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French impatriate tax regime

By

Julien Darras

Posted

March 21, 2022

at

07:07 PM

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Employees and managers relocating to France to work for a French company may benefit from personal income tax (“PIT”) exemptions of the “impatriate regime”. This article will discuss the benefits, conditions, and more.

Main benefits of the scheme:

✅ Impatriation bonus PIT exemption, which may be assessed at a flat rate of 30% of the total net income.

⚠️ further limitations may apply on the tax free bonus amount;

✅ PIT exemption for the portion of the income linked to the activity carried out outside of France for the employer’s interest;

✅ 50% PIT exemption of the income from foreign sourced dividends, interest, income from life insurance contracts and capital gains;

⚠️ conditions regarding the income payer location apply ;

⚠️ social security contributions (at a current rate of 17,2%) remain applicable on 100% of the income;

✅ 50% PIT exemption on foreign sourced intellectual or industrial property income;

📅 PIT exemptions are applicable for a period of 8 years.

💡 Also:

  • an exemption for 5 years from the French real estate wealth tax (IFI) on the real estate located outside of France;
  • a possible exemption from the registration to the French compulsory social security schemes for basic and supplementary retirement/pension insurance for 3 years, renewable once.

Main conditions of the scheme:

➡️ duties carried out in France via (i) a recruitment from abroad by a French company, or (ii) an intra-group mobility (e.g. from a parent company to its subsidiary);

➡️ not to have been tax domiciled in France during the 5 years preceding the hire;

➡️ file a tax return n°2042, n°2042 C and n°2047 the year following the hire.

Understand More About the France Tax System

Yatax is a French law firm which operates in tax law, advising companies, managers and individuals. The firm provides practical, quantified and innovative solutions meeting client expectations in the context of a demanding and fastly evolving tax environment.

Connect with Julien to assist you with the confirmation of your eligibility to the impatriate tax regime and the assessment of the tax breaks.

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