France has a special ‘inpatriate’ scheme designed to help attract company directors and employees to France by providing partial income tax exemptions, subject to certain conditions and for a period of up to eight years.

The inpatriate tax regime applies to individuals who were not resident of France for tax purposes during the five calendar years prior to taking up their duties in a company based in France which recruits them directly outside of France. This includes employees and directors who are posted or made available as part of an intra-group transfer, for instance, from a foreign parent company to a subsidiary based in France.

The inpatriate regime provides the following income tax and capital gains tax exemptions:

Employment income

  • Exemption of additional compensation directly linked to the exercise of a professional activity in France (premium). This can be deemed to be 30% of the remuneration for those recruited outside of France; and
  • Duties carried out outside of France are exempt.

Investment income and capital gains

  • 50% exemption of income from non-French investments (bonds, dividends, interest, royalties, etc); and
  • 50% exemption of capital gains realised on non-French shares and securities.

The above exemptions do not apply to social charges, which remain payable at a rate of 9.7% on employment income and 17.2% on investment income and capital gains.

The inpatriate scheme applies statutorily to all eligible employees and directors and does not therefore involve any preliminary procedures with the French tax authorities. It is however good practice to establish whether the regime is applicable before moving to France or accepting a job offer.

Further information

For further information, please speak to your usual Druces contact or:

Please note this article is for general information. You should not rely on it without advice on the specific facts of your case.

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