Are you an employee (company officers are in principle excluded, unless they have a separate employment contract for technical duties performed abroad) ? Do you travel abroad frequently for work ? Under certain conditions, you could be fully or partially exempt from tax in France
Full Exemption
Remuneration for work performed abroad is fully exempt from French tax in the following cases:
a. You pay tax in the other State at least equal to two-thirds of the tax that would be due in France
b. You spend more than 183 days abroad on the following assignments:
- construction or assembly sites, installation and start-up of industrial facilities, their operation and related engineering (in particular preliminary studies) ;
- exploration (including prospecting) for or extraction of natural resources (products of the soil and subsoil);
- navigation on board merchant vessels registered in the French international register (Registre international français) (whatever the position held on board by the seafarer);
c. You carry out commercial prospecting abroad for more than 120 days during a period of twelve consecutive months : developing the company's export business or activities directly related to the company's expansion abroad, resulting in concrete actions in the foreign States (visits, meetings, trade fairs…).
Where one of the three exemptions referred to above applies, the tax due in France on income other than the exempt remuneration is calculated at the rate corresponding to all of the taxpayer's income, both taxable and exempt (the so-called "effective rate" rule (règle du taux effectif)).
Further details : the exemption benefits both technical staff and the administrative staff accompanying them, whether these staff are employed by the companies carrying out the project or by subcontractors, but not employees of a subcontractor providing catering and accommodation for the staff.
The duration of the activity performed abroad is assessed taking into account travel time (between the first departure and the final return), weekly rest days, compensatory leave, paid leave and leave for work-related accidents or illness (even if such leave is taken in France or placed in a time-savings account). For seafarers and aircrew, the period of activity abroad corresponds to the time actually spent on board.
Partial Exemption
If you cannot benefit from a full exemption, you may be able to benefit from a partial exemption.
Remuneration supplements directly linked to working abroad (increases in salary or commissions, bonuses or daily allowances intended to compensate for the constraints of being away from family or the difficulties of working in certain countries) are not taxed if the following conditions are met:
- they must be paid in return for stays made in the direct and exclusive interest of the employer : for example, trips within the group to which the employing company belongs
- the trip must last at least 24 hours;
- their amount must be determined before the stays in another State (either in the assignment orders, in the case of one-off short trips, or in the employment contract or an amendment to it);
- they must not exceed 40% of the remuneration. This cap is calculated on the basis of the total annual remuneration excluding supplements.
Read more
- Tax Expatriation
- Living in France and Working Abroad: What Taxes Apply?
- International taxation: when is a company taxable in France?
