Are you moving house and thus leaving France?
If you are planning on moving house and in doing so you will be leaving France, it is important to note that you could be subject to an ‘Exit Tax’, if you meet specific criteria. In France, this tax applies to revenue and social charges on all unrealised gains; however it is possible to apply for a payment suspension by reporting this tax, in certain cases. This very much depends on the end destination of the person who is changing address.
You are subject to this ‘Exit Tax’ if you meet the following 2 conditions:
- You have been in France for at least 6 months before your move outside of France,
- You have social rights, assets, or shares with a value of 50% of the total shares of a company, or a total value higher than 800,000 €.
In terms of tax rates, the standard rate applies for personal income tax (IRPP), but social charges (CSG CRDS) are calculated at a rate of 15,5%. However, there is scope for this payment to be suspended if both the above taxations are reported (up until the sale or transfer of the company’s shares). As a result, the suspension can either be automatic (if the transfer takes place within the EU, Iceland or Norway) or ‘subject to choice’ (dependent upon whether the taxpayer makes the request for it to be suspended or not).
Let us assess what happens if the payment is not automatically suspended. If you find yourself in this case you must do the following:
- Fill out form number 2074-ETD and send it to the relevant tax office within the 30-day period before your departure.
- Appoint a legal representative that will act as the intermediary between you and the tax administration, in the case that they request information from you. This representative will not be the guarantor for the payment of this tax.
- Provide financial guarantees to the tax office, once you have submitted form 2074-ETD, which should equal 30% of the exit tax.
In the case that you do not meet the criteria for this payment to be suspended you may be able to request a tax refund. The tax administration could refund the tax paid in the following cases:
- You decide to move back to France,
- After your departure, you sell your shares and generate a capital gain or capital loss inferior to the capital gain declared in the exit tax,
You do not re-sell or transfer your home in France: in this case the amount of exit tax paid is refundable as long as the request is submitted within the 15 years after your original departure date.1
This is a matter to be followed up on. Here at Maupard we would be more than happy to look into your individual circumstances, to help you make sense of the consequences of this change and work in your favour.
Do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.