Expat tax exemptions attract entrepreneurs to France

Good news for international entrepreneurs wanting to start their business in France - the French government has a special expatriate exemption scheme to attract company directors and employees to France by providing partial income tax exemption.

The exemptions, which are valid for up to eight years, are available to employees and company directors of any nationality who work full-time in a permanent or temporary position in a French company. For international entrepreneurs it can be particularly helpful when recruiting employees to work in a new French branch of their company.

For international entrepreneurs setting up in France, those that are eligible include companies within the SARL, SA or SAS structures. Other companies subject to corporate tax (impôt sur les sociétés), can also be part of the scheme as long as the directors are taxable employees. Within a société anonyme (SA) or société par actions simplifiée (SAS), the following types of company director are eligible for the scheme:

  • Chairman of the Board
  • CEO
  • Deputy CEOs
  • Non-executive directors with temporary delegation
  • Members of the executive board
  • Any non-executive director or member of the supervisory board with special responsibilities

Within a société à responsabilité limitée (SARL):

  • Any directors who are minority or equal shareholders.

However, the scheme is restricted to those that have been specifically employed by a French company, rather than someone deciding to move to France first of their own accord. Beneficiaries must also be a resident in France for tax purposes in the year the exemption is claimed but they can’t have been resident for five years prior to taking up the current position.

Related article: Start a Business in France in 8 Steps

Any expats who have been employed by a French company since July 6, 2016 can apply for the scheme within a period of eight years. The scheme also covers any type of change of job or promotion within the company during that time.

Advantages of the expat exemption scheme

The scheme has various benefits such as:

  • Exemption on ‘expatriation bonuses’ afforded to employees within their contracts to help in the move abroad
  • Exemption on some relocation allowances on payments such as reconnaissance trips, agency fees, moving fees and travel costs
  • Exemption from income tax on work carried out on trips outside France. (However, these trips have to be proven to be in the “direct and sole” interest of the French company where the employee is working full-time. Proof of this can be given by providing details of expenses claims, travel orders or tickets)
  • Exemption on half of all income from securities, capital gains from transfers of shares and ownership interests. (Payment from these sums must be made by a person established outside France in a country that has signed a tax treaty with France containing an administrative assistance clause.)
  • Deductions made from social security contributions paid to a scheme in a foreign country, as well as supplementary pension and life insurance schemes
  • Eligible beneficiaries are also only subject to pay the wealth property tax (impôt sur la fortune immobilière) on their assets located in France for five years
  • Eligible employers are exempt from paying payroll tax (taxe sur les salaires) on eligible employees.

For more information on how to open a company or branch in France, including help with tax planning, accountancy, registered addresses and business bank accounts, please visit our pages in the menu or feel free to call us on 0033 (0) 1 53 57 49 10 or email us via our contact page. You are also welcome to download our free guides below.

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