France Expat Tax Regime Guide (Régime des Impatriés)
the French impatrié tax regime for incoming expatriates. The guide covers: the eligibility conditions — the "régime des impatriés" (Article 155 B of the CGI) is available to individuals who: (a) are duly hired or seconded by a company established in France (the "impatrié salarié" — the employee must be hired by a French company or transferred from a foreign company to a French company), (b) have not been a French tax resident in the 5 years preceding the transfer, (c) take up their residence in France for the first time or after a period of non-residence of at least 5 years; the regime also applies to the "impatrié dirigeant" (the manager who is a director, the president of a SAS, or the gérant of a SARL) and the "impatrié entrepreneur" (the self-employed person who creates a business in France); the tax exemptions — the impatrié regime provides: (a) exemption from French income tax on the foreign-source portion of the salary — the employee's salary is divided into a French-source portion (the work performed in France) and a foreign-source portion (the work performed outside France or the "prime d'impatriation" — the mobility premium); the foreign-source portion is exempt from French income tax; (b) exemption from French income tax on passive investment income earned abroad — the impatrié's foreign-source investment income (dividends, interest, capital gains from outside France) is exempt from French income tax for the duration of the regime; (c) exemption from the employer's social charges on the foreign-source portion — the employer's social charges (the "cotisations patronales") on the foreign-source portion of the salary may be partially or fully exempt (the "exonération de cotisations patronales" for the impatrié — the employer applies the "réduction générale" or the specific "exonération des cotisations d'allocations familiales" under certain conditions); the duration of the regime — the impatrié regime applies for a maximum period of 8 years from the date of the transfer of residence to France; after 8 years, the taxpayer is taxed as a standard French resident on all income; the tax base — the salary allocation — the foreign-source portion of the salary is determined based on the time spent outside France or the specific tasks performed abroad; the salary is allocated between the French and foreign portions (the "prorata temporis" or the "abattement pour activité à l'étranger"); the "prime d'impatriation" (the mobility premium) is exempt up to a maximum of 30% of the net salary; the wealth tax (IFI) exemption — the impatrié regime also provides a partial exemption from the IFI (the wealth tax on real estate): the foreign real estate assets are exempt from the IFI for the duration of the regime (the "exonération d'IFI sur les biens immobiliers situés à l'étranger"); the filing obligations — the impatrié must file a specific form (the "déclaration n° 2042-IMPAR" — the declaration of the impatrié regime) with the annual tax return; the form must include: (a) the total salary, (b) the foreign-source portion and the French-source portion, (c) the details of the foreign investment income that is exempt, (d) the details of the foreign real estate assets exempt from IFI.
The French impatrié regime is one of the most attractive expatriate tax regimes in Europe. All amounts in Euros (EUR). For related reading, see our Cross-Border Tax Guide → and Non-Resident Tax Guide →.
Key Benefits
- Salary exemption: The foreign-source portion of the salary is exempt from French income tax for up to 8 years. The exemption applies to: (a) the work performed outside France (the "activité exercée à l'étranger"), (b) the "prime d'impatriation" (the mobility premium paid to the expat to compensate for the move to France) — exempt up to 30% of the net salary.
- Investment income exemption: The foreign-source investment income (dividends, interest, capital gains) of the impatrié is exempt from French income tax for the duration of the regime. The exemption applies only if the income is from assets held before the transfer to France.
Conditions
- 5-year non-residence: The taxpayer must not have been a French tax resident in the 5 years before the transfer. The regime applies to: (a) salaried employees hired by a French company, (b) managers (président of SAS, gérant of SARL), (c) entrepreneurs who set up a business in France.
For the social charges exemption for impatriés, see our Social Charges Guide →. For the IFI exemption on foreign real estate, see our Wealth Tax (IFI) Guide →.