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22Aug

France: Extension of the advantages of the French expat regime

 

The French Government recently issued a law (Loi de modernisation de l’économie) which amongst other things provides for an extension of the advantages related to the privileged tax regime for foreign executives temporarily working in France(*).

Until 1 January 2008, foreign executives who come to France to work within an international group and under the framework of internal mobility are eligible to the privileged tax regime. Retrospectively, from 1 January 2008, foreign executives directly recruited from abroad by French companies will also be eligible. Self-employed persons, moving to France before 31 December 2011, can also apply to the Ministry of Economy for an upfront ruling to enter into this privileged tax regime. To be eligible, they have to demonstrate their exceptional economic added value to France or their specific competences (that are not readily available on the French labour market). Self-employed persons moving to France can also become eligible to the regime when they invest (at least) EUR 770.000 in SMC’s with well-defined activities.

A 30% flat rate exemption of French income tax is provided for foreign executives directly recruited from abroad and for self-employed persons eligible for the privileged tax regime.

For foreign executives working in and out of France and thus eligible for a travel exclusion (on top of the exempt impatriate premium), the maximum exemption has been fixed at 50% of the total remuneration (including the impatriate premium). Optionally, the foreign executive can choose to limit the travel exclusion to 20% of the taxable remuneration but apply for a fully exempted impatriate premium, should this lead to a lower taxable income.

Finally, foreign executives eligible for the privileged tax regime will be exempt from the French wealth tax for a maximum period of 6 years on their overseas wealth. A tax relief of 50% will additionally be granted on French income tax due on non-French sourced dividend and interest income and capital gains realised on shares of non-French companies.

(*) http://news.hrservices.be?200503251230

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Posted: August 22nd, 2008