Under France’s inpatriates regime employees seconded or hired from abroad were originally income tax free for five calendar years.
The extended measure will apply to individuals who started new roles in France from 6 July 2016.
“In order to strengthen France’s attractiveness, and notably to attempt to take advantage of the Brexit effect, the term during which there is an exemption of French income tax is extended to 31 December of the 8th year following the year in which the employee starts his position in France,” said Agnès Charpenet, Baker McKenzie’s France wealth management tax activity lead, in the firm’s March tax note.
The regime also offers tax breaks on bonuses earned outside of France and ‘passive’ income like intellectual property.
France’s wealth tax does not share the increased exemption, which remains at five years.
The wealth tax regime is still applicable until 31 December of the 5th year after the year in which the impatriate has established or re-established their tax domicile in France.
To qualify for the impatriates regime an individual must:
- Have a fixed-term or permanent employment contract in a company based in France either through a company based abroad, or recruited directly by the company based in France;
- have not been tax domiciled in France during the five calendar years prior to the year they assumed their duties in France;
- have designated France as their tax domicile and residence.