Impatriation: France, a tax oasis

Le 25 february 2010

“Since 2007, France has launched a policy to seduce impatriates, aiming to make the country attractive by relieving tax pressure,” says Jean-Maximilien Vancayezeele, Development Manager at Crystal Finance, in the group’s monthly newsletter. The expert reminds that when a person decides to return home to France, “he or she is subject to an unlimited tax obligation and is liable to pay income tax on the global revenue that he or she has earned”; the same applies for the French solidarity tax on wealth (ISF), except that property located overseas is exempt for a period of five years (article 121 from the Loi de Modernisation de l’Économie of July 2008).
A series of tax breaks has now been specially created for impatriates. Firstly, the imposition measure specific to Article 155 B of the Code Général des Impôts. Its first advantage consists in an income tax exemption on any impatriation bonus, either its real amount or a fixed abatement of 30% on global income. Another advantage lies in income tax exemptions on income earned in the course of the activity exercised overseas, subject to a ceiling rate of 20% of taxable income deriving from activity carried out in France.
On top of this, income earned by a person who has settled outside of France in a State that has concluded a tax convention with France, may benefit from an income tax exemption of 50%. Three income categories are concerned: income from stocks, bonds, options; earnings from royalties and intellectual property rights; capital gains from the sale of transferable securities and corporate rights. “Absence of tax on most incomes from international sources and on the impatriation bonus, exemption from the ISF for overseas property – impatriates can count on a particularly lenient tax environment,” concludes Crystal Finance.

Philippe Adam