France: Modification of the special tax regime granted to expatriates
13 Jan 2016
Under Article 155B of the French Tax Code, expatriates can benefit from a special tax regime whereby employees and executives recruited from abroad to work in a corporation established in France can obtain a partial tax exemption on their remuneration. The partial tax exemption applies during the 5 years following the year they commenced work in France and can also include certain income generated on personal overseas assets.
To benefit from this exemption, the individual cannot be a French tax resident at the time he starts to work in France and during the 5 years before the beginning of the work in France. Please note, the French Tax Administration has always refused the benefit of this special tax regime if the employee is recruited during the 5 year period by another French employer or by another French company, even if they belong to the same group i.e. the special tax regime should only apply to a non-resident's new job in France. In addition, an individual will not be able to benefit from the exemption if they are a French tax resident when they obtain the job.
The "Macron Law" (bearing the name of the French Minister of Finance) modifies partially the interpretation of the French Tax Administration, allowing the exemption to apply for employees changing their position within the same company or in a company belonging to the same group during the 5 year period.
As the French rule has been relaxed, there is now more flexibility for employees and executives from overseas to obtain a special personal tax benefit when coming to France to work. Should you require any further information or advice about the French expatriate tax regime, please contact Hervé Bidaud at hervé.firstname.lastname@example.org