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What are the eligibility conditions for the French impatriate tax regime?
The French impatriate tax regime is subject to a set of cumulative conditions strictly defined by Article 155 B of the French Tax Code.
- Only employees and qualifying company officers may benefit from the regime. Self-employed individuals, sole traders and members of the liberal professions are not eligible in that capacity.
- Five years outside France. The individual must not have been a French tax resident during the five calendar years preceding the year in which their duties in France begin.
- Recruitment from abroad. The individual must either be recruited directly from abroad by a company established in France or assigned to France as part of a transfer between related companies.
- French tax residence. The individual must have their home or main place of abode in France and carry on their main professional activity in France.
→ Employees and qualifying company officers
The regime applies to employees and certain company officers treated as employees for French tax purposes who come to work for a company established in France. Nationality is irrelevant. A French national returning to France after a period working abroad may therefore qualify, provided that all the relevant conditions are met.
In addition to employees, the regime may apply to certain company officers referred to in Article 80 ter of the French Tax Code. These include the chairmen and managing directors of sociétés anonymes or sociétés par actions simplifiées, minority or equal-interest managing directors of SARLs and certain other company officers taxed under the employment income rules.
→ No French tax residence during the previous five years
The individual must not have been a French tax resident during the five calendar years preceding the year in which their duties in France begin.This condition must be assessed under the French domestic tax residence rules and, where applicable, the provisions of the relevant double tax treaty.
Consequently, an individual who remained a French tax resident during that period cannot benefit from the regime, including where they were temporarily working abroad.
For further information about French tax residence, please refer to the dedicated FAQ.
→ Recruitment from abroad or an intra-group transfer
Two main situations are covered:→ The employee or company officer is assigned by a foreign company to work for a company established in France with which it has capital, legal or commercial links. This includes transfers within an international group.→ The employee or company officer is recruited directly from abroad by a company established in France. Before being recruited, the individual may have been employed, self-employed, a student or not professionally active.
The position of employees returning to France after a period of expatriation gave rise to considerable debate, which was ultimately resolved favourably by the French tax authorities.
Article: French impatriate tax regime and return from expatriation
⚠︎ POINT OF ATTENTIONIt is therefore essential to demonstrate either an intra-group transfer or recruitment carried out while the individual was still living abroad.
→ IN PRACTICEAs a lawyer specialising in the French impatriate tax regime, I regularly assist clients in securing their eligibility based on the documents generally requested by the French tax authorities during an audit.
→ Becoming a French tax resident
The French impatriate tax regime is available only to individuals who become French tax residents under the French domestic rules, particularly with regard to the first two criteria set out in Article 4 B of the French Tax Code.
The relevant individuals must therefore:→ have their home or main place of abode in France; and ;→ carry on their main professional activity in France.
The regime provided for by Article 155 B of the French Tax Code applies only where both conditions are met.
⚠︎ POINT OF ATTENTIONIf a tax treaty assigns the individual’s tax residence to another country, the French impatriate tax regime cannot apply.
Determining tax residence can be particularly complex where the employee’s family remains outside France.
→ IN PRACTICEAn incorrect assessment, particularly regarding tax residence or the circumstances of recruitment, may result in the regime being challenged by the French tax authorities.
How long does the French impatriate tax regime apply?
The regime may apply until 31 December of the eighth calendar year following the year in which the individual begins their duties in France.
A separate temporary regime applies for French real estate wealth tax (impôt sur la fortune immobilière, or IFI). This regime ends on 31 December of the fifth year following the year in which the individual becomes a French tax resident.
- A fixed end date. The regime ends on 31 December of the eighth calendar year following the year in which the individual begins their duties in France.
- A change of employer may terminate the regime. The regime is preserved where the individual moves to another company within the same corporate group, but not, in principle, where they join an unrelated employer.
→ Conditions to be met each year
The maximum period provided for under Article 155 B of the French Tax Code does not automatically guarantee that the regime will apply throughout the entire period.
For each relevant year, the taxpayer must, in particular, have their home or principal place of residence in France and carry out their principal professional activity in France. These conditions are cumulative and must be reviewed annually. Failure to meet one of the conditions for a particular year does not necessarily result in the permanent loss of the regime.
The regime may continue to apply for earlier or subsequent years in which all the conditions are met.However, an ineligible year cannot be carried forward and does not extend the regime’s original end date.
ⓘ KEY POINTSProvided that the other conditions are met, the regime may then apply from the year in which the individual began working in France.
Where the household moves to France at a later date, the taxpayer may benefit from the regime from the year of the household’s relocation, but only until the original end date.
→ Change of duties or employer
The regime is preserved where the individual changes duties within the same company.It may also be preserved where the individual changes employer within the same corporate group, whether the new duties are similar or different.
However, this change does not extend the duration of the regime.By contrast, moving to an employer outside the corporate group will, in principle, terminate eligibility for the regime.
The composition of the corporate group and the effective date of the change should therefore be properly documented.
What tax exemptions are available?
The French impatriate tax regime provides several income tax exemptions, mainly covering: :
→ the impatriation allowance;→ remuneration relating to duties performed abroad;→ certain foreign-source investment income;→ and, under the separate IFI regime, real estate assets located outside France.
These exemptions are subject to strict conditions and different rules apply depending on the nature of the income concerned.
- Actual or deemed impatriation allowance. The exemption may apply either to an allowance specified or objectively determinable before the individual begins their duties in France or, alternatively, to a deemed allowance representing up to 30% of total remuneration.
- The 30% exemption may be limited. After applying the exemption, taxable remuneration must remain at least equal to the reference salary. The effective exemption may therefore range from 0% to 30%.
- Duties performed abroad may also qualify. The corresponding remuneration may be exempt where the duties are performed in the direct and exclusive interests of the French employer and the business travel is properly substantiated.
- Two alternative caps must be compared. Either the combined exemption for the impatriation allowance and foreign working days is capped at 50% of total remuneration, or the exemption for foreign working days alone is capped at 20% of taxable remuneration after deduction of the exempt impatriation allowance.
- The 50% exemption does not cover all foreign income. It applies only to certain foreign-source investment income, intellectual property income and capital gains on securities, subject to specific conditions.
- IFI is governed by a separate temporary regime. Only real estate assets and rights located in France are taken into account until 31 December of the fifth year following the year in which the individual becomes a French tax resident.
→ Exemption of the impatriation allowance
The impatriation allowance is the portion of remuneration paid to an employee or qualifying company director in consideration for relocating to France.Two alternative methods are available.
The taxpayer must apply either the actual allowance method or the deemed allowance method.
1. Actual allowance method
Under this method, the exemption applies to the remuneration actually received in connection with the individual’s relocation to France.
It may, for example, include:→ housing costs;→ cost-of-living adjustments;→ impatriation or relocation allowances;→ and other remuneration supplements directly related to the relocation to France.
⚠︎ POINT OF ATTENTIONWhere the amount is not expressly stated, it must be capable of being determined using objective criteria set out in the relevant document.
2. Deemed allowance method — up to 30%
Under the deemed allowance method, up to 30% of total remuneration may be treated as an exempt impatriation allowance.
In this case, the employment contract does not need to identify a separate impatriation allowance.
However, the exemption remains subject to the reference salary requirement.
Depending on the amount of the reference salary, the effective exemption may therefore represent between 0% and 30% of total remuneration.
Regarding the RSUs, please consult the relevant article
→ The reference salary establishes a minimum taxable amount
Article 155 B of the French Tax Code makes the exemption of both the actual and deemed impatriation allowance subject to compliance with the reference salary requirement.
The exemption cannot reduce the individual’s remaining taxable remuneration below the remuneration paid for comparable duties within the same company or, where no suitable comparison is available, within a similar company established in France.
The comparison must be carried out using annual net taxable remuneration and must take the individual’s professional experience into account.
Where the remuneration remaining taxable after the exemption is lower than the reference salary, the excess portion of the impatriation allowance must be added back to taxable income.
→ IN PRACTICEIt is advisable to obtain a formal employer certificate confirming the reference salary and the basis on which it was determined, in order to support the exemption claimed in the event of a tax audit.
In practice, some employers may be reluctant to disclose the reference salary directly to the employee, particularly because of the confidential nature of their internal remuneration policies.
In such cases, I can liaise directly with the employer to obtain the necessary information, perform the relevant calculations and secure the supporting documentation.
I strongly advise against applying the impatriation allowance exemption unilaterally without the employer’s prior confirmation and appropriate supporting documentation.
⚠︎ POINT OF ATTENTIONIn the event of a tax audit, the French tax authorities may request detailed evidence supporting both the amount used and the calculation method.
→ Duties performed abroad in the interests of the employer
The regime also provides an exemption for the portion of remuneration relating to professional duties performed outside France.
The business travel must be undertaken in the direct and exclusive interests of the French employer.
Eligible travel may include trips undertaken to:→ meet clients;→ attend meetings;→ supervise business operations;→ carry out a specific assignment;→ or provide services to a foreign entity within the same corporate group.
Where this portion of remuneration is not expressly specified in the employment contract or calculated at the time of travel, it may be determined by comparing the number of working days actually spent abroad with the individual’s total number of working days during the year.
Travel days are not, in principle, treated as working days performed abroad.
Private travel, annual leave and stays that are not directly and exclusively connected with the employer’s business do not qualify for the exemption.
→ Two caps to compare each year
The professional income exemptions available under the regime are subject to two alternative caps:
→ a global cap of 50% of total remuneration, covering both the impatriation allowance and remuneration relating to duties performed abroad; → or a cap applying specifically to foreign working days, under which the exempt remuneration relating to duties performed abroad is limited to 20% of taxable remuneration, after deduction of the exempt impatriation allowance.
The most favourable option will depend on the amount of the impatriation allowance, the reference salary and the number of eligible foreign working days.
The two options should therefore be compared using the figures applicable to each tax year. The option selected must also be reported in the additional information section of the French income tax return.
→ 50% exemption for certain foreign-source income
Subject to the conditions laid down in Article 155 B of the French Tax Code, a 50% income tax exemption may apply in particular to:→ foreign-source dividends;→ foreign-source interest;→ and certain capital gains arising from the disposal of foreign securities.
Without the impatriate tax regime, foreign-source investment income is generally subject to the French flat tax, consisting of:→ 12.8% income tax; and→ 18.6% social contributions;
resulting in an overall tax rate of 31.4%.
Under the impatriate tax regime, 50% of the relevant taxable basis is exempt from income tax.
In practical terms, the income tax component, which would normally be charged at 12.8%, is reduced by half to 6.4%.
However, social contributions remain payable in full at the rate of 18.6%.
ⓘ KEY POINT→ What IFI regime applies to new French tax residents?
The IFI regime applicable to new French tax residents is separate from the impatriate tax regime provided for under Article 155 B of the French Tax Code.
An individual who was not a French tax resident during the five calendar years preceding their arrival in France is, in principle, liable to French real estate wealth tax only on real estate assets and rights located in France.
This exemption for foreign real estate applies until 31 December of the fifth year following the year in which the individual becomes a French tax resident.
It is not conditional upon recruitment from abroad or salaried employment. Its conditions and duration must therefore be distinguished from those governing the impatriate income tax regime.
→ How much can actually be exempted?
The impatriation allowance, reference salary, business travel, applicable caps and foreign-source income must be considered together.
A personalised review makes it possible to determine the exemptions that are genuinely available and to secure their application in the French tax return.
How is the French impatriate tax regime applied in practice?
Eligibility for the impatriate tax regime does not, in itself, guarantee that the available exemptions will be effectively secured.
Implementing the regime requires coordination between several elements, including the employment contract or corporate appointment agreement, payroll, the French payroll reporting system (déclaration sociale nominative, or DSN), the monitoring of working days spent abroad and the individual’s French income tax return.
→ Payroll and income tax reporting
The impatriate tax regime is intended to be applied directly through payroll from the date on which the individual begins their duties in France.
However, the French tax authorities accept that the exemptions provided for under Article 155 B of the French Tax Code may be claimed through the annual income tax return where the regime was not originally applied through payroll.Exempt remuneration must be reported in box 1DY or 1EY of Form 2042-C, depending on whether it relates to the first or second taxpayer.Qualifying foreign-source investment income must be reported in box 2DM of Form 2042-C.Additional mandatory information must also be provided in the income tax return.
→ Securing or correcting the taxpayer’s position
Where eligibility for the regime or its practical application raises a particular difficulty, I recommend considering an advance tax ruling request (rescrit fiscal).
This procedure enables the taxpayer or their employer to provide the French tax authorities with a detailed description of the circumstances and request a formal position on the application of the relevant tax rules.
It is particularly appropriate where the amounts involved are significant or where uncertainty remains regarding the interpretation or application of the legislation.
If the impatriate tax regime was not applied, or was only partially applied, in respect of a previous tax year, the position may still be corrected.
A tax claim may be filed to obtain a refund of tax paid in excess, provided that the conditions of the regime were met, the necessary supporting documents are available and the applicable claim deadline has not expired.
The merits of the claim and the amount of the potential refund must be assessed on a case-by-case basis.
I regularly assist impatriates with tax refund claims
Frequently asked questions about the French impatriate tax regime
Certain aspects of the regime regularly give rise to practical difficulties. Below are answers to some of the most frequently asked questions.
→ Does the impatriate tax regime have to be mentioned in the employment contract?
Eligibility for the regime does not necessarily have to be mentioned in the employment contract.
However, where the exemption applies to an actual impatriation allowance, its amount or the method used to calculate it must have been established in the employment contract, corporate appointment agreement or an amendment executed before the individual begins their duties in France.
Where this requirement is not satisfied, the deemed allowance method of up to 30% may be considered.
→ Can the regime be claimed if the employer did not apply it through payroll?
Yes, provided that all the relevant conditions are met.
The employee may correct the amount pre-filled in the annual French income tax return and separately report the taxable and exempt portions of their remuneration.
However, coordination with the employer remains essential, in my view, to secure the calculation and obtain the necessary supporting documents.
→ Does the deemed allowance method always provide a 30% exemption?
No. The effective exemption may range from 0% to 30% of total remuneration, depending in particular on the reference salary requirement.
Taxable remuneration after application of the exemption must remain at least equal to the reference salary.
→ Can the tax benefit be recovered if the regime was not applied in previous years?
A tax claim may be considered where the conditions of the regime were satisfied, the exemptions can be accurately recalculated and the required supporting documents are available.
It is also necessary to verify that the claim deadline for the relevant tax year remains open.
Why seek advice from the firm?
→ Analyse and structure
Review of eligibility, selection of the actual or deemed allowance method, determination of the reference salary and contractual structuring of the impatriation allowance.
→ Implement the regime and coordinate with the employer
Coordination with HR and payroll teams, provision of a reference salary certificate template where required, and review of employer certificates relating to the reference salary or working days spent abroad.
→ Calculate and report the exemptions
Calculation of the available exemptions, comparison of the alternative caps and preparation of the annual French income tax return.
→ Secure and defend the taxpayer’s position
Preparation of advance tax ruling requests and tax claims, responses to enquiries from the French tax authorities, assistance during tax audits and representation in pre-litigation or litigation proceedings.
→ Extensive experience of the regime
For more than ten years, I have advised employees, senior executives and employers on the application of the French impatriate tax regime.
I have prepared hundreds of income tax returns involving the regime, responded to numerous tax audits and enquiries, assisted companies with its implementation and filed advance tax ruling requests and tax claims.
This practical experience provides a clear understanding of the documents, calculations and explanations generally expected by the French tax authorities.
→ A single and confidential point of contact
As a French lawyer bound by professional secrecy, I can also act as an independent intermediary between the taxpayer and their employer.
This makes it possible to centralise communications, preserve the confidentiality of sensitive remuneration information and ensure that the legal, payroll and tax aspects of the matter remain consistent.
→ How can the regime be applied securely?
Whether you are preparing to move to France, completing your annual income tax return, seeking to claim the regime retrospectively or responding to an enquiry from the French tax authorities, I can assist you in securing the regime and defending the exemptions claimed.
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