Taxation of international executives
The residency rules are the same for short- or long-term assignments, although it is likely that employees will remain residents in their home country/jurisdiction if there are on a short-term assignment. If employees do not remain residents in their home country/jurisdiction or in the absence of a double tax treaty, they may become tax residents of France under French domestic rules. It is important that this is carefully analyzed as the employer compliance obligations depend on the residence status of the assignee.
Non-resident or resident employer withholding may apply depending on the status of the assignee..
If the employee remains a non-resident of France during the assignment, then only French-sourced income will be taxable, subject to treaty exemptions.
If the employee becomes a resident of France, worldwide income earned during the assignment will be subject to income tax, subject to treaty exemptions.
A short-term assignment spread out over 2 calendar years will yield a better overall tax result than an assignment that takes place in the same year. However, the impact in the home country/jurisdiction will depend on the method for relieving double taxation and will have to be carefully analyzed.
If the assignee is a non-resident of France under the terms of a tax treaty, the dependent services clause of the treaty should also be reviewed in order to determine whether any actions can or should be taken in order to exempt the salary from taxation in France. In some cases, taxation may be eliminated by carefully monitoring the number of days the employee spends in France.
All information contained in this publication is summarized by KPMG Avocats, the French member firm affiliated with KPMG International Limited, a Private English company limited by guarantee. The information contained in this publication is based on the French General Tax Code (Code General des Impôts-CGI), the French tax administration’s official doctrine (as published on Bofip), the French tax administration’s website, The French social security websites (urssaf.fr), the French international social security body (cleiss.fr) and supporting information published by the Ministry of Economy, Finance and Industry
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