TLDR: France offers two main tax regimes for foreign residents moving there: a special regime for "impatriated" employees and executives (Article 155 B of the French Tax Code, CGI) and a temporary tax treatment for new residents (Article 885 A of the CGI). These regimes aim to mitigate double taxation and facilitate talent attraction.
Special regime for "impatriated" employees and executives
Employees and executives who have not been tax-resident in France during the five calendar years preceding their appointment may benefit from a special tax regime under Article 155 B of the CGI. This regime also applies to individuals recruited directly from abroad by a company established in France, provided their actual residence is abroad at the time of recruitment.
To qualify, the individuals must be tax-resident in France under articles a and b of paragraph 1 of Article 4 B of the CGI during the year the regime is applied.
Eligible exemptions and allowances
Certain remuneration components may be exempt under specific conditions, including:
- allowances related to the additional cost of housing;
- tax and social security contribution supplements ("tax equalization");
- other allowances considered as salary supplements (e.g., expatriation allowances, reimbursement of personal expenses).
Allowances and reimbursements for professional expenses (reconnaissance trips, agency fees for housing search, moving costs, etc.) may be exempt under paragraph 1 of Article 81 of the CGI, provided they are used for their intended purpose.
Tax treatment for new residents
Individuals who have not been tax-resident in France during the five calendar years preceding the year in which they establish their tax residence there are taxable only on their assets located in France. This principle applies to both income and wealth.
The tax treaties concluded by France with certain states may provide a tempering measure: assets located outside France owned on January 1 of each of the five years following the calendar year in which these individuals become tax residents in France are not included in the tax base for the solidarity tax on wealth (IFI) for each of those five years.
Tax residence and global taxation
Individuals tax-resident in France under Article 4 B of the CGI are taxable on all their income, whether from French or foreign sources. This general principle applies unless specific exemptions exist, such as those for new residents or the special regimes mentioned above.
Conditions and limits of application
The special regime for "impatriates" is reserved for employees and executives who meet the prior non-residence and actual residence abroad at the time of recruitment. It is not automatically extended to other categories unless specific provisions allow it.
Exemptions and favorable treatments only apply if the conditions of Article 155 B of the CGI are met, including documentary proof of actual residence abroad and compliance with the intended use of allowances and reimbursements.
Exclusions and clarifications
The special regime for "impatriates" applies for a limited period, until December 31 of the eighth calendar year following the year of appointment.