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Sept. 30—Expatriate employees sent to France would receive three additional years of tax benefits while their employers would pay less payroll-related taxes under a proposed budget submitted by the French government to parliament Sept. 28.
Expatriate employees seconded to France for a limited amount of time by non-French employers currently may receive income tax exemptions for up to five years on certain wages and benefits in a system known “the impatriate regime.”
The benefit allows for remuneration received outside of France by the expatriate as well as “expatriate bonuses” or overseas living allowances related to living in France to be income tax free for the employee.
The budget proposes extending the period of time for receiving the tax free benefits to eight years from five years while also making the same tax free amounts that the employee receives to be exempt from payroll taxes in instances where the expatriate employee has arrived on or after July 6, 2016.
The budget also proposes new income tax thresholds to account for inflation.
• The first income tax bracket's threshold would increase to 9,710 euros (10,912) from 9,700 ($10,901) euros and maintain a 14 percent tax rate.
• The second income tax bracket's threshold would increase to 26,818 euros ($30,139) from 26,791 ($30,110) euros and maintain a 30 percent tax rate.
• The third income tax bracket's threshold would increase to 71,898 euros ($80,805) from 71,826 euros ($80,724) and maintain a 30 percent tax rate.
• The fourth income tax bracket's threshold would increase to 152,260 euros ($171,123) from 152,108 euros ($170,952) and maintain a 41 percent tax rate, with all amounts greater than the new threshold maintaining a 45 percent tax rate.
Parliament must approve the proposed budget for the proposals to take effect.
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Budget documents can be found in French at http://www.economie.gouv.fr/files/files/PDF/plf2017-principales_mesures_fiscales.pdf and http://www.performance-publique.budget.gouv.fr/sites/performance_publique/files/files/documents/actualites/PLF2017/PLF2017.pdf.
More information on payroll issues in France can be found in the France country primer.
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