The impatriate tax regime enables certain employees and managers who come to work in France to benefit from significant advantages on their income. Designed to boost the region’s economic attractiveness, the scheme is subject to strict conditions. It requires rigorous upstream analysis, without which exemptions may be called into question or under-utilized. Here are the essential points to know to optimize this diet without taking risks.
A plan for international talent
Introduced by the 2008 Finance Act, the impatriate regime is designed to encourage high value-added profiles to settle in France. It is intended for people recruited abroad or temporarily seconded to France by their employer.
The beneficiary must not have been a French tax resident in the five calendar years prior to arrival, or at the time of signing the employment contract. They must settle in France under an employment contract signed with a company established in the country.
This scheme mainly concerns senior executives, rare technical profiles or foreign employees called upon to take on management functions within an international group.
Partial and targeted tax exemptions
The scheme provides partial exemption from income tax on :
- The portion of remuneration linked to impatriation (impatriation bonus, benefits in kind, accommodation expenses, etc.),
- Foreign-source income, under certain conditions.
The amount exempted may reach 50% of the total remuneration, provided that this exemption does not exceed 30% of the total, unless you opt for the overall ceiling.
Passive income from foreign sources (dividends, interest, capital gains on the sale of securities, etc.) may also be exempt, provided it is not received in France. This exemption applies for a maximum of eight years from the year of arrival.
Points of attention and common mistakes
While the scheme is advantageous, it remains complex to implement, and certain errors can result in its loss or retroactive taxation. It is essential to ensure that :
- The employment or secondment contract complies with the criteria laid down by the tax authorities,
- Remuneration components are correctly identified and broken down into taxable and tax-exempt components,
- Foreign-source income must be received and retained abroad to qualify for the exemption.
A misinterpretation of eligibility criteria, an incomplete tax return or an undeclared change in situation may result in the tax authorities calling the scheme into question, with penalties.
Wealth taxation and the impact on assets
Contrary to popular belief, the impatriate regime does not automatically exempt you from property wealth tax (IFI). Real estate located in France remains taxable, whether owned directly or through a company. On the other hand, real estate located abroad may, under certain conditions, benefit from a temporary exemption.
It is therefore essential to link the impatriate regime to overall wealth management, taking into account investment flows, the ownership of secondary residences and the receipt of rental income abroad.
Impatriate regime: our support
BERGEOT PAOLI Associés assists impatriate managers, executives and employees in analyzing, implementing and monitoring the tax regime applicable to impatriates in France. We can help you validate your eligibility, optimize the structuring of your remuneration, secure the applicable exemptions and anticipate the risks of declarations.
We also coordinate with your other advisors (employment lawyer, asset manager, HR) to ensure smooth, compliant implementation over the long term.
Discover our support for expatriation and impatriation