UAE: the France–UAE tax treaty secures departures

A tax treaty allocates the right to tax to one of the two states depending on the nature of the income, and provides a mechanism for eliminating double taxation where both retain a right.

In the event of dual residence, it breaks the tie using criteria applied in order: permanent home, centre of vital interests, habitual abode, then nationality.

These criteria are ranked, and you move on to the next only if the previous one is not decisive. A home kept in France and available all year round counts from the very first criterion.

A tax treaty therefore creates no new right: it allocates a right to tax between two states that both claim it.

Two often-confused effects must be distinguished. A treaty eliminates double taxation of the same income by two states; it does not remove the reporting obligation in the state that waives taxation. Income exempted under a treaty must, in most cases, still be declared.

Invoking a tax treaty requires proving that you are a tax resident of the host state, which is done through a certificate issued by its tax authority.

This certificate is a procedure separate from the residence permit. A ten-year permit does not replace it, and many expatriates have never applied for one.

In the Emirates, tax residency for an individual is established in particular by presence of from 183 days¹ over twelve months. In Qatar, the law requires a permanent residence in the State or a stay of more than 183 days² over twelve months.

The purpose of this Qatari definition, incidentally, is not to create a tax — there is no personal income tax — but precisely to allow such certificates to be issued.

We do not publish the conditions for issuing these certificates, the documents required or the timescales: they are governed by administrative procedures that we have not been able to verify in up-to-date official sources.

Even before the tax treaty comes into play, Article 4 B of the French General Tax Code sets out four alternative criteria: the household, the place of principal stay, professional activity and the centre of economic interests.

Meeting just one is enough to keep French tax domicile. A company director whose operating company and family remain in France remains domiciled in France, however much time is spent in the Emirates.

The tax treaty only comes into play afterwards, to decide between two effective residences. It does not correct a poorly documented departure: it arbitrates between two real situations.

Several destinations also have no tax treaty with France — Vanuatu, the Bahamas, the Cayman Islands, Paraguay. No arbitration is then possible, and the only protection lies in effectively severing ties.

The burden of proof also lies with the taxpayer. It is their documents, built up over the years, that will establish the reality of the departure, not a statement made at the time of an audit.

1. Check whether there is a tax treaty with the target destination, before any other examination.
2. Document the severing of ties: home, family, activity, economic interests.
3. Apply for the tax residency certificate as soon as the presence conditions are met.
4. Keep proof of presence, which will be used in the event of an audit.
5. For a company, check separately that its effective management has actually been moved.

The Emirati tax context has also changed: individuals are still not taxed, but a corporate tax on profits now applies at 9%³ above AED 375,000⁴ of taxable profit.

This change has an indirect effect on tax treaties: a state that levies a corporate tax falls more clearly within the scope of treaty mechanisms, which is rather favourable to those seeking to rely on them.