Many companies employ employees and executives. Encouraged by the French state, the impatriation offers many advantages in order to make this form of professional mobility as attractive as possible. What are the conditions for obtaining impatriate status? What exemptions can be benefited from and for how many years? Extendeez answers any questions you have about impatriation.
What is an impatriate?
The term impatriate refers to a professional mobility employee in one of two situations:
If a company decides to hire foreign employees by bringing them to France to work, it does not matter whether they are already employees of the company or have been recruited abroad to take up a position in France.
This may be an expatriate employee who has completed his mission abroad and is returning to his country of origin. Beware, this return is different from a repatriation that involves an emergency return. In this case, the employee will then be not an impatriate, but a returnee.
The employee may also be a seconded employee,i.e. an employee who has gone to work in a subsidiary of the French company based abroad for a few months, or several years, and has returned to France.
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What are the conditions for granting impatriate status?
To get the impatriate status,the employee must have been domiciled tax outside France during the 5 calendar years preceding his taking office in the company located in France that recruited him or in which he was sent as part of an internal mobility.
Beware, coming to France to find a job or to be already domiciled in France at the time of recruitment does not allow to obtain the status of impatriate. In the European Union, for many countries and trades, the impatriation is quite simple since it does not require a work permit for European nationals.
In addition to these criteria, the employee or employee must, in theory, establish his or her tax residence in France as soon as he takes office (according to a and b of Article 4 B of THE CGI). However, the final installation cannot always be done as soon as he takes up his position for personal or professional reasons. In this case, the benefits of the impatriate scheme may still apply for the year of taking up positions in France.
Indeed, it is common for employees to stay in short-term rental in furnished or furnished apartment apartment-hotel upon their arrival, time to look for a housing in the neighbourhood they want to live in or the time relocation and relocation are complete, whether the whole family is on site or after a trial period. The mobility lease will be particularly suitable for this type of situation. Learn more about the mobility lease of the Elan Law.
What are the income tax exemptions for the impatriates?
Section 155 B of the CGI provides for an income tax exemption for employees and employees who are undocumented for “compensation items directly related to this situation.”
The impatriation premium and activity abroad
The additional remuneration (impatriation bonus), linked to the exercise of professional activity in France, and the share of remuneration relating to the activity carried out abroad in the interest of the company that employs them, in other words, the remuneration received for business trips abroad, can benefit from exemptions.
Both exemptions are subject to a cap that can be comprehensive. In this case, the exemption of the share of remuneration due to the activity carried out abroad and the impatriation bonus – which may be limited according to the reference remuneration set by the company, i.e. the remuneration received by an employee not impatriated in the same company and who holds a function equivalent to that of the impatriate – cannot exceed 50% of the total remuneration. Moreover, the exemption of the share of remuneration relating to the activity carried out abroad may not be more than 20% of the employee’s taxable remuneration, net of the impatriation bonus.
What about passive income?
In addition to the exemption related to compensation due to the impatriation situation, impatriates may also benefit from 50% benefits on their passive income for income collected abroad, regardless of whether they are related to industrial or intellectual property products, personal capital income or capital gains related to the disposal of securities and social rights abroad.
Note: If this benefit relates to income tax, the impatriate must nevertheless pay the social levies of all of these incomes.
What about real estate wealth tax (IFI)
By becoming French tax residents, the impatriated, having not been domiciled in France during the previous 5 years, can only be taxed on the IFI, the property wealth tax, because of their real estate assets and assets located in France, without any conditions of employment. This advantage can be applied each year during which the impatriate is domiciled tax in France until 31 December of the5th year following the year in which he established his tax domicile in France.
How long can the impatriate benefit from these benefits?
However, the impatriate regime has a limited duration. The employee, executive or executive will only be able to enjoy these benefits until 31 December of the8th calendar year following his taking up his position in the company that recruited him or welcomed him in case of internal mobility. This limit applies to employees who have taken up their duties as of July 6, 2016. For post-6, 2016, the limit is set at December 31 of the5th year following the appointment.
Of course, these benefits are retained as part of a change of position within the company or a change of employer within the same group, regardless of the duties it performs. On the other hand, the scheme no longer applies if the employee leaves the host company before the end of this period, even if he remains tax domiciled in France.
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