The “Secret” French Tax Rule That Could Cut Your Income Tax by 30%
Moving to France usually implies high taxes, but the French Impatriate Scheme (Article 155 B) changes that narrative. Designed to attract international talent, this incentive can exempt a large portion of your income from tax for up to eight years.
Who Qualifies?
You must meet three strict criteria to access these benefits:
- 1. Recruited from Abroad: You must be “called” to France. This means being transferred by an international group or directly recruited by a French company while you are still living outside France. If you move voluntarily and then find a job, you do not qualify.
- 2. Five-Year Non-Residency: You cannot have been a tax resident of France for the five calendar years preceding your arrival.
- 3. Fiscal Residency: You must establish your primary tax residence in France upon taking the job. This typically means that if you have a family (spouse and minor children), they must also relocate to France.
The 30% Exemption Benefit
The core benefit is the exemption of the “impatriation bonus.” While this can be a specific amount written into your contract, there is a simpler option: the 30% flat-rate calculation.
Under this rule, you can deem 30% of your total net remuneration as a tax-free bonus.
- Example: If your net salary is €100,000, you are only taxed on €70,000.
Additionally, compensation corresponding to days worked abroad (business trips outside France) can be fully exempted from income tax, provided you keep accurate travel records.
> Important Note: Your remaining taxable salary must remain at least equal to the “reference salary”—the amount a non-impatriate employee in the same company earns for the same role.
Passive Income and Wealth Tax
The perks extend beyond your paycheck:
- Passive Income: You receive a 50% tax exemption on foreign-sourced dividends, interest, and capital gains (if a tax treaty exists).
- Wealth Tax (IFI): For five years, only your real estate located in France is subject to the Real Estate Wealth Tax. Foreign properties are excluded.
The Impatriate Scheme effectively turns France into a tax haven for eligible professionals until December 31st of the eighth year following arrival. However, the benefit is not automatic. You must actively claim it on your annual tax return. Given the complexity of the reference salary and caps, professional advice is highly recommended. Watch our informational video to learn more!