Why tax residency always precedes investment

1) Introduction — First fix the map, then move the money

If you were navigating by stars, you wouldn’t push the boat off the dock until you’d set your position. Cross-border investing works the same way: tax residency is your position. It determines which tax authority claims you, what must be reported, which treaties you can use, and how banks and notaries will treat your file. Get residency wrong—or simply unresolved—and the rest of your structure becomes guesswork. Residency first, investment second. Always.

Why such emphasis? Because since 2017, automatic information exchange (CRS) has turned the lights on. Banks, custodians, and investment platforms collect your details and report them to the jurisdiction where you are tax resident—every year. Crypto is joining that world under the OECD’s Crypto-Asset Reporting Framework (CARF) and the EU’s DAC8. In parallel, the EU’s MiCA regime licenses crypto-asset service providers (CASPs), and the Transfer of Funds Regulation (TFR) makes identity data travel with crypto transfers. If your residency story is fuzzy while these systems are crisp, expect friction: onboarding stalls, escrow rejections, and back-tax surprises. eur-lex.europa.eu+4oecd.org+4oecd.org+4

This article explains why tax residency precedes investment and how to operationalize that sequence. We’ll clarify the main residency frameworks for people (e.g., France’s Code général des impôts article 4 B, the UK Statutory Residence Test, the US Substantial Presence Test) and for companies (OECD tie-breaker changes and effective management in practice). Then we’ll show how transparent rails (MiCA/TFR), documented provenance, and governance discipline convert complex wealth—especially crypto-native—into bankable, notarially-secure transactions. Finally, we’ll detail how SBH Capital Partners structures and manages turnkey solutions in Saint-Barthélemy, where local fiscal autonomy operates inside French law with clear residency tests over five years for individuals and effective management for companies. Le modèle fiscal de Saint-Barthélemy permet une neutralité légale unique au monde—when residency and substance are done right. Bofip+5Légifrance+5GOV.UK+5

Key promise: Master residency before you deploy capital and you’ll replace uncertainty with treaty access, predictable reporting, and bank/notary confidence. Chez SBH Capital Partners, nous aidons nos clients à transformer leurs actifs numériques en patrimoine tangible—because their residency is clear before they invest.

2) Understanding tax residency — People, entities, and the treaty “tie-breaker”

For individuals, residency is a legal status with measurable tests.

• France (CGI, art. 4 B). You are tax-resident in France if you have your home or principal place of abode there, your principal professional activity there (unless ancillary), or the center of your economic interests there. France updated 4 B in February 2025; the classic criteria remain central. Document where you truly live, work, and earn. Légifrance
• United Kingdom (SRT). The Statutory Residence Test combines day-count thresholds with sufficient ties (home, work, family) for each tax year. The test is mechanical; you can be UK-resident one year and not the next, depending on facts. Keep diaries and proofs that match the SRT matrix. GOV.UK
• United States (Substantial Presence Test). You meet US residency with 31 days in the current year and 183 weighted days over three years (all days this year + 1/3 of last year + 1/6 of the year before). Exceptions exist, but the default is arithmetic. Day-count errors drive expensive surprises. irs.gov

For companies, residency is about where decisions are actually made.
Under most domestic systems and treaties, company residency turns on effective management—where strategic decisions occur. The OECD Model Tax Convention historically referenced the place of effective management as a treaty tie-breaker for dual-resident entities, but since the 2017 update the Model points dual-resident companies to a competent-authority mutual agreement procedure using a bundle of factors (place of management, incorporation, etc.). Bottom line: create one clear center of decision-making, minute it properly, and avoid split-brain governance. oecd.org+1

Why the tie-breaker matters before you invest.
Treaties often grant reduced withholding or capital-gains protections—but only if you are a resident of one contracting state under Article 4. If two states can claim you (or your company), benefits can be denied until the tie-breaker is resolved. That is why we say residency precedes investment: the treaty you want to rely on must already “see” you as a resident when the income is paid or the gain arises. oecd.org

Crypto adds visibility, not opacity.
The CRS already sends financial account data to your residence jurisdiction. The CARF brings crypto-asset transactions and holdings into an automatic-exchange perimeter; the EU’s DAC8 mirrors that across the bloc. Meanwhile, MiCA licensing and TFR travel-rule obligations make identity data and provenance ride with value. Build your residency—and your documentation spine—so these systems reinforce your narrative rather than contradict it. eur-lex.europa.eu+4oecd.org+4oecd.org+4

Metaphor: Residency is the compass; treaties are the nautical charts; CRS/CARF/DAC8 are the lighthouses broadcasting your position. Sail without a compass, and the lights will expose it.

3) The stakes — Reporting, withholding, banking, and notarial execution

Reporting risk (automatic exchange).
Under CRS, financial institutions identify your residency and send standardized data annually to your home authority; the OECD Standard dictates who must report, what is reported, and which due-diligence steps apply. Once CARF/DAC8 are fully binding on your intermediaries, expect crypto flows to join those data streams—addresses, transactions, valuations—through obliged platforms and custodians. If your self-declared residency diverges from the one your counterparties report, mismatch letters and audit flags follow. oecd.org+2oecd.org+2

Withholding risk (treaty access).
Interest, dividends, royalties, and certain gains often face withholding unless you qualify for treaty reductions. Article 4 residency under the relevant treaty is step one; in dual-resident cases (especially companies), the post-2017 approach means benefits can be withheld pending competent-authority agreement. File residency certificates early and structure so one state’s claim is obviously stronger. oecd.org

Banking & notarial friction (SoF/SoW and provenance).
High-end private banks and French notaries require a coherent file:

• Identity & BO: exact matches across passports, registers, and deal docs—aligned with FATF-style expectations even when not cited.
• Source of funds/wealth: for fiat—bank statements, sale contracts; for crypto—wallet statements, on-chain hashes, platform ledgers, custodian attestations, conversion certificates.
• Governance: board minutes/resolutions, local management evidence, and registers proving effective management where claimed.
  If these elements disagree with the residency story, the deal stalls. (MiCA/TFR rails help because they standardize what data must accompany transfers and who is licensed to move them.) eur-lex.europa.eu+1

Case in point—France and Saint-Barthélemy.
France’s article 4 B tests are precise; if you meet them, France considers you tax resident. Saint-Barthélemy, a French overseas collectivity with autonomous tax powers, imposes five-year conditions for individuals and an effective-management test (with five-year seasoning or qualifying local control) for companies to be treated as locally tax resident. The Conseil d’État has also confirmed that state-level social charges remain in scope for certain residents—a nuance many ignore. Residency positions have consequences; they must be intentional. Conseil d'État+3Légifrance+3Légifrance+3

Metaphor: Think of compliance as a bridge. Residency and substance are the pillars; CRS/CARF/DAC8/ MiCA/TFR are the cables; notarial execution is the road deck. Weak pillars? The whole span flexes.

4) Solutions — A residency-first playbook for investors (especially crypto-native)

A) Decide your personal residency—on paper and in life.

• Pick the jurisdiction that fits your life and planning goals.
• Prove it: day-counts, lease/utility bills, family ties, main work location, economic center. In France, align with CGI 4 B; in the UK, run the SRT properly; in the US, measure Substantial Presence and treaty positions if relevant. Your calendar should match your case. Légifrance+2GOV.UK+2

B) Anchor corporate residency where you mean it to be.

• One seat of effective management. Hold board meetings in the claimed jurisdiction; minute decisions; store registers locally; maintain local banking and accounting.
• Avoid dual residency: after 2017, entity tie-breakers rely on competent-authority agreement—slow and uncertain. Build facts so you don’t need it. oe