Personal Income Taxes: how to anticipate a return to or a departure from France

1. Transfer of domicile to France

 

The taxpayer is taxable on the basis of all the income from French or non-French sources that he has earned or disposed of since the date of his arrival in France. This is the case regardless of the country where the person concerned was domiciled prior to his establishment in France.

In the event of receipt of income from French sources prior to the transfer of domicile, the taxpayer will be taxed on the amount of income from French sources that the person concerned disposed of prior to the transfer. As of the transfer, the taxpayer is taxed on all the income from French sources, whether or not earned or disposed of since the date of his arrival in France.

The taxpayer may benefit from the inpatriate regime if he meets certain conditions, including not having resided in France during the last five years. This regime allows the taxpayer to benefit from a reduction in income tax.

 

2. Transfer of domicile to outside of France

If the taxpayer no longer has income from French sources, the base of the taxpayer who transfers his residence abroad must include for the year of this transfer:

– the income that the person concerned has had until the date of his departure;

– industrial and commercial profits and agricultural profits taxable according to the real profit system, which he has made since the end of the last taxed financial year;

– income acquired without having disposed of it prior to his departure;

– income the taxation of which has been deferred.

Taxpayers who transfer their residence to outside of France must declare their income for the year of the transfer under the conditions of the law and pay the corresponding tax in full the year following the transfer.

Since March 3rd of March 2011, the transfer of tax residence to outside France entails taxation (exit tax), unless payment is deferred, to income tax and social security contributions on unrealised capital gains and capital gains carried forward for tax purposes.