Expatriate tax ebook - France

Basis of taxation

Charge to tax
Residence
Income from employment
Source of employment
Benefits (in kind)
Expatriate concessions
Relief for foreign taxes
Deductions against income

Charge to tax
A charge to French tax is dependent on whether the income arises in France. The extent of the charge will be determined by an individual’s tax residency status.

Residence
Taxation of individuals in France is determined by their residency or the source of their earnings. Persons are resident in France for French tax purposes if:

• they have their home or main abode in France
• they carry on a professional activity in France unless this activity is carried on therein incidentally
• they have the centre of their economical interests in France.
  

Individuals that are French resident are taxed on their worldwide income and gains. Non residents are only taxed on their French income and gains.

Income from employment
A French tax charge arises on employment income derived from duties performed in France. Assessable employment income includes all wages, salaries, overtime pay, bonuses, gratuities, perquisites, benefits etc.

Source of employment
As mentioned above, where duties are performed in France, any remuneration received in respect of these duties is treated as French sourced income and, therefore, subject to French income tax regardless of the expatriate's tax residence status (subject to the relevant double taxation treaty).

Benefits (in kind)
In general, where the benefit is enjoyed in France, a French income tax charge will arise. Therefore, housing, meal allowances, provision of a car and relocation allowances will come within the charge to French income tax in addition to the individual's salary.

Expatriate concessions
A tax exemption on the allowances paid to employees seconded to France has been implemented under specific conditions.

Relief for foreign taxes
Where income has been subject to tax twice (in France and a foreign jurisdiction) relief can be granted by the French Revenue Authority where provided for in the relevant double taxation treaty.

Deductions against income
France grants a wide range of tax deductions. French resident taxpayers are entitled to deduct a 10% personal allowance on salaries and pensions for deemed expenses. They may also be entitled to the following as allowances: 'child tax credit', education, sitter, alimony, employment of a servant, gifts in favour of specific organisations, interest paid for the acquisition of certain real estate.

Some non resident individuals may also be entitled to allowances to offset against French source taxable income.

Information about France:

introduction

facts and figures

basis of taxation

what taxes?

tax planning opportunities