France

Click to download PDF:  As per 1 January 2016, 2017

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate Progressive tax rate: 0% – 45% (income below EUR 9,807 will not be taxed).
Tax period Calendar year.
Tax residency / Domicile according to domestic law Persons are deemed to be domiciled in France for tax purposes :
• their home is in France;
• their main place of abode is in France (present for 183 days or more in a calendar year);
• they carry on a professional activity in France, salaried or not, unless they can prove that it is a secondary activity;
• they have the centre of their economic interests in France.
A person will be regarded as resident in France if any of the above conditions is met.
Tax registration Not required.
Employment income definition Any remuneration and benefit in cash or in kind received by an employee for services rendered under an employment agreement (e.g. school fee reimbursements, benefits in kind, cost of living allowances, home leave reimbursements, housing allowances).
Examples of tax exemption Reimbursements of properly documented business expenses (including business trip expenses, per diems, etc.) are not taxable.
Specific expatriate concession Special income tax regime for assignees into France (“inbounds”)
If several requirements are met, employee is exempted from taxation of specified income during eight years * (expatriate bonuses, moving expenses reimbursement, remuneration for the work days performed outside France…etc.)
* 8 years for taxpayers who started their professional activity in France from July 6th 2016, otherwise it is 5 years
Income of board members Depending on both the type of company and the functions performed in the company.
Tax returns Each taxable person shall file the return in which is detailed incomes and profits derived during the tax period (a year), and the family expenses. Appropriate forms (n° 2042 and seq.) are communicated by the French Tax Authority (FTC) or can be uploaded by their website.
In principle, the return must be filed no later than the end of May of the following year.
Tax payments Warning :  the below described situation is to be changed : from January 1st, 2019 a withholding income tax and social contributions system should apply instead of the current instalment payment system
Two tax instalments must be paid  by the taxable person who was taxed the previous year on the basis of this taxation. Payment deadlines are the 15th February and the 15th May of the following year.
If several requirements are met, the taxpayer may reduce or be exempt from instalments (new taxpayer for the first taxation year, etc).
The payment of the remaining balance occurs when receiving the tax notice (by September of the following year at the latest).
The taxpayer may opt for monthly payment of income tax.
 Tax on real estate property Article 31 of the 2018 finance bill cancels the wealth tax (ISF) in place in France since 1982, and replaces it with a tax on real estate property (IFI) beginning January 1, 2018, which is aimed at only real estate property.
The IFI will apply to real estate property which is not attributed to the professional activity of the owner.
The relevant date (January 1st), the threshold for taxation (€ 1,300,000), the tax brackets and the definition of taxpayers subject to the tax remain unchanged compared to the rules applicable to the ISF. Similarly, the flat 30% reduction applicable to the value of a principal residence is maintained.
The five-year exclusion of assets located outside of France from the taxable base for new French tax residents called “impatriates” is maintained; similarly to individual taxpayers with a tax domicile outside of France, individual taxpayers who have not been domiciled in France during the five years preceding the transfer of their domicile to France are only taxed on the property located in France, until December 31st of the fifth year following the year of arrival in France.
The applicable range and the taxable base for the IFI are significantly reduced; only non-professional real estate property is taxable, leading to the exemption of financial assets (notably cash, stock and equity) and moveable assets. In parallel, the rules regarding the exemption of professional assets are redefined and concentred on real estate.
TAX TREATIES
Employment income / income from board members Art 15/16 Model OECD Tax treaties.
INTERNATIONAL SOCIAL SECURITY
Cross border employments EU Regulation No 883/2004 and EU regulation No. 1408 / 71.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable.
Social Security Cost as % from gross salary and absolute amounts The French social security system is composed of various schemes providing a wide range of benefits.
This system includes social security basic coverage (sickness, maternity, disability, work-related accident benefits and old age state pension), unemployment benefits, compulsory complementary retirement plans, complementary death/disability coverage and complementary health coverage.
The contributions are shared between employer and employee; on average the employer’s share of
contributions represents 45% of the gross salary, the individual’s share 23% (including ‘CSG’ & ‘CRDS’).The non-French tax resident are not subject to the ‘CSG’ & ‘CRDS’.
However, since the contributions are assessed using various ceilings, the average rate will decrease as the gross salary increases.
IMMIGRATION
Work permit Swiss, EU and EEA nationals do not need a work permit to work in France.  Nationals of another country need a work permit need to obtain a work permit. The
work permit can be a visa, a residency permit or a specific document.
Visa Swiss, EU and EEA nationals do not need a visa to enter into France.
Non EU, EEA nationals need a visa. The applications have to be lodged at the French consulate or embassy in the country of residence.
Residency permits / registration certificate EU and EEA nationals do not need a visa to enter into France.
Non EU nationals in general need to apply for a residency permit. Different residency permits exist (in principle, they are valid for one year or for 10 years depending the permit). Different permits have to be lodged at the French prefecture or sub-prefecture.
Driving license Driving licences issued in other EU, EEA countries are recognized in France. Driver may exchange his license to grant French driving license (although it is not obligatory).
Driving licences issued in the other country are accepted only for one year after settled in France. Under certain conditions, driver may exchange his driving licence.
STOCK OPTION PLAN Specific tax treatment assimilating gains in wages. CSG are applicable to the French tax resident.
ARTICLE 15 OF THE OECD MODEL
183 days  Number of days on the territory of France, including :-the weekly rest days
-the vacation days obtained within the activivty performed in France
-sickness or occupational accident days off
-part days in France
-days of departure and arrival
-public holidays
-short interruptions (training, strike days,…)Moreover, all the stays in France during the period of 12 months must be added up.
Notion of employer  In principle, the employer is the person towards who the employee is in a situation of legal subordinationIn some situations, the characteristics of the employer can be divided into the companies
However, the fact that the services rendered by the employee are an integral part of the business activities carried on by the company which benefits from these services does not imply on its own that this company in becomes the employer : it is necessary to study further all the criteria set out by Article 8.14 of the comments of the OECD model to determine if this company becomes the employer
Existence of a permanent establishment  See the criteria of the tax treatyIn countries where no tax treaty was signed with France –> see the French criteria of permanent establishment :
-carrying on a business in an establishment in France
-dependant representatives acting on behalf of the company in France
-operations wich represent a full business cycle in France
-real estate income or gains in France
Sylvie Collignon
Senior Manager Global Mobility Services
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