What Is Impatriation?
Impatriation is the term used when an individual moves their residence from one country to another. This is usually done to work at the headquarters of a company that needs specific skills from a foreign employee. When you move, you become an impatriate and are subject to different tax laws than those who live in their home country.
Expatriate Vs Impatriate
A company’s headquarters is their home base. Expatriates are transferred away from their company’s primary location to help at subsidiaries in other countries and oversee operations there.
In comparison, impatriates are individuals who are brought in to help at the company’s headquaters. They are not transferred to a location, but rather move to the company’s home country.
Why Is Impatriation Promoted?
There are a number of reasons why impatriation is promoted by countries. The main reason is to improve the economy by bringing in new talent, skills, and ideas. Additionally, it can help to boost the country’s image internationally.
Since Brexit, France has recognised an opportunity to attract the most skilled and talented professionals across Europe. As a result, they have made it easier for highly-skilled workers to move there.
That’s why countries, like France, are offering incentives to move there, including tax breaks and other financial help. In fact, the French government has made it easier for foreigners to work in their country by passing new laws and tax regimes that encourage the impatriation of senior executives and leaders from abroad.
How Does Impatriation Affect Taxation?
As an expatriate, you are subject to the tax laws of the country in which you reside. This means that you will be taxed on your income and assets according to the regulations of that country. In some cases, this can be more or less than what you would pay if you were living in your home country.
In regards to French law, the new tax regime has been a huge advantage for France’s impatriates, who aren’t required to pay income tax on the first 50% of their earnings. If you are an employee or manager who isn’t domiciled in France for tax purposes for the last five years, then this will apply to you!
The Impatriate Tax Regime
The French government has established a favorable tax system for “impatriates” codified under article 155 B of the General Tax Code to make France more appealing.
This regime, created by the Law n°2008-776 dated of August 4th, 2008, provides income tax exemption for all impatriates who meet some specific conditions and are recruited by a French-based company.
This tax exemption is available to two sorts of impatriates:
- The French firm recruited the impatriate directly from abroad
- An impatriate working for a foreign firm within a French business
The following amounts paid to the impatriates may be taxed at a reduced rate under the special tax regime:
- For bonuses/premiums directly linked to the “impatriation” or “impatriation” bonuses, there is an exemption. Such bonuses must be detailed in the employment contract or other documentation before the commencement of the duties in France, or on option could be fixed at 30% of the total net remuneration
- the part of income relating to the activity carried out abroad (outside France) in the interests of the employer (working days abroad)
- 50 % of the investments income from foreign sources (interests, dividends)
- 50 % of the capital gains on the sale of securities from foreign sources
- 50 % of certain intellectual and industrial property rights are from foreign sources
Not Sure How Impatriation Affects You?
Impatriation tax is a complicated topic that can vary depending on your individual situation. If you’re not sure how it will affect you and your taxes, then you should speak with a tax professional to find out more.
At Elitax, we are experts in impatriate taxation. If you are considering moving to France or returning to your home country, we can help you determine how this will affect your taxes. We can also advise you on the best way to file and pay your taxes so that you can avoid any penalties or fines.
We are a team of bilingual accountants and tax specialists, so we can help you with all of your impatriate needs. Contact us on +33 (0)1 43 71 10 05 for a free consultation!
About French Impatriates
The country’s culture and lifestyle are considered attractive to those looking for adventure abroad, with companies readily offering secondments or jobs on local missions as well.
Most of the impatriates who live in France are over 40 years old, with a higher percentage of men. Also, the majority have children, who they bring with them on the move (which is often Paris).
Need help with your taxes? Get in touch with us today on +33 (0)1 43 71 10 05
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