Jan
31
French Labour law - impatriates and managers: generalization of the preferential tax system

In the framework of the Draft Budget Law 2019, the National Assembly has just adopted, on November 9, 2018, an amendment No. II-1946 [1] to amend article 155 B of the General Tax Code (Code général des impôts) ("CGI") in order to extend the benefit of the favorable tax regime for impatriates.

This amendment aims to make the French territory more attractive for impatriates in the particular context of Brexit.

He intervenes in the context of the "yellow vests" (Gilets Jaunes) which claim in particular a better tax justice.

Employees who are impatriates and managers: generalization of the preferential tax system. (...)

1) The favorable tax system for "impatriates" (Le régime fiscal de faveur des impatriés).

Since 2008, in order to attract top talent and executives in France, a very favorable tax regime has been put in place for managers and employees who come to work in France.

This plan is provided for by article 155 B of the CGI (French Tax Code) and applies to managers and employees who come to work in France as part of an internal mobility within an international group or a recruitment directly abroad by a French company.

It allows them to benefit from a tax exemption for part of their remuneration and thus benefit from a much larger net remuneration.

1.1) Exemption from pay supplements directly related to the impatriation

This exemption may apply in two ways, at the option of the taxpayer:

• Exemption from the amount of the remuneration supplement assessed at actual (évalué au reel) (impatriation premium, mobility allowance, housing allowance, etc.) provided that it appears in the employment contract or in the corporate office;

• A lump-sum exemption of 30% of the net remuneration (provided that the employee / manager has been recruited directly abroad).

1.2) A 50% exemption from certain income received abroad. (Une exonération de 50% de certains revenus perçus à l’étranger).

These are income from movable capital, intellectual property or industrial property and capital gains on transfer of securities and social rights.

2) The extension of the tax system to all impatriates in the context of intra-group mobility?

The amendment adopted by the National Assembly on November 9th, 2018 as part of the discussion on the PFL 2019 aims to extend the benefit of the first part of exemption relating to the supplements of remuneration related to the impatriation.

In fact, according to its current wording, article 155 B of the CGI reserves the possibility of opting for the lump sum assessment of their impatriation premium only to persons recruited directly abroad by a company established in France.

Employees who come to work in France within the framework of intra-group mobility cannot therefore benefit from this lump sum bonus. They can simply claim the real exemption, which assumes that the impatriation premium is fixed in their employment contract or their social mandate.

However, in practice, when the original employment contract is maintained, the impatriation premium is generally fixed by an amendment to the employment contract, but this is not the case when the mobility entails a breach of the initial contract and the conclusion of a new "local" contract between the companies established in France and the impatriate.

In fact, where applicable, the impatriate employee is not entitled to receive such a bonus in addition to his basic salary.

He is thus finally deprived of any possibility of benefiting from the first part of the preferential regime provided for in Article 155 B of the CGI.

However, in the current Brexit framework, many of the managers and employees who will be moving to France in the context of intra-group mobility will be offered a local contract.

It is therefore in order to maintain France's attractiveness, particularly in the particular context of Brexit, that amendment No II-1946 intends to extend the possibility of opting for a flat-rate exemption for all employees recruited under intra-group mobility with a local contract.

The PFL 2019 and its amendments are for the moment submitted, in 1st reading to the examination of the Senate. It remains to be seen whether this amendment will ultimately be included in the Budget Law that will be voted for 2019.

Frédéric CHHUM, Avocats à la Cour (Paris et Nantes)

Membre du Conseil de l’ordre des avocats de Paris

CHHUM AVOCATS (Paris, Nantes)

.Paris : 4 rue Bayard 75008 Paris - Tel: 01 42 56 03 00 ou 01 42 89 24 48
.Nantes : 41, Quai de la Fosse 44000 Nantes -  Tel: 02 28 44 26 44

E-mail : chhum@chhum-avocats.com

Blog: www.chhum-avocats.fr

http://twitter.com/#!/fchhum

Ajouter un commentaire

Image CAPTCHA