A special expatriate exemption scheme exists to help attract foreign directors and highly qualified workers to France.
French tax regime for expatriates provides partial income tax exemption, that is subject to a couple of conditions and for a period of up to five years (or eight years for eligible employees and directors assuming their position from July 6th, 2016).
Moreover, this exemption scheme is not only designated for foreign company directors and employees (of any nationality) called upon to work full-time in a permanent or temporary position for a company located in France, but also for those called upon by a foreign entity to work for a company in France.
In order to be eligible, the potential candidates must meet two conditions:
- They must not be French tax residents during the five years preceding the date of takeover within the company established in France.
- They must be French residents for tax purposes during the year in question.
Moreover, this special expatriate exemption scheme affects many items that are fully or partially exempt from income taxes, such as:
- Expatriation bonus (part of the employees remuneration that’s directly linked to expatriation) are totally exempt from income taxes ;
- Base salary and additional pay related to work performed outside of France for the sole and direct interest of the French company where the beneficiary employee is working full time. This remuneration item is fully exempt from income taxes ;
- Income from investments from foreign sources are exempt from income taxes for 50% ;
- Certain intellectual and industrial property rights from foreign sources are exempt from income taxes for 50% ;
- Capital gains on the sale of securities and ownership interest from foreign sources are exempt from income taxes for 50%.
In addition, the eligible employees are only subject to pay the wealth property tax on their assets (ie. “Impôt sur la fortune”) that are located in France for a 5 years period.
And very importantly, the pay items affected by this special expatriate exemption scheme are also exempt from payroll tax (ie. “Taxe sur les salaires”). However, it only benefits to remuneration paid out from January 1st, 2017 onwards.