Expatriate tax regime: Who can benefit from it?
The expatriate tax regime is a system designed to enhance France’s attractiveness to talent. It is available, under certain conditions, to expatriate employees and company directors who come to work in France.
In summary
- The expatriate tax regime applies to employees and company directors recruited abroad or who have been transferred to France.
- It is reserved for new residents of France for tax purposes and those who have not lived in France for the previous five years.
- It entitles individuals to targeted tax exemptions, within specific limits and ceilings.
- The scheme applies for a maximum period of eight years.
What is the expatriate tax regime?
The expatriate tax regime applies to employees and company directors required to work in France, whether recruited abroad or transferred by a firm. To qualify, an individual must:
- Be recruited directly abroad by a firm established in France.
- Be transferred to France by a foreign business to work for a firm located in France.
Did you know?
Employees or company directors who responded from abroad to a job offer from a firm established in France are also considered to have been recruited directly from abroad. Individuals who voluntarily relocated to work in France are not eligible for this scheme.
What are the eligibility requirements?
To benefit from this scheme, the following conditions must be met:
- Be resident in France for tax purposes.
- Not have been domiciledin France for tax purposes in the 5 years preceding the start of employment.
- The beneficiary may be an employee or company director, subject to certain conditions.
How long is the scheme valid for?
The scheme applies for a maximum of eight years, for both employees and eligible company directors, from the date they take up their duties in France.
Change of position
The scheme remains applicable in the event of a change of position within the same business or a firm in the same group. However, the total duration of the scheme cannot be extended beyond eight years.
Which company directors can benefit from it?
- The Chairman of the Board of Directors.
- The Chief Executive Officer.
- The Deputy Chief Executive Officer.
- The Temporarily Appointed Director.
- The Members of the Executive Board.
- Any Director or Member of the Supervisory Board with Special Responsibilities.
Minority or equal shareholders.
Company directors subject to the employee tax regime.
What are the advantages of this scheme?
This scheme notably allows for exemption from:
- The expatriate bonus.
- Days worked abroad.
- Mobility allowances.
- Certain investment income.
- Social security contributions in the employee’s country of origin.
Benefits related to professional activity
The expatriate bonus is the portion of remuneration directly related to expatriation. It is exempt from income tax.
The actual amount must be stipulated in the contract, the corporate mandate, or an addendum drawn up before the employee takes up their position.
If not explicitly stated, it must be determined according to objective and precise criteria.
The bonus can be assessed as a lump sum: it is then deemed to be equal to a maximum of 30% of the total remuneration.
Eligible employees and company directors may be exempt from social security contributions for the portion of their remuneration corresponding to days worked abroad, provided that these trips are undertaken in the direct and exclusive interest of the firm established in France where they primarily work.
Proof of this interest can be provided through expense reports, travel orders, or travel tickets, for example.
Did you know ?
The tax-exempt portion can be calculated by dividing the number of days worked abroad by the total number of days worked in the year. A precise schedule can be maintained.
The income tax exemption for certain components of professional remuneration is capped.
Two options are available each year:
- Option 1
Exemption from the expatriate bonus and the portion related to work abroad, up to a limit of 50% of total net remuneration. - Option 2
Exemption only from the portion related to work abroad, up to a limit of 20% of total net remuneration (excluding bonuses).
The most favorable option can be chosen each year.
The net taxable remuneration must be at least equal to that of employees holding comparable positions within the firm (“reference remuneration”).
Otherwise, the difference must be added back to taxable remuneration.
A certificate from the employer can be provided to justify the comparison.
Did you know ?
Remuneration components covered by the expatriate tax regime are also exempt from payroll tax.
Other specific exemptions
During the period of application of the scheme, beneficiaries may also receive:
- An exemption from tax on allowances paid relating to relocation (familiarization trips, agency fees, moving expenses, etc.).
- An exemption from half of investment income and capital gains from the sale of securities, subject to conditions (payment by an entity established outside France, in a state with a treaty and administrative assistance clause).
- An exemption from contributions to the social security system of the source country (statutory contributions, pension contributions, supplementary benefits).
- A reduction in the French real estate wealth tax (IFI) limited to real estate located in France for the first five years.
What are the practical details of the scheme?
- Exempt remuneration must be declared on income tax return form no. 2042C.
- The chosen capping option must be indicated in the “other information” section from the form no. 2042/2042C.
- For the flat-rate assessment of the bonus, the option must be explicitly declared.
- The expatriate tax regime applies automatically. No prior agreement from the tax authorities is required.
In the nominative social declaration (DSN), the employer must clearly indicate:
- The amount of wages subject to income tax.
- The amount of wages exempt under the expatriate tax regime (bonus + portion related to work abroad) in the box “Amount exempt under the expatriate tax regime”.
- Impôts.gouv.fr
The tax administration’s website also provides information on the expatriate tax regime.
Link : Expatriate regime
- The BOFIP
The BOFIP is the website containing the tax administration’s official comments on all tax legislation.
Link : BOFIP
- Tax service
Pour toute question de fiscalité personnelle :
0 810 467 687 (premium rate number).
- Foreign Investors Office – Tax4Business
A service provided by the French Public Finances Directorate (DGFIP) dedicated to tax matters for foreign nationals.
Contact : tax4business@dgfip.finances.gouv.fr
At a glance
This page explains the French impatriate tax regime. It is based on institutional sources such as Service-public.fr, impots.gouv.fr and Business France. It presents information covering eligibility conditions, duration and tax benefits, including exemptions applicable to remuneration and related income. It uses the example of an employee or company director recruited abroad and moving to France for professional purposes.