Returning to live and work in France after several years abroad

The situation

Our support

1. 01

   Securing the date of the change of tax residence

   We analysed the client’s situation against the residence criteria set out in the domestic law of each of the States concerned and in the applicable tax treaty.

   This analysis covered, in particular:

   • the location of the family home;
   • the periods of presence in each country;
   • the place where the professional activity was carried on;
   • the centre of economic interests;
   • any home or activities retained abroad;
   • the date the family relocated and the date duties began in France.

   We then set out a roadmap to give effect to the change of residence: relocation timetable, updating of contracts, treatment of the income for the year of arrival, and coordination of the tax returns in both countries.

   Example: a person who settles in France during the year may be regarded as a French resident from a date different from that of their physical arrival. This date determines, in particular, which foreign income must be reported in France and how double taxation is to be eliminated.

   The approach taken for the firm’s mobility matters is precisely to determine the date of the change of residence, analyse the applicable tax treaty and formulate practical recommendations to give effect to the move.

2. 02

   Securing the benefit of the inbound (impatriate) regime

   We examined the client’s eligibility for the inbound regime provided by article 155 B of the CGI, taking into account his residence history, the circumstances of his recruitment and the duties performed in France.

   We also reviewed the contractual documentation and the remuneration terms in order to clearly distinguish:

   • the remuneration corresponding to the duties performed in France;
   • the bonus directly linked to the impatriation;
   • the remuneration relating to any activities performed abroad;
   • the variable elements and benefits granted to the executive.

   Where the conditions are met, article 155 B of the CGI allows, in particular, the impatriation bonus to be exempt for its actual amount or, by election, a flat-rate valuation equal to 30% of the remuneration to be used. The regime applies until 31 December of the eighth calendar year following that in which duties began in France.

   Simplified example: for remuneration within the scope of the regime of €300,000, the flat-rate option may lead to an impatriation bonus of €90,000 being identified, before taking into account the other conditions, limits and rules specific to the regime.

   Our work did not stop at confirming the client’s eligibility. We also secured the employment contract, prepared the instructions needed for payroll processing and checked that the regime was correctly applied on the payslips and in the annual returns.

3. 03

   Analysing income and investments kept abroad

   We drew up a map of the income and assets held abroad in order to determine their treatment from the move to France:

   • bank and securities accounts;
   • foreign-source dividends and interest;
   • shareholdings in foreign companies;
   • pension and savings plans built up abroad;
   • deferred remuneration and incentive plans;
   • life-insurance or capitalisation contracts;
   • real estate located outside France.

   For each category, we analysed France’s and the former State of residence’s right to tax, any withholding taxes and the treaty mechanism for eliminating double taxation.

   The inbound regime may also provide, under certain conditions, a partial income-tax exemption for certain passive income and certain foreign-source capital gains received or realised by the eligible person.

   Simplified example: where foreign income of €100,000 falls within the scope of the 50% exemption provided by the regime, only €50,000 is retained for French income tax, subject to the applicable conditions and to the treatment of social levies.

   In parallel, we checked the reporting obligations attached to holding assets abroad, so that the client’s first French tax file accurately reflected their whole wealth situation.

4. 04

   Anticipating real estate wealth tax (IFI)

   The client held real estate assets in France and abroad. We therefore analysed his exposure to real estate wealth tax, taking into account his status as a new French tax resident.

   Persons who establish their tax domicile in France after not having been domiciled there during the five preceding calendar years benefit, under certain conditions, from a specific IFI regime.

   We in particular:

   • identified the buildings and real estate interests within the scope of the IFI;
   • analysed the companies and funds indirectly holding real estate assets;
   • determined the debts that could be taken into account;
   • examined any exemptions linked to the carrying on of a professional activity;
   • prepared a monitoring timetable until the expiry of the regime applicable to new residents.

   Simplified example: during the application period of the new-residents regime, the IFI base may be limited to real estate assets located in France alone, subject to the taxpayer’s situation and the statutory conditions.
5. 05

   Organising the tax and social-security implementation of the return

   Finally, we coordinated the various steps needed to implement the return to France:

   • review of the employment contract and the impatriation clause;
   • drafting of payroll instructions;
   • analysis of the applicable social-security legislation;
   • identification of the foreign accounts, contracts and assets to be reported;
   • preparation of the first French returns;
   • checking of the tax credits intended to eliminate double taxation;
   • review of the tax assessments and follow-up of any requests from the authorities.

   Where a temporary continuation of the home State’s social-security scheme was possible, we also examined the conditions for secondment and the necessary supporting documents.