Tax Benefits for Expatriates Moving to France: Understanding the French Regime
France offers a specific tax regime for inbound employees (the "impatriate regime") designed to attract international talent. As a French tax lawyer, I regularly assist executives and companies in making the most of this regime, which can provide substantial income tax exemptions for up to eight years. In this article, I explain how it works, who qualifies, what the options are, and how to choose the best strategy.
What is the French impatriate regime?
The impatriate regime is intended to make France more attractive to internationally mobile professionals. It grants income tax exemptions on certain components of remuneration, for up to eight calendar years following the year of arrival.
There are two main tax exemptions:
- The impatriation bonus (extra compensation linked to relocation)
- The portion of salary corresponding to work performed abroad
These two benefits can be combined, subject to applicable caps.
1. Exemption of the impatriation bonus
Definition and conditions
The impatriation bonus refers to additional compensation (cash or in kind) granted in relation to the relocation. It must be provided for in the employment contract, management agreement, or in an amendment thereto.
If the bonus cannot be precisely fixed in advance, it must be objectively determinable — for example, as a percentage of base salary or in the form of housing provided by the employer [1].
Optional lump-sum valuation
Inbound employees may elect to value the bonus at 30% of their total net salary, excluding employee shareholding or savings plans. This lump-sum also includes severance payments in case of contract termination [2].
Limitation based on a “reference salary”
The taxable income in France must not fall below the salary of a comparable employee working in the same or a similar company in France. If it does, the difference is added back into the taxable base.
2. Exemption of compensation for foreign workdays
A portion of the salary relating to work performed outside France may also be tax-exempt, provided that the foreign travel is carried out exclusively in the direct interest of the French employer [3].
3. Two capping options to choose from
Each year, the inbound employee must choose between two mutually exclusive capping options:
Option 1: Global cap
- All tax exemptions (bonus + foreign days) are capped at 50% of total remuneration.
Option 2: Split cap
- The impatriation bonus is fully tax-exempt.
- The foreign workday exemption is capped at 20% of taxable remuneration.
4. Illustrative example
Here is a realistic example based on a situation I commonly advise on:
- Net base salary: €90,000
- Impatriation bonus: €130,000
- Reference salary: €100,000
- Foreign workdays: 80 out of 240 business days
Step-by-step calculation:
- Taxable salary aligned with reference: €100,000
- Bonus exempted: €120,000 (difference between €220,000 and €100,000)
- Foreign workday portion: €33,333 (€100,000 / 240 × 80)
Comparison of options:
Option 1 – Global cap
- Maximum exemption: 50% of €220,000 = €110,000
Option 2 – Split cap
- Bonus exempt: €120,000
- Foreign day cap: 20% of €100,000 = €20,000
- Total exemption: €140,000
Conclusion: Option 2 is the more favorable choice in this case.
5. Who qualifies for the impatriate regime?
The regime applies to:
- Employees or executives assigned to a position in France, either through transfer from a foreign company or recruited directly from abroad [4];
- Corporate officers as defined under Article 80 ter of the French Tax Code [5], including:
- For SA and SAS: CEOs, general managers, board members, etc.
- For SARLs: minority or equal-share managers
- For other legal entities subject to corporate tax: executives treated as salaried employees for tax purposes
6. Conditions to qualify for the regime
To benefit from the regime, the following conditions must be met — and reassessed each year:
a) Recruited or transferred from abroad
Either by a foreign entity or directly by a French company.
b) No prior French tax residency
The individual must not have been tax resident in France during the five calendar years prior to taking up the role [6].
c) Main residence (home or centre of vital interests) in France
The individual must have their usual place of residence and family base in France [7].
d) Main professional activity located in France
This refers to either the activity where most time is spent or the source of the highest global income [8].
Note: If one of these conditions is not met in a given year, the benefit is lost for that year, but it may still apply in previous or subsequent years, up to the 8-year limit.
Conclusion
The French impatriate regime is a powerful tax optimization tool for internationally mobile professionals relocating to France. I advise performing a thorough eligibility check and carefully selecting the most advantageous capping option.
Need help navigating this regime? I assist executives, HR teams, and legal departments in securing this status and optimizing the tax impact of international mobility.
S. ASSOGNA (sandro.assogna@avocat.fr)
[1] BOI-RSA-GEO-40-10-20 n. 70 (date de début de publication du BOI : 21/06/2017)
[2] Conseil d'État, 9ème - 10ème chambres réunies,04/10/2023, 466714
[3] BOI-RSA-GEO-40-10-20 n. 220(date de début de publication du BOI : 21/06/2017)
[4] BOI-RSA-GEO-40-10-10 n. 10 (date de début de publication du BOI : 21/06/2017)
[5] BOI-RSA-GEO-40-10-10 n. 70 et n. 80 (date de début de publication du BOI : 21/06/2017)
[6] BOI-RSA-GEO-40-10-10 n. 150 (date de début de publication du BOI : 21/06/2017)
[7] Conseil d'Etat, Section, du 3 novembre 1995, 126513,publié au recueil Lebon
[8] BOI-IR-CHAMP-10 n. 220 (date de début de publication du BOI : 28/07/2016)
