Have you been recruited by a company based outside France to come and work in France? Have you come to France to carry out business? If so, you can definitely benefit from The Inpatriate Scheme.
If you have not been a tax resident for the last 5 years, you’ve already met the first criterion.
To be eligible for this tax regime, must meet the following 3 criteria:
- You have been living outside France for 5 years (as mentioned above).
- You have decided to start your own business in France, or you have been recruited by the incoming investor, or by its subsidiary in France.
- You, the employee, will become a French tax resident.
A limit in the duration of the employment agreement is acceptable.
The yearly inpatriate’s compensation has to be subdivided in 2 portions: inpatriation premium and compensatory allowance.
This scheme will allow you to benefit from 4 tax exemptions:
- 100 % private income tax exemption for both:
- • The inpatriation premium for a duration of 8 years
- • A limitless compensatory allowance
- 50% income tax exemption for certain income sources outside France related to international property, dividends on interest and capital gains on the transfer of assets.
- 100 % French wealth tax exemption for assets or properties located out of France. There is neither an exemption limit on the value of the assets, nor a limit on the duration of the exemption.
- 100% social contribution exemption in France: in order to avoid double payment of inpatriate’s social contributions in both your country of origin and France, initial social contributions paid in his country of origin are deductible against regular French social contributions.
- These exemptions are capped, but it is possible to choose a cap. However, the taxable wage must be equal to that of an employee performing similar functions in the country of origin. This is called a ‘Referential Wage/Salary’.
1. This corresponds to the standard level of salary for the job in the domestic employment market.
In order to secure the exemptions of your personal individual taxation in France, it is important to verify beforehand that you meet the criteria of this tax-friendly system, in particular the tax-exempted portion of your yearly income in France.
If you would like us to simulate your taxable income based on the chosen cap option and the elements of your compensation, we can. We will figure out the breakdown between inpatriation premium and compensatory allowance, pursuant to best practices of domestic employment market.