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France - Overview and introduction

France - Overview and introduction

Taxation of international executives


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Persons resident in France are taxed at progressive rates on their worldwide income, subject to tax treaty relief. Employers are not required to withhold income tax from the salaries of their French-resident employees. Instead, income taxes are generally paid the year following the year in which the income is received and tax laws, including tax rates for income received in a year, are normally not enacted until late in that same year. However, this system may change in 2018 and onwards : indeed, as from the 2018 income tax year, French tax resident will also be subject withholding tax on their salaries.

There is, a specific regime for impatriates which was made more generous for assignees arriving from 2008 onward.

Non-residents are subject to income tax in France on their French-source income only. Employer income tax withholding is required when the non-resident receives compensation that is taxable in France.

Income tax in France is imposed only at the national government level. Several other taxes are imposed by the government and various local authorities including social taxes, surtaxes, wealth tax, dwelling tax, inheritance taxes, real estate taxes, and television tax, to name the most common. In addition, retail prices on most goods and services generally reflect value-added tax (VAT), which is currently 20 percent on most goods and services. However, transportation, home repairs and improvement and a few other items are subject to a reduced 10 percent VAT, food items and a few other items are subject to a reduced 5.5 percent VAT, and still others, such as certain medicines have only 2.1 percent VAT.

The official French currency is the Euro (EUR).

Herein, the host country refers to the country where the expatriate is going on assignment. The home country refers to the country where the expatriate lives when he/she is not on assignment.

© 2020 FIDAL, a French société d’exercice libéral à forme anonyme à directoire et conseil de surveillance. FIDAL is an independent legal identity that is separate from KPMG International and its member firms. All rights reserved.

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