Place of effective management in real life

[frankx1]

Let's say a French entrepreneur plans to move to Dubai in like May 2026.

To have enough time to setup his Dubai company, he forms the company already in January 2026 and ”žmanages“ it in his country (France) for the months January to April.

Now the question is if this time period is enough that French authorities would try to tax the whole 2026 profit of the company in France or not (and let it get taxed from Dubai) because they say the company was managed from France?

And is there any rule of thumb / threshold how many months of a year you can manage a company in i.e. France until it's considered managed and taxable there?

 

[daniels27]

There is no general rule of thumb. It is all subject to the circumstances. Those law originate from a time when executives had a big office with two secretaries sending fax.

Today and especially in you situation it is more a question of finding out about it. From that point of view, I know cases where one country refused a private letter ruling with another country as it would probably go against the place if effective management rules of the other country.

If you don't do it too obvious and don't tell grace about it, you are probably fine. I would advise not to use any French address etc. when incorporating. Use your girlfriend's (you may have to find her first) one in Costa Rica.

Last edited: Dec 15, 2024

 

[frankx1]

daniels27 said:
There is no general rule of thumb. It is all subject to the circumstances. Those law originate from a time when executives had a big office with two secretaries sending fax.

Today and especially in you situation it is more a question of finding out about it. From that point of view, I know cases where one country refused a private letter ruling with another country as it would probably go against the place if effective management rules of the other country.

If you don't do it too obvious and don't tell grace about it, you are probably fine. I would advise not to use any French address etc. when incorporating. Use your girlfriend's (you may have to find her first) one in Costa Rica.
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Thanks a lot 🙂

 

[JackAlabama]

frankx1 said:
Let's say a French entrepreneur plans to move to Dubai in like May 2026.

To have enough time to setup his Dubai company, he forms the company already in January 2026 and ”žmanages“ it in his country (France) for the months January to April.

Now the question is if this time period is enough that French authorities would try to tax the whole 2026 profit of the company in France or not (and let it get taxed from Dubai) because they say the company was managed from France?

And is there any rule of thumb / threshold how many months of a year you can manage a company in i.e. France until it's considered managed and taxable there?
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thats possible. He should move to Dubai in Dec 25 or form the company in May 2026.

 

[daniels27]

JackAlabama said:
thats possible. He should move to Dubai in Dec 25 or form the company in May 2026.
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Yes of course. But how would you assess the risk of living in France for 4 months while having that company?

 

[JackAlabama]

daniels27 said:
Yes of course. But how would you assess the risk of living in France for 4 months while having that company?
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pretty high as its france. RR is totally not there either as written above unless theres a very compelling thing which is omitted from OP.

 

[lory]

In principle, there is no risk as long as it is just the company you set up in Dubai and it has no activity. It is not reported. The problem arises if you open a bank account for the company, as issues may occur later.

But as already mentioned, create a P.O. box address or something similar and avoid using your current address in France for company registration. There is also the option to get real addresses for relatively small costs, which can include mail forwarding.