How to avoid unwanted tax residency

1) Introduction — Don’t let a calendar decide your tax bill

You would never wire eight figures without a term sheet. Yet many sophisticated investors still cross borders before fixing their tax residency, then discover that day-counts and old leases have done the structuring for them. In an era of automatic information exchange and identity-tagged payment rails, “I’ll tidy the paperwork later” is no longer harmless improvisation—it’s how you inherit withholding taxes, unplanned filings, and audit-ready mismatches. OECD

Today, unwanted tax residency happens in three ways:

1. your facts (days, home, economic center) quietly satisfy a country’s test;
2. counterparties report you there under CRS/CARF/DAC8, even if you disagree;
3. your company’s effective management points somewhere else than your pitch deck suggests, triggering dual-residence disputes. The fix is simple to state and hard to fake: decide residency first, then move capital. OECD+2OECD+2

This article is your institutional-grade playbook. We’ll translate the main individual tests (France’s CGI art. 4 B, the UK Statutory Residence Test, the US Substantial Presence Test) and corporate tests (the OECD Model’s 2017 change to the company tie-breaker) into practical steps. We’ll show how MiCA and the EU “travel rule” make identity travel with crypto value, and how CARF/DAC8 extend automatic exchange to crypto-asset activity—so you can engineer a file that a banker can love, a notary can sign, and a regulator would respect. Finally, we’ll explain how SBH Capital Partners builds Saint-Barthélemy structures—within French law, with local fiscal autonomy—that keep your residency and substance unambiguous. Chez SBH Capital Partners, nous aidons nos clients à transformer leurs actifs numériques en patrimoine tangible. Taxation and Customs Union+5Légifrance+5GOV.UK+5

Promise of value: learn the tests, design the facts, then document them to match what CRS/CARF/DAC8/MiCA/TFR will show. That’s how you avoid unwanted tax residency—and the friction it creates.

2) Tax residency 101 — How countries decide you’re “theirs”

Individuals — three archetypes you’ll meet everywhere

• France (CGI, article 4 B). You are French tax-resident if you have in France (i) your home or principal abode, (ii) your principal professional activity (unless ancillary), or (iii) the center of your economic interests. One criterion is enough. France’s official guidance and Legifrance codify these tests; they are fact-sensitive and well-litigated. Keep proofs for each criterion (housing, work, bank relationships, family schooling). Bofip+1
• United Kingdom (Statutory Residence Test). The SRT combines automatic day-count rules with the sufficient-ties matrix (home, family, work, prior UK presence). It is recalculated each tax year—you can be resident one year and not the next. HMRC’s RDR3 guidance sets the logic; use a proper day-count diary and keep boarding passes. GOV.UK
• United States (Substantial Presence Test). You meet the SPT if you are present 31 days in the current year and 183 weighted days over three years (all days this year + 1/3 of the prior year + 1/6 of the year before). The IRS page lays it out cleanly; exemptions exist, but the default is arithmetic. Day-count errors are expensive. irs.gov

Companies — where decisions actually happen

Most systems anchor corporate residency to effective management: where key management and commercial decisions are made. Treaty law used to break corporate dual residency by the place of effective management; since the 2017 OECD Model update, the tie-breaker for non-individual dual residency is resolved by competent-authority agreement, weighing multiple factors (place of management, incorporation, etc.). Practically: design one clear seat of management—board meetings, officers, registers, banking—and minute it. You don’t want your treaty rate waiting on a mutual-agreement procedure. OECD+1

Reporting reality — your counterparties will tell on you

• CRS (2025 consolidated text). Banks and financial institutions collect your tax residency and report account data annually to your residence jurisdiction. If your facts and your self-certification diverge, expect questions. OECD
• CARF and DAC8 (crypto). The OECD’s CARF and the EU’s DAC8 extend automatic exchange to crypto-assets, obliging platforms and custodians to identify customers and report transactions. In other words: your crypto activity enters the same transparency flow as bank accounts. OECD+1
• MiCA + TFR. MiCA licenses crypto-asset service providers (CASPs). The EU Transfer of Funds Regulation (Reg. 2023/1113) imposes the travel rule: originator/beneficiary information must accompany transfers, and providers must block or remediate when data is missing, per EBA guidelines (applicable since 30 Dec 2024). Identity travels with value. amf-france.org+2eba.europa.eu+2

Metaphor: Residency is the compass, corporate substance the keel, and CRS/CARF/MiCA/TFR the lighthouses. If your compass and keel don’t agree, the lighthouses will show it.

3) The stakes & pain points — Where unwanted residency bites

1) Automatic exchange exposes mismatches. Under CRS, financial institutions classify you and report; under CARF/DAC8, crypto platforms will do the same. If you declare residency A while your bank or platform reports residency B, your file invites mismatch letters and audits. Plan as if the receiving authority will compare your return to what CRS/CARF/DAC8 delivered. OECD+2OECD+2

2) Withholding and treaty access depend on residency—now, not later. Dividend or interest flows often carry withholding tax unless you qualify for treaty relief as a resident of a contracting state (Article 4 OECD Model). Since 2017, dual-resident companies don’t get an automatic tie-breaker; the competent authorities must agree. Translation: if your company’s effective management drifts, counterparties may apply full withholding pending resolution. Avoid the stalemate—concentrate management and document it. OECD+1

3) Bank and notarial friction loves ambiguity. High-end private banks and French notaries require files that are traceable and consistent:

• Identity & BO: passports, proof of address, organogram, and control proofs consistent with FATF-style expectations;
• SoF/SoW: for fiat, statements and sale contracts; for crypto, wallet statements, on-chain hashes, platform ledgers, custodian attestations, conversion certificates;
• Governance: board minutes, resolutions, registers, and local banking/accounting that prove effective management where you claim it.
  If residency is fuzzy, the process stalls. MiCA and the travel rule help only if your documents mirror what licensed CASPs transmitted. esma.europa.eu+1

4) “Perma-tourism” is a myth. The popular 183-day meme is an oversimplification. The UK SRT weighs ties; the US SPT looks back three years; France 4 B can assert residency if your economic center and home point to France—even with fewer days. Days matter, but so does gravity. GOV.UK+2irs.gov+2

5) Saint-Barthélemy—precision requirements in a French framework. Saint-Barth, a French collectivité d’outre-mer under Article 74, has autonomous tax powers and strict residency tests:

• Individuals: tax residency only after five years of residence;
• Companies: residency after five years of effective management on island, or sooner when effective management is on island and the company is controlled by individuals resident in Saint-Barth for five years.
  Even then, France retains competence for certain social contributions, per Conseil d’État case law. In short: eligibility is binary and document-driven. Légifrance+2Bofip+2

Analogy: Think of your cross-border life as a string quartet. Residency sets the key, substance keeps tempo, and