Tax information: Leaving France
Welcome to the tax guide on leaving France, produced by Deloitte. Looking for tax information about going to France, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 1 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you departQ. Should I complete any documentation prior to leaving France?
A. Since 1 January 2005 it is no longer necessary to file a provisional part-year resident tax return in the year of departure. In addition, assignees leaving France should no longer settle by anticipation their income tax related to the year of departure. Hence they are subject to the same tax filing and payment procedures as those who remain in France.
It is important, however, that appropriate communication be made to the French tax authorities regarding departure for re-routing mails either to a new foreign address or to a contact in France. This will help ensure that any future correspondence from the tax authorities is dealt with in a timely manner. The French tax authorities can request the name and address in France of a fiscal representative.
Below is an example of tax filing and payment procedures following departure from France in 2009:
- Payment of last 2008 French income tax instalment , if any, by 15 September 2009;
- Filing of the 2009 French part-year resident income tax return by the end of May 2010 to account for income received in 2009;
- Payment of the 2009 French income tax, if any, in 3 instalments (by 15 February 2010, by 15 May 2010 and the balance by 15 September 2010).
The dwelling tax (" taxe d'habitation") and the real estate tax ("taxe foncière") are also no longer settled by anticipation but within the standard due dates fixed by the French tax administration.
Q. Is it beneficial to open an offshore bank account compared to an account on the French mainland?
A. Offshore bank accounts do not provide tax benefits from a French perspective but they may be useful from the perspective of the country that you are going to.
Q. Will I be regarded as not resident of France during my period overseas?
A. A number of factors are taken into consideration when determining whether you will sever French tax residency, as follows:
- The number of days present outside France during the tax year;
- whether your family accompanies you to the host country;
- whether you establish tax residency in another country
- whether tax treaty residency overrides domestic law;
You should seek professional tax advice when leaving France.
Q. Will I still need to complete a French tax return after my departure?
A. If you are considered as a non-resident, you will be liable for French tax on French-source income only (including income attributed to France by a tax treaty) and on capital gains arising from the disposal of certain assets located in France. If you continue to be regarded as a resident you will be taxable in France on worldwide income.
Q. Will I have to pay French tax in respect of the employment income I will earn overseas?
A. This will depend upon your French residency status. A resident will remain taxable on his worldwide income whereas a non-resident will be subject to French tax on his French source income only.
Q. Will I have to pay tax in respect of French investment income earned while overseas?
A. Residents and non-residents will be subject to French tax in respect of French-source investment income unless a tax treaty provides otherwise.
Q. I plan to sell my French property while overseas. Are there any capital gains tax implications?
A. Capital gains derived from the sale of the taxpayer’s main home “residence principale” are expressly exempted from French income tax provided that he is a French tax resident and that the property is considered his main home (i.e. his habitual and effective residence) at the time of the sale.
Q. I have a number of French company shares. Will I remain liable to French capital gains tax if I sell any of these while outside France?
A. Individuals who receive proceeds from the sale of French shares while non-resident of France are normally subject to tax on the gains in the country of residence only (the conditions and rates of taxation in that country are often outlined in the relevant international income tax treaty, if any). Under French internal law, non-residents are exempt from French capital gains tax, even if the proceeds result from the sale of French shares (subject to certain exceptions concerning unquoted French real estate company’s, French companies where you hold, or have previously held, a substantial interest).
Q. What Social Security contributions will I pay when abroad?
A. This will depend on which country you are going to, on who you will be employed by, and for which length of time you will be overseas. If you are travelling to a country within the EEA, or to a country with which France has a totalisation agreement covering social security contributions, and you will remain employed by a French company you will be able to remain in the French Social Security system (for which duration will depend on the country you are going to).
If you are travelling to a country outside the EEA or to a country with which France does not have a social security agreement, you will in theory cease to contribute to the French social security system at the beginning of the overseas assignment. However, French domestic law provides that you can remain enrolled under the legal French social security system for a period of up to 6 years. In practice, this provision is rarely used as it implies that your employer also pays the substantial French social security contributions. In practice, in such a situation, you will cease to contribute to the legal social security system in France and contribute to a voluntary system.
