For many internationally mobile individuals, real estate is not just an investment — it is an emotional anchor to a place, a community, a way of life. A family home in Paris, a cottage in the Cotswolds, an apartment in Barcelona. These properties are cherished for reasons that have nothing to do with tax planning. But in the context of international tax residency, they can become significant liabilities.

The retention of property in a country from which an individual has nominally departed is one of the most common — and most dangerous — triggers for tax residency disputes.

Why property matters for tax residency

In virtually every major jurisdiction, the existence of a permanent home is a primary criterion for determining tax residency. In France, the foyer criterion under Article 4B of the CGI considers the place where the individual's family habitually resides — and a maintained, furnished property available for use by the taxpayer's family is strong evidence of a foyer. In the UK, the Statutory Residence Test includes an "accommodation tie" that counts against individuals who maintain a UK dwelling available for their use for 91 or more consecutive days.

In Germany, a dwelling maintained for permanent use in Germany is sufficient to establish unlimited tax liability under the Abgabenordnung. The standard is not merely ownership. It is availability. A property that is rented out on a long-term basis to an unrelated third party — with a genuine, arm's length lease, proper rental income reporting, and the inability of the owner to use the property — is treated differently from a property that is vacant, occasionally used, or informally available to family members.

The distinction matters enormously. Tax authorities are sophisticated in identifying properties that are nominally rented but actually available. Short-term rental arrangements with flexible cancellation provisions, rentals to family members at below-market rates, properties with a room "reserved" for the owner, and properties that are "being renovated" but never seem to complete the renovation are all red flags that experienced tax inspectors recognise.

The foyer trap for French expatriates

The French concept of foyer is particularly expansive. It is not limited to the individual's own place of residence — it extends to the place where their family habitually lives. A French entrepreneur who has relocated to the UAE but whose spouse and children continue to reside in a maintained apartment in Paris is at serious risk of being classified as having their foyer in France — even if the entrepreneur personally spends zero days in France during the tax year.

The jurisprudence on this point is well established. French administrative courts and the Conseil d'État have repeatedly held that the foyer is determined by the family's place of habitual residence, not the individual taxpayer's physical location. The fact that the entrepreneur works full-time in the UAE, has a certified employment contract, and earns a WPS-traced salary does not override the foyer determination if the family remains in France.

This is why, at Fidelys Partners, we are careful never to assume that professional substance alone is sufficient to secure tax residency in a new jurisdiction. Professional substance addresses criterion (b) of Article 4B. But criterion (a) — the foyer — is independent and can be triggered by the family's situation, regardless of the individual's professional arrangements. Clients must understand that both dimensions require attention.

The UK accommodation tie

The UK's approach is more mechanical but equally consequential. Under the Statutory Residence Test, a UK accommodation tie exists if the individual has a place to live in the UK that is available for a continuous period of 91 or more days during the tax year, and the individual actually spends one or more nights there during the tax year (or, if the accommodation is the home of a close relative, spends 16 or more nights there).

The accommodation tie counts as one of the "sufficient ties" in the SRT framework. By itself, it may not be decisive. But in combination with other ties — family, work, presence in previous years, and more days in the UK than in any other country — it can tip the balance toward UK tax residency. The most effective strategy for individuals leaving the UK is to dispose of their UK property — either by selling it or by renting it out on a genuine, long-term, arm's length basis — before the beginning of the tax year of departure.

If disposal is not possible or desirable, ensuring that the property is not available for the individual's use (for example, through a verified long-term tenancy) is the next best option.

Strategic considerations for property retention

Not every internationally mobile individual can or should sell their home country property. There may be family considerations, market conditions, or long-term plans that make retention the right decision. In these cases, the property must be managed in a way that minimises its impact on the individual's tax residency position. The key strategies include: entering into a genuine, arm's length lease with an unrelated third party, for a term that clearly exceeds the individual's absence; reporting all rental income fully and correctly to the home country's tax authority; ensuring that no room, space, or access is reserved for the owner or their family during the tenancy; maintaining documentation that demonstrates the property is not available for the owner's use; and, critically, not spending any nights in the property during visits to the home country.

For properties that cannot be rented — perhaps because of their nature, their location, or the owner's emotional attachment — the analysis becomes more difficult. A vacant, furnished, maintained property that the owner visits periodically is, in the eyes of most tax authorities, a permanent home available for use. The evidentiary burden of proving that this property does not constitute a foyer or accommodation tie is heavy, and the outcome is uncertain.

Conclusion

At Fidelys Partners, we address property considerations as part of every international relocation plan. We advise clients on the tax residency implications of property retention, the strategies available to mitigate risk, and the documentation required to support their position. Real estate is often the most emotional element of an international move. It is also, frequently, the most dangerous. Managing it correctly is not optional — it is a prerequisite for a defensible tax residency position.

— Fidelys Partners —