: you then remain taxable in France on all your income^[2].

Bank Accounts Abroad

If you are domiciled in France, you must declare to the tax administration each year the accounts opened, held, used, or closed abroad during the year^[9]. Account references are declared on form no. 3916, to be attached to tax return no. 2042^[2]. An undeclared account exposes you to a fine of €1,500 per account, and €10,000 per account if it is located in a country without an information-exchange agreement with France^[9].

Micro-Enterprise Thresholds

The micro-tax regime no longer applies for year N if one of the thresholds is exceeded two years in a row, in N-1 and N-2^[5]. So keep an eye on your revenue from one year to the next: exceeding a threshold has consequences.

Flat-rate withholding option and pay-as-you-earn withholding

If you opt for the flat-rate withholding, the pay-as-you-earn advance payment is not automatically cancelled^[5]. Make sure it has actually been stopped.

Outdated online guides

A law firm notes that guides not revised in nearly two years still cite old articles of the LCEN, including those from major legal publishers and government administrations^[8]. Check the date and the cited texts before copying a template for legal notices.

What this article does not cover

For your stay, check with the authorities of the country concerned; for social media, review each platform's terms and the official French pages on advertising and influence; for social protection, contact Urssaf and the health insurance fund.

Returning to France: what you need to declare

In the year you return, promptly inform the tax office for individuals of your new address; you can do so from your online account, via secure messaging^[9]. Form no. 2042-NR covers your French-source income taxable in France, received from January 1 up to your return date, and form no. 2042 covers all your income received from your return date to December 31^[9].

If you received no income from France during your stay abroad, you had no tax obligations in France^[9].

Checklist before leaving or returning:

• have your tax residence confirmed by your tax office;
• report your new address abroad to the Centre des Finances Publiques, or your return to the tax office for individuals;
• list your foreign bank accounts on form no. 3916;
• track your revenue against the micro-company thresholds;
• review your terms of sale, privacy policy and legal notices;
• check, country by country, the right of stay and local tax obligations.