1. The Impatriate tax regime
In order to make France more attractive, the government has put in place a favorable tax regime for “impatriates” codified under the article 155 B of the General Tax Code.
This regime, created by the Law n°2008-776 dated of August 4th, 2008, provides income tax exemption benefiting the category of taxpayers knows as “impatriates” and can be applied to employees and to corporate officers who meet some specifics conditions and are recruited by a French based company.
Two types of “impatriates” can benefit from this tax exemption.
With the application of the special tax regime, the following income received by the “impatriates” could benefit from the tax exemptions:
However, the 30% option was not opened to people hired as part of intra-group transfer mobility before November 2018.
NB: the “impatriation” bonus (the 30% option) is limited to the reference salary applicable to local employees in similar positions.
Indeed, the part of the remuneration which remain taxable must be equal to the remuneration earned by a non-Impatriates employee in the same condition as the Impatriates employee (same company, similar functions, etc.). If there are no similar functions within the company, the French rules provides that the reference compensation may be the same as that paid in the comparable companies based in France.
In all cases, all the exempt remuneration is capped, on option at:
Option should be made every year through the tax return and available to the first five or eight fiscal years following the year of arrival. It is five years for the “impatriates” appointed in France before the 6th July 2016 and eight years for those appointed after the 6th July 2016.
2. What are the conditions to be fulfilled in order to benefit from this tax regime?
The benefit of this special tax regime is subject to the following conditions:
3. What is the duration of application of this tax regime?
The duration of application of this regime will depend on the date on which the Impatriates took office:
4. What are the reporting obligations to be able to benefit from this tax regime?
In order to benefit from the regime, the taxpayer must request its application in his tax return. Indeed, the regime will not be applied automatically.
Moreover, the taxpayer will have to submit a document called “mention expresse” specifying the choice for the 30% option and the number of days worked abroad (if any).
The best way to manage your tax return in France is get a tax expert. Elitax will work with you to ensure you take full advantage of the treaty arrangements which are relevant to your situation. Request a 15 minute free consultation with us.