Inbound (impatriate) regime
Art. 155 B CGI
The inbound expatriate (impatriate) regime exempts from income tax the impatriation bonus of persons not resident in the previous five years (art. 155 B CGI).
Please note.This definition is deliberately simplified. It does not constitute legal or tax advice. The exact conditions, thresholds, rates and periods depend on your situation and on the regulations in force.
Which text applies?
- Art. 155 B CGI : Exempts the impatriation bonus, the remuneration for stays abroad and half of certain foreign-source passive income, until 31 December of the eighth year following the taking up of duties.
Who can benefit from the inbound expatriate (impatriate) regime?
The regime covers employees and certain executives called from abroad to work for a company established in France, whether they are recruited directly abroad or called by a company established abroad. They must not have been tax domiciled in France during the five calendar years preceding the taking up of their duties, and must be so domiciled from that date.
Which income is exempt?
- the impatriation bonus, for its actual amount or, for persons recruited directly abroad, on option, for a flat 30% of net remuneration;
- the portion of remuneration corresponding to stays abroad carried out in the direct and exclusive interest of the employer;
- 50% of certain foreign-source passive income: dividends and interest paid by a payer established in a State bound to France by an administrative assistance agreement, and gains on the sale of securities held under the same conditions.
What are the caps on the exemption?
The exemptions of the bonus and of stays abroad are capped, at the taxpayer’s choice: either their total is limited to 50% of total remuneration, or the portion relating to stays abroad alone is limited to 20% of taxable remuneration net of the bonus. In addition, the portion of remuneration that remains taxable may not be lower than that paid for similar duties in the company or in a similar company established in France: the difference is added back.
The exemption applies to income tax only: social contributions remain due on the whole of the remuneration. Exempt amounts are included in the reference taxable income. The regime cannot be combined with the exemption under article 81 A, and remuneration paid in the form of securities is not included in the base of the flat-rate option.
How does the rule apply? A worked example
Option for the flat 30%
Illustrative example: a manager recruited directly abroad receives total net remuneration of €200,000 (net of social contributions, before the standard 10% deduction). Her contract provides for no bonus; she opts for the flat rate. 20% of her working days take place abroad.
She chooses the cap of 50% of total net remuneration, which the total exempt amount, €88,000, does not exceed. The calculation assumes that the remuneration remaining taxable is not lower than the reference remuneration for similar duties.
- Total net remuneration
- €200,000
- Exempt flat-rate bonus (30%)
- €60,000
- Remuneration net of the bonus
- €140,000
- Portion for stays abroad (20% of €140,000)
- €28,000
- Total exempt
- €88,000
- 50% cap
- €100,000
- Remuneration remaining taxable
- €112,000
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