France Cross-Border Tax Guide (Fiscalité Internationale)
the French tax treatment of cross-border activities. The guide covers: the tax residency rules for individuals — the "foyer fiscal" concept: a person is resident in France if (a) their home (foyer) is in France, or (b) their principal place of stay (séjour principal) is more than 183 days per year, or (c) their professional activity (activité professionnelle) is in France, or (d) the centre of their economic interests (centre des intérêts économiques) is in France; the residency rules for companies — a company is resident in France if its place of effective management (siège de direction effective) is in France; the foreign income exemption for individuals — income from a foreign permanent establishment (établissement stable) is exempt in France under most tax treaties (the "exemption with progression" method — the foreign income is exempt from French tax but is included in the calculation of the progressive tax rate applied to the French-source income); the foreign tax credit (the "crédit d'impôt") — foreign-source dividends and interest are subject to French tax at the PFU (30%) or the progressive rate, with a foreign tax credit equal to the foreign tax paid (capped at the French tax due); the controlled foreign company rules (the "règles CFC" or "transparency rules" under Article 209 B of the CGI) — a French company that holds at least 50% of a company in a low-tax jurisdiction (tax rate less than 50% of the French rate, i.e., below 12.5%) must include the profits of the foreign company in its taxable income; the exit tax (the "exit tax" under Article 167 bis of the CGI) — a person who transfers their tax residency from France to another country must pay an exit tax on unrealised capital gains on shares, securities, and certain assets if the total unrealised gains exceed €800,000 (or if the shareholding exceeds 50% of the company's profits and the value exceeds €800,000); the exit tax is suspended (sursis de paiement) until the actual disposal of the assets (up to a maximum of 10 years); the double tax treaty network — France has one of the most extensive tax treaty networks in the world, with over 120 treaties; the treaties generally follow the OECD Model Convention; the key treaties for France are with Germany (1969), the UK (2008), the US (1994), Belgium (1964), Italy (1989), Spain (1995), Switzerland (1966), Luxembourg (1958), and China (2013); the tax treaty with the US is particularly important for French residents — the US-France treaty provides that dividends are taxed at 15% (5% for companies holding at least 10%), interest at 0%, and royalties at 5% or 10%; the international hiring of employees — an employee who works partly in France and partly outside France must apportion the salary between the French-source portion (subject to French tax) and the foreign-source portion; the "règle des 183 jours" — an employee who is present in France for less than 183 days in a 12-month period and is paid by a non-French employer is not subject to French tax on the foreign salary; the international VAT rules — the import of services from outside the EU is subject to French TVA (reverse charge by the French customer); the export of services outside the EU is exempt from French TVA.
France's exit tax and CFC rules are strict, but the treaty network provides relief for double taxation. All amounts in Euros (EUR). For related reading, see our Personal Tax Guide → and Corporate Tax Guide →.
Tax Residency — Individuals
- French tax resident (foyer fiscal): A person is a resident of France if any of the following criteria is met: (a) home (foyer) — the person has a permanent home in France (owned or rented), (b) principal stay (séjour principal) — the person is present in France for more than 183 days in a calendar year, (c) professional activity — the person's principal professional activity is exercised in France, (d) centre of economic interests — the person's principal investments, financial interests, or business activities are located in France. If the criteria conflict with a tax treaty, the treaty's tie-breaker rules prevail (Art. 4 of the OECD Model — permanent home, centre of vital interests, habitual abode, nationality).
- Resident taxation: French tax residents are taxed on their worldwide income (revenu mondial). Non-residents are taxed only on their French-source income (salaries paid by a French employer, rental income from French property, French dividends and interest at the PFU of 30%, capital gains on French real estate).
Exit Tax
- Exit tax on unrealised gains: If a person transfers their tax residence out of France and holds shares, warrants, or securities with unrealised capital gains exceeding €800,000 (or holds at least 50% of a company's profits with a value above €800,000), the exit tax applies. The tax is calculated on the unrealised gains as if they were realised on the day before the transfer. The rate is the progressive IR rate (up to 45%) plus the exceptional contribution on high incomes (CEHR) of up to 4%.
- Suspension of payment (sursis): The exit tax payment can be suspended if the taxpayer (a) transfers to another EU/EEA country, (b) provides a guarantee to the tax authorities, and (c) files an annual declaration of the assets. The suspension lasts up to 10 years. The tax becomes due if the assets are sold within the 10-year period or if the taxpayer returns to France within 5 years.
For the tax treaties and foreign tax credits for specific countries, refer to the relevant treaty between France and the other country. For the international hiring of employees, see our Hiring Employees Guide →.