According to Choose Paris Region, the Ile-de-France region has 1.7 million international residents as well as 15,000 international companies, including a large number of financial institutions such as Bank of America, Goldman Sachs, JP Morgan, Citi and Morgan Stanley.
Every year, entrepreneurs, investors and expatriates move to France. We provide support to these people who, because of their international profiles (fewer than three French tax returns, foreign documentation, sometimes dividing their time between two countries, etc.), sometimes have difficulty obtaining a loan to buy a property when moving to France to work. The French banking process can also be difficult to navigate. Our international team is therefore on hand to help expatriates in France obtain a mortgage.
As well as culture, history and gastronomy, foreign expatriates in France can benefit from tax benefits under the expatriate tax regime.
Expatriate tax regime: What are the eligibility conditions?
This tax regime for foreigners who live and work in France applies to those who previously lived outside France. To benefit from this regime, expatriates must not have been French tax residents in the five calendar years preceding the date on which they began working for a company established in France.
The other criterion to consider is the geographic location of the company that employs the foreign person in France. The company must be based in France and the expatriate must have been recruited in one of the following two ways:
– The employee was “hired by a company established in another State“: for example, this covers individuals who work for a parent company and who are then seconded to a subsidiary abroad on an intra-group transfer. The links between the parent company and subsidiary must relate to share capital or be legal or commercial in nature.
If the company does not yet legally exist in France when the expatriate employee arrives to take up their role, they may still benefit from the expatriate tax regime if their move to France is linked to creation of the local entity.
– The employee is hired for a position in a company in France that is unrelated to the company for which the individual currently works in their home country, or the person is self-employed.
However, if a person comes to France on their own initiative to seek work or if they are already tax resident in France at the time they are hired, they are not eligible for the expatriate tax regime.
You moved to France and you want to buy a property with a French mortgage ?
For how long can an individual benefit from the expatriate tax regime?
The tax regime takes effect as soon as the foreign employee starts working and applies for up to nine full years after that date.
Expatriate employees may only benefit from the regime in years in which they meet both the following conditions:
- They own their home or main residence in France
- They carry out their main professional activity in France
If the expatriate employee in France changes position at the company that hired them when they arrived in France or moves to a different company in the same group, they may continue to benefit from the expatriate tax regime. The period over which the regime applies will not be extended, however.
If the employee leaves the host company, they will cease to benefit from the tax regime, even if they remain resident in France.
What are the advantages of the French expatriate tax regime?
Under the expatriate tax regime, the following are exempt from income tax:
– the expatriation bonus
– the share of income relating to foreign activity carried out for the employer
– 50% of income from foreign-source investments
– 50% of certain foreign-source intellectual and industrial property rights (royalties, patents, etc.)
– 50% of capital gains on the disposal of foreign-source securities and investments
Contributions to supplementary pension schemes, as well as contributions to supplementary pension schemes to which expatriates were affiliated before arriving in France, are also deductible for tax purposes under the expatriate regime.