Paris
EY Société d’Avocats
Tour First
1, Place des Saisons
TSA 14444 92037 Paris-La Défense Cedex France
Executive contacts
John Meehan
Emmanuel Morisson-Couderc
Colin Bernier, Reward
Charles Andre
ey.com/globaltaxguides
+33 (1) 55-61-35-80
Email: john.meehan@ey-avocats.com
+33 (1) 55-61-13-69
Email: emmanuel.morisson-couderc @ey-avocats.com
+33 (1) 55-61-12-41
Email: colin.bernier@ey-avocats.com
+33 (2) 51-17-50-62 (resident in Nantes)
Stanislas Dujardin, Equity
Antoine Vigneras de Bourdeau
Email: charles.andre@ey-avocats.com
+33 (1) 55-61-17-46
Email: stanislas.dujardin@ey-avocats.com
+33 (3) 28-04-36-99 (resident in Lille)
Joséphine Lévy
Sandrine Laurin
Immigration contact
Barbara Moreira
Email: antoine.vigneras@ey-avocats.com
+33 (1) 55-61-16-37
Email: josephine.levy@ey-avocats.com
+33 (1) 55-61-14-44
Email: sandrine.laurin@ey-avocats.com
+33 (1) 46-93-45-92
Email: barbara.moreira@fr.ey.com
Immigration and social security contact
Virginie Pecorella
A. Income tax
+33 (1) 55-61-16-36
Email: virginie.pecorella@ey-avocats.com
Who is liable. Individual income taxation is based on residence. Taxpayers are categorized as residents or nonresidents. Treaty rules on tax residence override domestic rules.
Residents. Persons of French or foreign nationality are considered residents for tax purposes if their home or, if no home is available, their principal place of abode, professional activity or center of economic interest is located in France. As a resident, an individual is taxed on worldwide income, subject to applicable treaty exemptions.
Nonresidents. Persons not considered resident as defined above are taxed on French-source income only.
Expatriate tax law. A favorable expatriate tax law, which was implemented on 1 January 2004, applies to employees seconded to France. This favorable tax regime provides that under certain conditions, expatriates seconded to France may not be taxed on
Directors’ fees paid to nonresidents are generally subject to a flat 12.8% withholding tax, unless a tax treaty provision reduces or eliminates the tax.
Investment income. Interest and dividends are taxed at a flat rate of 30% (12.8% income tax and additional social charges of 17.2%). However, taxpayers can elect to be taxed on such income under regular progressive rates if more favorable. See Expatriate tax law for information regarding taxpayers qualifying under Article 155 B.
Net income derived from the rental of real estate and from royalty income (other than for industrial property) is taxed as ordinary income. Royalties from industrial property are taxed at a rate of 33.33%, subject to a possible reduced rate provided in a tax treaty. Income from real estate is subject to income tax plus 17.2% CSG/ CRDS and social tax.
Exempt income. Exempt income includes the following:
• Certain profits from the sale of securities
• Family allowances and health care reimbursements
• Payments received pursuant to life insurance contracts (under certain conditions)
Employment income earned by a tax resident of France with respect to employment duties performed outside France for an employer established in France, a European Union (EU) Member State or a Member State of the European Economic Area (EEA) that has concluded with France a tax treaty containing an administrative cooperation clause is exempt if one of the following conditions is satisfied:
• For more than 120 days during a 12-month period, the employee is engaged outside France in prospecting for new clients for his or her employer.
• The employee establishes that his or her salary is subject to a foreign income tax equal to at least two-thirds of the equivalent French tax.
• For more than 183 days in a 12-month period, the employee performs employment duties overseas in connection with construction, engineering, or exploration or extraction of a natural resource.
Supplemental amounts, contractual premiums or per diems earned for foreign duty by such residents may be exempt from tax under certain conditions, depending on the number of foreign workdays. This exemption is limited to a maximum of 40% of the annual remuneration. Special exemptions and rules apply for small businesses engaged in commercial, professional and agricultural activities and in certain other circumstances.
Taxation of employer-provided stock options. Exercise gains realized on stock options are subject to full ordinary income tax and employee and employer social security contributions as employment income if either the following circumstances exists:
• The stock options are from nonqualified plans.
• The stock options are from qualified plans, and the reporting requirements are not satisfied.
Stock option plans that qualify under French corporate law benefit from a favorable tax regime. Foreign plans may be amended to qualify under the French rules.
stocks granted under an authorization given by the shareholders after 8 August 2015. However, it has been partly reinstated for restricted stocks granted under an authorization given by the shareholders after 31 December 2016 (see below).
Gains derived from the sale of shares awarded under French qualified restricted stock plans that were granted before 28 September 2012 are taxed in accordance with the following rules:
• Taxable income equals the FMV of the shares at the date of vesting and is subject to tax only at the date of sale. It is subject to income tax at a flat 30% rate, plus 17.2% of social taxes and the 10% employee social contribution described above.
• If more favorable, the taxpayer can elect to have the stock award taxed at the regular progressive rates of income tax, plus the 17.2% of social taxes and 10% employee social contribution described above.
For gains derived from the sale of shares awarded under French qualified restricted stock plans that are granted on or after 28 September 2012 (under an authorization given by the shareholders before 8 August 2015), the acquisition gain (FMV of the shares on the date of delivery) is subject to the following:
• Income tax at the regular progressive rates
• 9.7% CSG/CRDS and the 10% employee social contribution described above
For gains realized under French qualified restricted stock plans for which implementation was authorized by the shareholders on or after 8 August 2015 and on or before 31 December 2016, the vesting gain (FMV of the shares on the date of delivery) is taxed at the date of sale of the shares in accordance with the following rules:
• Income tax is imposed at the regular progressive rates with application of a reduction of the tax base of 50% if the shares are held for more than two years after the vesting date. The reduction of the tax base is increased to 65% if the shares are held for more than eight years after the vesting date.
• 17.2% social taxes are imposed on investment income (calculated on the amount before any reduction of the tax base).
For gains realized under French qualified restricted stock plans for which implementation was authorized by the shareholders after 31 December 2016 and on or before 31 December 2017, the vesting gain (FMV of the shares on the date of delivery) is taxed at the date of sale of the shares in accordance with the following rules:
• Portion of the annual gain below EUR300,000: Income tax is imposed at the regular progressive rates with application of a reduction of the tax base of 50% if the shares are held for more than two years after the vesting date. The reduction of the tax base is increased to 65% if the shares are held for more than eight years after the vesting date. Social taxes of 17.2% are imposed (calculated on the amount before any reduction of the tax base).
• Portion of the annual gain above EUR300,000: Income tax at the regular progressive rates is imposed. The 9.7% CSG/CRDS and the 10% employee social contribution described above is imposed.
combined income of the members of the household, including dependents. No option to file separately is available.
Family coefficient system. Under the family coefficient system, the income brackets to which the tax rates apply are determined by dividing taxable income by the number of allowances available to an individual. The final tax liability is then calculated by multiplying the tax computed for one allowance by the number of allowances claimed. Available allowances are shown in the following table.
Limits are imposed on the tax savings resulting from the application of the family coefficient system. For example, for a married couple, for the 2023 tax year, the tax savings may not exceed EUR1,759 for each additional half allowance claimed.
The progressive tax rates take into account the family coefficient.
The following table provides the 2023 income tax brackets and rates for individuals (the financial act updates the tax brackets each year, and the 2024 brackets have not yet been adopted).
Exceptional 3% and 4% tax on high income taxpayers. High income taxpayers are liable for an exceptional tax calculated on their gross reference taxable income. For single taxpayers, the rate is 3% for the portion of the gross reference taxable income between EUR250,000 and EUR500,000 and 4% for the portion exceeding EUR500,000. For married taxpayers, the rate is 3% for the portion of the gross reference taxable income between EUR500,000 and EUR1 million and 4% for the portion exceeding EUR1 million. Gross reference taxable income equals taxable income plus exempt income, less limited items that are tax deductible.
CSG/CRDS and social tax. CSG/CRDS applies to all resident taxpayers. It is charged at a rate of 9.7% on 98.25% of gross salary if it does not exceed EUR185,472 (2024 ceiling) per year and on 100% of the portion of the gross salary that exceeds EUR175,968, including benefits in kind and bonuses.
CSG/CRDS on passive income and capital gains is increased by a social tax surcharge, resulting in a total rate of 17.2%. If the individual is not affiliated to the French mandatory social security scheme and is affiliated to a mandatory social security
annual income tax return. The French tax administration calculates the real estate wealth tax and the amount due must be paid after receipt of the real estate wealth tax assessment.
Debts relating to assets exempt from real estate wealth tax or not included in the real estate wealth tax base cannot be deducted in the calculation of the real estate wealth tax.
Specific deduction rules apply for the valuation of shares of a company owning real estate, notably in the case of in fine loans (loans for which the capital must be reimbursed at once at the end of the loan; that is, loans with maturity) and loans that have been concluded directly or indirectly between the company and the taxpayer or members of his or her family.
Exit tax. An exit tax on restricted categories of income (mainly capital gains) may apply to taxpayers who departed France on or after 3 March 2011 if they own more than 50% of the stocks of a company or have more than EUR800,000 in shares the day before breaking their French tax residency and if the taxpayer was a French resident for at least six years during the last 10 years. The exit tax on the unrealized capital gain calculated at the date of the tax residency transfer may be due or may be postponed with or without a financial guarantee, depending on the country to which the taxpayer transfers her or his tax residency. Effective from 1 January 2014, after the departure from France, the taxpayer must hold his or her shares for at least 15 years (for transfers of residence after 1 January 2019, the 15-year period is reduced to two years or five years if the shares value exceeds EUR2,570,000). If the taxpayer decides to sell his or her shares before the end of this period, the postponement of the taxation ends, and the taxpayer is taxable on the capital gains calculated at the departure. The taxpayer must comply with filing obligations, which differ depending on the state and the date of the transfer.
Inheritance and gift taxes. If a decedent or donor was resident in France (or if the heir or beneficiary is French tax resident and was French tax resident during six years of the 10 past years), tax is payable on gifts and inheritances of worldwide net assets, unless otherwise provided by an applicable double tax treaty. For nonresident decedents or donors, only gifts and inheritances of French assets are taxable, provided the beneficiary is also a nonresident of France, unless otherwise provided by an applicable double tax treaty.
Surviving partners (spouses or partners in a Civil Union [Pacte Civil de Solidarité, or PACS]) are exempt from inheritance tax. The allowance for parents and children amounts to EUR100,000. The excess is taxed at rates ranging from 5% to 45%, depending on the value of the inheritance. Surviving brothers and sisters may be exempt from inheritance tax if specific conditions are met. In the absence of these conditions, they may each claim a personal allowance of EUR15,932 and are taxed at a rate of 35% on inheritances of up to EUR24,430 and at a rate of 45% on the excess. Other close relatives are taxed at a rate of 55% on the excess over EUR1,594 (or EUR7,967 for nephews and nieces), and other persons at a rate of 60% on the excess over EUR1,594.
social security code, which allows eligible employees and their employers to opt out of paying statutory pension contributions for a period of three years that is renewable for three additional years.
To opt out, the following conditions must be met:
• The employee has not been subject to compulsory pension contributions in the five calendar years preceding his or her start date in France.
• The employment began in France on or after 11 July 2018 with a French or foreign work contract.
• Employers and employees should be able to provide documentation of a minimum EUR20,000 contribution per year to an eligible private French pension fund or to a foreign pension fund.
The exemption applies for both the basic state old-age pension and the compulsory complementary pension contributions, which are CNAV, ARRCO/AGIRC, CEG, CET and APEC. The employee portion and employer portion of these contributions are exempt. Savings for an employee with a gross annual compensation that exceeds the pension rate ceiling (EUR370,944 for 2024) are significant.
The employer and the employee need to send a joint request to the relevant social security office (URSSAF). Documentation needs to be included demonstrating either a payment or intention for payment of the annual minimum contribution of EUR20,000 to an eligible alternative pension plan as well as a sworn statement by the employee that he or she was not subject to a mandatory French pension regime in the five calendar years preceding the start of employment in France.
Benefits. The following benefits are available to an individual subject to the French social security system:
• Daily compensation in the event of interruption of professional activity
• Full retirement pension (basic state pension and complementary pension cover)
• Family allowance (exempt from income tax)
• Full professional accident coverage
• Partial or total medical expense reimbursement
Totalization agreements. The provisions of the French social tax code apply if work is performed on a regular basis in France, regardless of an employer’s place of residence or the source of payment. A French citizen or resident on foreign assignment outside France may continue to contribute to the French social security system for a limited period under certain conditions.
To provide relief from double social security taxes and to assure benefit coverage, France has entered into totalization agreements with the jurisdictions listed below. The EU social security regulation can usually provide for periods of continued coverage under a home country social security regime for up to five years (with the mutual agreement of the competent authorities of both Member States). Agreements with other jurisdictions apply for one to five years and periods of continued coverage may be extended with the mutual agreement of both competent authorities.
Azerbaijan Israel Quebec
Bahrain Italy Romania
Bangladesh Jamaica Russian
Belarus Japan Federation
Belgium Jordan St. Martin
Benin Kazakhstan St. Pierre and Bolivia Kenya Miquelon
Bosnia and Korea (South) Saudi Arabia
Herzegovina
Kosovo Senegal
Botswana Kuwait Serbia
Brazil Kyrgyzstan Singapore
Bulgaria Latvia Slovak Republic
Cameroon Lebanon Slovenia
Canada Libya South Africa
Central African Lithuania Spain
Republic Luxembourg Sri Lanka
Chile Madagascar Sweden
China Mainland Malawi Switzerland
Colombia Malaysia Syria
Congo (Republic of)
Côte d’Ivoire
Malta Taiwan
Mauritania Thailand
Croatia Mauritius Togo
Cyprus Mexico Trinidad and Czech Republic Monaco Tobago
Denmark Mongolia Tunisia
Ecuador Montenegro Türkiye
Egypt Morocco Turkmenistan
Estonia Namibia Ukraine
Ethiopia Netherlands United Arab
Finland New Emirates
French Polynesia Caledonia United Kingdom
Gabon New United States
Georgia Zealand Uzbekistan
Germany Nigeria Venezuela
Ghana North Vietnam
Greece Macedonia Zambia
Guinea Norway Zimbabwe
Recent double tax treaties signed with neighboring jurisdictions contain provisions on cross-border telework to neutralize, under certain conditions, the impact of habitual cross-border telework on the tax obligation in the jurisdiction of residence and/or in the jurisdiction of employment.
F. Work and residence permits
EU nationals. Nationals of the EU (not including the United Kingdom), EEA and Switzerland are not required to hold work or residence permits. However, if needed for personal or professional reasons, a residence permit is issued on written request to the relevant police authorities (Préfecture).
Temporary status. All EU (not including the United Kingdom), EEA and Swiss nationals working in France while remaining on the payroll of the company in their home country have temporary détaché status. The employee may enter France without a visa by showing a valid passport or national identity card. From a French labor law standpoint, home company must comply with secondment obligations in France and complete a posting declaration
• Salary conditions: The annual gross salary must be at least EUR43,250 and equivalent to the salary of a local French employee in the same role or level, whichever is higher.
• Employment contract: The validity of the French employment contract must exceed three months.
• Academic qualifications: Applicants must hold a French diploma at the master’s level or higher, or another professional degree issued by a French university or school.
This residence permit aims to attract international talent and facilitate their integration into the French labor market, while also allowing the holder’s family members to accompany them to France with an appropriate residence status.
For all types of Passeport talent status, if the applicant is not residing in France, a work visa application is submitted at the French consulate in the assignee’s country of residence. For contracts shorter than 12 months, the visa serves as a residence permit. If the assignment is for 12 months or more, the visa issued is valid for three months and a residence card must be requested. The residence permit is valid for up to four years and is renewable.
Local hire status is available to individuals hired by French companies under a permanent contract (CDI) and who are not eligible to a “Passeport Talent – European Blue Card” or a “Passeport Talent – employee qualified” (see above). In principle, the employer must search the local labor market for three weeks before applying for a work permit for a foreign employee unless the job is listed on the official shortage occupation list. A work permit application must be filed before the arrival of the employee in France. After the work permit is granted, the employee must apply for a visa at the French consulate of his or her place of residence abroad. The visa is valid for 12 months. At the expiration of the visa, the individual applies for a residence permit valid for four years, which can be renewed.
If the individual is hired under a fixed-term contract (CDD), he or she falls under the Temporary worker status (see Categories for non-EU, non-EEA and non-Swiss nationals seconded to France.).
The average timeline for processing work permit applications is six to eight weeks from the date when all required documents are filed with the authorities until the date when the work permit is sent to the relevant French consulate for visa issuance.
Categories for non-EU, non-EEA and non-Swiss nationals who do not have a salaried activity in France. The categories for nonEU, non-EEA and non-Swiss nationals who do not have a salaried activity in France are discussed below.
Non-EU, non-EEA and non-Swiss nationals who want to act as a legal representative of a French company must apply for a Passeport talent – corporate officer (in French, “Passeport talent – mandataire social”) visa at the French consulate in their country of residence before arrival in France. The individual must
the property for a person with two children and a spouse, and three-quarters of the property for a person with three or more children and a spouse. This measure may apply to nonresidents who own property located in France.
Driver’s permits. Holders of foreign driver’s licenses must apply to exchange them for French driver’s licenses before the end of the first year of residence in France. An exchange is authorized if a reciprocity agreement exists between France and the country that has issued the license. For example, with respect to the United States, automatic exchange is authorized for the following states.
Arkansas Iowa Oklahoma
Colorado Maryland Pennsylvania
Connecticut Massachusetts South Carolina
Delaware Michigan Texas
Florida New Hampshire Virginia
Illinois Ohio Wisconsin
Individuals with driver’s licenses from other countries or states for which an exchange is not authorized must take the French driver’s license test, which consists of a written examination and a practical driving test.
Holders of valid driver’s licenses from EU Member States are not required to exchange them for French licenses except in the case of penalties. However, licenses from certain EU Member States may need to be renewed regularly.