GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC

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                  Global mobility Services:
                  Taxation of International Assignees
                  - France

People and
Organisation

Global Mobility
Country Guide
(Folio)
GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC
GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC
Country:
France
     Introduction:      International assignees working in France                          4

     Step 1:            Understanding basic principles                                     5

     Step 2:            Understanding the French tax system                                7

     Step 3:            What to do before you arrive in France                            14

     Step 4:            What to do when you arrive in France                              16

     Step 5:            What to do at the end of the year                                 17

     Step 6:            What to do when you leave France                                  19

     Step 7:            Other matters requiring consideration                             20

     Appendix A:        Tax computation using 2017 French personal income tax rates       27

     Appendix B:        2017 individual income tax liability at different salary levels   29

     Appendix C:       Tax-free benefits for expatriates in France and/or French
                       headquarters                                                       31

     Appendix D:        Total levies on selected income                                   32

     Appendix E:        Deductible expenses and tax credits                               33

     Appendix F:        Social security contributions                                     35

     Appendix G:        France contacts and offices                                       37

     Additional Country Folios can be located at the following website:
     Global Mobility Country Guides

                                             Global Mobility Country Guide (Folio)        3
GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC
Introduction:
International assignees working
in France
This booklet has been prepared to      For income received as of 1st
provide a general background to        January 2018, the marginal tax rate
French personal income tax for         is of 45% and the number of tax
expatriates qualifying as French tax   brackets is set at 5 (excluding special
residents.                             surtax on high income of 3 and 4%).

This booklet is not intended to be a   This special surtax on high income is
comprehensive or exhaustive study      due if the “reference income”
of French tax law and should not be    exceeds € 250,000 for a single
used for completing French personal    taxpayer (€ 500,000 for taxpayers
income tax returns. Some of the tax    taxed jointly).
rates, exemptions and allowances
have been omitted from the booklet     The special surtax rate is 3% from €
because they tend to vary from year    250,000 to € 500,000 for a single
to year. Where such information has    taxpayer (€ 500,000 to € 1,000,000
been included, the data is based       for taxpayers taxed jointly) and 4%
upon the tax law applicable to 2018.   above.

Last Updated: April 2018
This document was not intended or written to be used, and it cannot be used, for the purpose of   Menu
avoiding tax penalties that may be imposed on the taxpayer.

4       People and Organisation
GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC
Step 1:
Understanding basic principles
The scope of French                         subsequent child. Thus, the             general social security tax
taxation                                    income of a married taxpayer            (“Contribution Sociale
                                            with three children is split            Généralisée” – “CSG”) and a
1. An international assignee sent to        into four.                              contribution to the
   work in France will, in general,                                                 reimbursement of the social debt
   become liable to French taxation      5. However, the tax saved from             (“Contribution au
   either as a resident or as a non-        income splitting is limited             Remboursement de la Dette
   resident of France. The main tax         depending on the net taxable            Sociale” – “CRDS”). Employees
   of concern for an international          income of the tax household             who are not deemed as French
   assignee is personal income tax          (please refer to Appendix B).           tax resident are not liable to
   (“impôt sur le revenu”); it applies      Figures vary for persons taxed          French CSG / CRDS surtaxes on
   to the worldwide income of tax           jointly and for single and              their employment income.
   residents in France and to the           divorced taxpayers with
   French source income of tax              dependent children.                  Husband and wife –
   residents of other countries,
                                         6. With the combination of income-      Civil partnership
   unless otherwise provided by a
                                            splitting rules and progressive      (PACS)
   tax treaty signed between France
                                            tax rates, the top marginal tax
   and the relevant state. It should                                             9. Married taxpayers or civil
                                            rate begins at a net annual
   be noted that France has an                                                      partnership taxpayers (persons
                                            taxable income of approximately
   extensive tax treaty network.                                                    who have concluded a contract
                                            € 155,000 for a single person and
                                                                                    called PACS) are generally
The tax year                                at around € 310,000 for jointly
                                                                                    required to file a joint income tax
                                            tax persons.
                                                                                    return stating the aggregate
2.   The French tax year runs from 1
                                            Please note that global income          world-wide income of both
     January to 31 December.
                                            tax under € 61 is not collected by      spouses/partners, and
Methods of                                  the tax authorities.                    dependents, unless a tax treaty
                                                                                    provides otherwise.
calculating tax                          7. French employers do not deduct
3. Each category of income is               withholding tax on salaries paid     10. For French tax purposes, a
   combined and, after deduction of         to French tax residents.                 dependent may be a child under
   allowances, taxed at progressive         However, France will move to a           18, a child between 18 and 21, a
   rates. An example is set out in          tax withholding system as from           child between 21 and 25 if in full-
   Appendix A.                              year 2019. The tax withholding           time education or a disabled
                                            would be applicable on                   person regardless of age.
4. Total income is split according to       employment and self
   family status (ie. 'the more                                                      Under specific conditions, a
                                            employment income, on
   children you have, the less tax                                                   dependent may also be a
                                            pensions, unemployment income
   you pay’). Under income-                                                          disabled person, living in the
                                            and rental income. (see
   splitting rules, total taxable                                                    same house but who is not
                                            paragraph 71).
   income is divided by the number                                                   necessarily a member of the
   of shares awarded to the                 Tax is deducted at source for            family.
   taxpayer: one share for a single         non-residents, as outlined in
   person, two shares for a taxpayer        paragraph 21 below.
   taxed jointly without children,
                                         8. However, French employers
   half a share for each of the first
                                            must generally withhold French
   two dependent children and one
                                            social security contributions, a
   full share for the third and each

                                                                       Global Mobility Country Guide (Folio)           5
GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC
Determination of                         12. If an expatriate working in              Echange control
residence                                    France is considered to be a             purposes
                                             resident in both France and the
11. An individual is deemed to have          home country, reference is made       14. For French exchange control
    his tax domicile in France if:           to the relevant tax treaty, if any,       purposes, a non-French national
                                             to determine the country in               qualifies as a resident when the
     He has his home in France (ie
                                             which the individual will be              place of his principal abode is
      the place where he and his
                                             regarded as resident.                     in France.
      family usually live) or, if he
      has no home in France or           13. Most tax treaties signed by           15. As far as exchange control
      abroad, France is the place of         France consider the following             regulations are concerned,
      his principal abode; or                items to be relevant in                   French residents and non-
                                             determining the place of                  residents must declare to the
     France is the place where he
                                             residence:                                French customs authorities any
      performs his main
                                                                                       transfer of funds exceeding €
      professional activity; or              A permanent home;
                                                                                       10,000 into or out of France,
     France is the centre of his            Personal and economic                    with the exception of bank
      economic interests.                     relations (centre of vital               transfers for which the reporting
                                              interests);                              requirements are the
    Only one of these criteria needs                                                   responsibility of the financial
    to be met in order to qualify as a       An habitual abode; and                   institution.
    French tax domiciliary. Unlike
    certain other jurisdictions, being       Nationality.
    considered domiciled in France
                                            These criteria are analyzed
    does not reflect the intention to
                                            successively in descending order
    return to or remain in France;
                                            of priority.
    rather, it is a synonym for
    tax resident.

6        People and Organisation
GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - FRANCE - PWC
Step 2:
Understanding the French tax system
Taxation of                                    election by the employer, at       21. Non-residents liable to French
employment income                              the rental value used by the           personal income tax on
                                               Tax Authorities to levy local          employment income are subject
16. Employment income is widely                taxes. In order to qualify, the        to withholding tax to be paid by
    defined and includes all                   expatriate must not be a               the empoyer each quarter. After
    employment benefits provided by            managing director of the               deducting mandatory employee
    the employer, whether in cash or           company owning or renting              social security contributions and
    in kind.                                   the dwelling;                          the standard 10% salary
                                                                                      deduction, employment income
   In addition to salary, taxable            However, “expatriate”                   is subject to withholding tax at
   employment income includes                 allowances may be fully                 source at the rates of 0%, 12%
   notably bonuses, commissions,              exempt from French personal             and 20%. The 12% withholding
   overseas' adjustments, cost of             income tax according to the             tax is a final non-refundable tax.
   living allowances, housing                 special inbound tax regime              Non-residents are nevertheless
   allowances, tax reimbursements             applicable (see paragraph 22).          liable to French income tax on
   and the private use of a company
                                                                                      the portion of the progressive
   car.                                  17. Salaries and other related
                                             benefits are taxed after deducting       remuneration which reachs the
   Benefits-in-kind are, as a general        employee's mandatory social              20% band. If the resulting tax is
   rule, included in taxable income                                                   higher than the 20% withholding
                                             security contributions except
   at market value. The following            CRDS and part of CSG and after           tax, the 20% withholding tax
   are exceptions:                           a standard allowance for                 levied by the employer is offset
                                                                                      but an additional income tax is
                                             professional expenses equal to
    Reimbursements of travel                                                         due by the employee.
                                             10% of taxable employment
     costs incurred by an employee
                                             income (maximum allowance of
     exclusively for business
                                             € 12,305 for 2017 French
     purposes and furniture
                                             personal income tax).
     removal expenses are
     generally both fully non-           18. An employee may elect to deduct
     taxable;                                actual professional expenses
                                             incurred instead of the 10%
    A cash lump sum provided by
                                             standard deduction but, in this
     an employer to compensate
                                             case, all expenses reimbursed by
     the employee for housing
                                             his employer must be added back
     costs is assessed in full for
                                             to his taxable salary.
     income tax purposes,
     although housing (rented or         19. Qualifying professional expenses
     owned by the employer)                  include certain commuting
     provided to the employee is             expenses, meals taken while
     subject to special rules. In this       away from home and
     case, the taxable benefit is            professional documentation.
     assessed, not at the actual
     cost of the rent, but at the        20.     Professional advice should
     fixed rates provided by the            be sought before any option is
     French social administration           elected to deduct actual expenses
     (depending on the level of             since various conditions must be
     remuneration as well as the            met to ensure deductibility.
     number of rooms) or, upon

                                                                        Global Mobility Country Guide (Folio)          7
Special income tax                         job in the same or a similar             France more than six years as
regimes for assignees                      company established in France).          salaried employees and providing
                                                                                    they were not regarded as French
into France                                It also provides an exemption of         tax residents in the year
(“inbounds”)                               part of the remuneration based           preceding their transfer to
                                           on foreign workdays. The                 France. In particular, the
                                           taxpayer has the choice between          reimbursement by the employer
22. Inbound assignee regime (Article       two limitations. The total               of tuition fees for dependent
    155B of the French tax code):          exemption (i.e. on salary                children enrolled in either
    This regime came into force on 6       supplements – actual or not –            primary or secondary schools
    August 2008 and is applicable as       and foreign workdays) is limited         may be tax exempt.
    of the 2008 French income tax          to 50% of the total remuneration.
    year. It applies to employees          The individual may also elect         24."French outbound” regime
    assigned to France by their            instead for an exemption of              (article 81A of French tax code):
    foreign employer as from 1             French tax connected with                Specific regimes were created for
    January 2008 or to employees           foreign workdays limited to 20%          employees maintaining their tax
    directly recruited abroad by a         of the taxable remuneration.             residence in France and assigned
    French company as from 1                                                        by their French employer or by
                                           The availability of this inbounds        an employer established in a
    January 2008. In both cases, the       regime is limited to the first five
    individuals must not have been                                                  state of the European Union or of
                                           years following the year of arrival      the European Economic Area
    French tax resident during the         (8 years for inbounds who take
    five calendar years preceding the                                               and which has signed a tax treaty
                                           their function in France as of           with France, which includes
    year of beginning of their             July 6, 2016).
    assignment/employment                                                           provisions relating to
    in France.                             In case of mobility (change of           administrative assistance, to
                                           employer) within the group as            carry out part of their
    Under this regime, individuals                                                  professional activity out of
                                           from August 2016, the employees
    assigned to France by their            will keep the benefit of the             France.
    foreign employer can benefit           inbound regime but only for the
    from a French income tax                                                         Thus, a per diem allowance for
                                           initial duration of the regime.           business trips made out of
    exemption in relation to salary
    supplements connected with             In addition, the inbound regime           France exceeding 24 hours may
    their assignment.                      legislation cannot be cumulated           be allocated by the employer to
                                                                                     an employee and attract a
                                           with the regime available to
    For employees directly recruited       French outbounds (see                     favorable tax regime providing
    abroad, the new regime offers an       paragraph 24).                            that certain conditions are met.
    option with regards to the tax                                                   In particular, the “Travel
    treatment as follows:                  Since these tax regimes are               Hardship Allowance” must be
                                           subject to strict conditions, we          determined before the
       The exemption of the actual        would recommend that you seek             professional activity abroad
        amount of salary                   professional advice at the earliest       starts; the amount must remain
        supplements received; or           possible stage before filing your         within a limit of 40% of the
                                           French income tax return.                 global annual remuneration.
       In the event that there are
        no such salary supplements,     23. General Inbounds Regime:                 If the relevant conditions are
        upon election, a flat rate          certain expatriates who cannot           met, this per diem allowance is
        exemption of 30% of the             benefit from the above “inbound          not taxable but taken into
        total remuneration.                 regimes” (or for whom a claim            account to determine the
                                            under these provisions might not         average tax rate applicable to
    The regime still provides for a
                                            be beneficial) may be able to            other income fully taxable in
    “floor” of taxable compensation
                                            claim a full exemption in respect        France.
    (i.e. the taxable compensation
    cannot be lower than the taxable        of certain “expatriate” allowances
    remuneration paid for a similar         (please refer to appendix C),
                                            providing they do not stay in

8        People and Organisation
In addition, other tax               Taxation of                                         applicable in addition to the
    exemptions could be considered                                                           30% PFU.
                                         investment income                                  As with the current flat rate
    when:
                                         26."Inbound” tax regime:                            withholding system, interest
      Tax paid in the foreign                                                               and dividends paid to
                                            inbound assignees that benefit
       country equals at least two-                                                          individuals domiciled in
                                            from the “inbound” regime                        France will be subject to
       thirds of the income tax that        (Article 155B of the French Tax                  withholding at source to be
       the individual would have            Code) can exempt 50% of the                      operated by the payers of
       paid in France on the same           amount of the following income,                  the income (or by the
       income ; or                          under certain conditions, which                  individuals themselves in
                                            mainly relates to the geographic                 some cases).
      Specific activities enumerated                                                       Taxpayers with low income
                                            situation of the paying entity:
       in French Tax Code are                                                                may, if they choose, opt to
       performed, if the presence               Interest and dividends;                     tax all of the income subject
       abroad extends more than 183                                                          to the PFU at the
                                                Royalties;                                  progressive income tax
       days in a 12-month period
                                                                                             rates. In this case, the 40%
       (120 days for business                                                                reduction previously
                                                Capital gains; and
       prospecting).                                                                         applicable to dividends
                                                Industrial and intellectual                 remains applicable. It
Taxation of self-                                property gains.                             should be noted that this
employment income                                                                            option is applicable to all of
                                         27.       Generally, a French resident              the income subject to the
25. Profits or gains derived from                  is liable to French income tax            PFU without a possibility of
    trades, professions or vocations                                                         a partial option. It will be up
                                                   on investment income,                     to the taxpayer to determine
    carried out in France are subject              whether from French or
    to tax regardless of whether the                                                         the impact of the PFU on
                                                   foreign sources. Investment               their fiscal situation before
    individual is resident of France.                                                        opting for the application of
                                                   income is subject to a flat rate
    If the individual is resident in               tax (« PFU », sometimes                   the progressive rates,
    France, a liability may also arise             referred to as the « flat tax »)          keeping in mind that the
    on profits or gains on activities                                                        option for the PFU should
                                                   beginning January 1, 2018.
    carried out abroad unless tax                                                            be more favorable for
                                                   The overall PFU rate is set at            taxpayers whose income
    treaties provide otherwise.                    30%, including income tax at              reaches the 14% tax rate
   Professional expenses are                       12.8% and social surtaxes at              bracket.
   deductible from the profit. In                  17.2%.                                   As a consequence of the
                                                                                             introduction of the PFU, the
   addition, the taxpayer should
                                         The income items subject to the PFU                 rate of withholding tax
   registered with an “Association                                                           applicable to dividends and
                                         are, notably, the following:
   de Gestion Agréée” in order to                                                            interest paid to individuals
   avoid the application of a 25%                                                            fiscally domiciled outside of
                                         All investment income (interest,
   increase on the net profit for the    distributed income, dividends,                      France is set at 12.8%.
   calculation of the French tax         director’s fees, and similar income),
   liability.                            including interest earned on housing               The flat 40% reduction
                                         savings accounts (PEL, CEL) open                    previously applicable to
   Non-salaried individuals may          starting in 2018.                                   dividends subject to the
   also benefit from the new                                                                 30% PFU is cancelled,
                                                                                             unless the taxpayer chooses
   “inbound” regime under certain        The application of the PFU to                       to be subject to the
   conditions and within certain         financial income gives rise to the                  progressive tax rates.
   limitations.                          following remarks:
                                                                                      28.     Rental income is taxed as
   Professional advice should                      The Exceptional                      ordinary income. Real estate
   be sought at the earliest                        Contribution on High                 income (rental income and gains
   possible stage.                                  Income (CEHR) applicable
                                                                                         from real estate sales) is not
                                                    to a fraction of fiscal
                                                    reference income at the 3%           subject to the PFU and remains
                                                    and 4% rates remains                 subject to the taxation at
                                                                                         progressive tax rates (with the

                                                                            Global Mobility Country Guide (Folio)         9
increase in the social surtax rate           29.    Income received from     (including special social
     to 17.2%).                                          furnished properties     surtaxes of 17.2%).
                                                         is subject to French
     When the tax household receives                     income tax as            An additional tax is applicable
     annual rental income (not                           business income.         on real estate capital gains
     relating to specific type of                                                 exceeding € 50,000 and realized
     investments) lower than €            When the gross rental income does       on real estate other than
     15,000, the gross income may be      not exceed € 70,000 annually, a         building lots. This tax is
     directly reported on the tax         special tax regime called "régime       progressive from 2% to 6% and
     return and is taxed after            micro-BIC" is automatically             is applied in addition to income
                                          applicable by law. This regime leads
     deduction of a fixed allowance of                                            tax and social levies.
                                          to 50% of the gross rental income
     30% corresponding to expenses.       received being taxed.                   The declaration of this capital
     Alternatively, the tax household                                             gain, as well as the payment of
                                          However, it is possible to elect the
     may opt for the determination of     common law tax regime ("regime          the related personal income tax,
     rental income taking into            réel") which is applicable and          is made directly through the
     account actual expenses paid         irrevocable for a minimum period        notary. However, it must be
     (instead of the 30% flat rate        of 1 years. The "régime réel" leads     reported on the annual personal
     deduction) such as mortgage          to the determination of a net rental    income tax to determine the
     loan interest, management            income being taxed (after               “reference income” and
                                          deduction of qualified expenses
     expenses, repairs, property taxes                                            therefore the potential
                                          including mortgage interest and
     etc.. However, no actual             depreciation). In such a case, a        application of the special surtax
     depreciation cost will be taken      French accountant is required for       on high income of 3% and 4%.
     into account. This election is       the preparation of the accounting
     made through the filing of the       and specific filing. In addition, the   In addition, the capital gain (up
     annual personal income tax           taxpayer should registered with an      to € 150,000) relating to the
     return and cannot be revoked for     “Association de Gestion Agréée” in      sale of a property in France by a
                                          order to avoid the application of a     non French tax resident may be
     a three year period.
                                          25% increase on the net rental          tax exempt providing, in
     Rental losses (generally due to      income for the calculation of the       particular, that the individual
                                          French tax liability.
     repairs), with the exception of                                              was previously considered as a
     interest on loans, are creditable                                            French tax resident for at least
     against other income up to a                                                 two years, the sale is made at the
                                          Capital gains tax
     limit of € 10,700 per year                                                   latest five years after the
     provided that the lessor rent the    30. Generally, capital gains derived    departure from France, or
     property up to December 31 of            from the sale of a principal        without the condition of the five
     the following three years.               residence or the first sale of a    years if he had the residence at
                                              secondary residence (under          his disposal at least as from 1
     Depending on the nature of the           conditions) are tax-free.           January of the year preceding
     property, rental losses exceeding                                            the year of sale.
     this limit are creditable against       In addition, the capital gain
     rental income only and can be           realized on the sale of a            The exemption is limited to one
     carried forward for ten years           secondary residence is tax free if   property per tax household.
     following the year in which the         the sales price is less than
     loss is incurred.                                                            The exemption is also applicable
                                             € 15,000 or if the residence has     to nationals of non EU States
     Deductible rental losses                been owned for more than             which have included a non
     exceeding 10,700 € or when the          30 years.                            discrimination clause in their
     taxable income received by the          For property owned between 23        tax treaty signed in France.
     taxpayer is lower than € 10,700,        and 30 years, the gain is only
     are creditable against of the           submitted to social levies.          The capital gains from the sale
     taxable income of the following                                              of shares, parts and other
     six years.                               The net gain is taxed at a flat     income and assimilated gains
                                              rate of 19% i.e. a total of 36.2%   (notably capital gains from the
                                                                                  sale of shares and gains from the

10        People and Organisation
sale of shares and gains from        France during at least six of the          If the individual finally comes
    fixed-term financial                 ten years preceding the transfer           back to France, or if 15 years
    instruments) is also subject to      of their tax residency out of              elapsed from the date of
    the PFU (see paragraph 27). The      France, are taxed upon this                departure from France, the
    PFU also applies to capital gains    transfer on the unrealized capital         gain or rights will benefit from
    due upon transfers of tax            gains related to securities, values        an automatic cancellation/
    residency outside of France (exit    or rights which they hold,                 reimbursement of tax,
    tax, please refer to paragraph       directly or indirectly, in                 provided that certain filing
    33).                                 companies if their participation           conditions are fulfilled.
                                         in companies meet the following
    At the same time, the reduction      conditions:
    for the holding period is
    eliminated as of 2018, except as      They give right to at least 50%
    applicable to sales of shares in a     of the companies’ profits.
    PME subscribed to within ten           These securities, values or
    years of the creation, which           rights can be held directly or
    benefit from a “reinforced”            indirectly, at the date of the
    reduction for the holding period       transfer of the tax residency;
    if the shares were acquired            or
    before January 1st, 2018.
                                          The value of this/these
    Under certain conditions,              participation(s) exceeds €
    exchange of securities is subject      800,000 upon transfer of tax
    to tax deferral.                       residency. These securities,
                                           values or rights can be held
31. Capital losses on the sale of          directly or indirectly, at the
    shares are creditable against          date of the transfer of the
    capital gains of the same nature       tax residency. These capital
    and are subjected to the same          gains or value of receivables
    rebate depending on the length         will be subject to the personal
    of the holding of the shares.          income tax according to
    These losses can currently be          progressive tax rates and
    carried forward for a ten-year         social surtaxes of 17,2%.
    period following the year in
    which the loss is incurred.             There are several possibilities
                                            allowing to defer the payment.
32. Taxpayers may invest in a special       For example, it can be
    savings plan called a 'Plan             automatically suspended for
    d'Epargne en Actions' ('PEA')           transfers within the UE (plus
    under which profits and capital         Norway and Island) or upon
    gains realized within the scheme        production of a guarantee for
    are exempt from French personal         transfer to non-EU countries.
    income tax, provided that the           Filing obligations will have to
    savings are not disposed of             be followed in any case. Under
    within a five-year period and           certain conditions, the tax can
    additional conditions are met.          be refunded, if paid, or
    The maximum investment is €             relieved.
    150,000 per taxpayer (i.e. €
    300,000 for persons taxed               In such a case, the payment of
    jointly who are allowed to own          tax will be deferred up to the
    two PEAs).                              date of disposal of the
                                            securities or rights.

33. As of 3 March 2011, taxpayers,
    who have been tax residents of

                                                                     Global Mobility Country Guide (Folio)       11
Double taxation                             of benefits. Please refer to             security scheme of his home
agreements                                  appendix F for standard                  country.
                                            mandatory contribution rates.
34. If exemption from French                                                      42.An employee may benefit from
    income tax is available under a      37. This system includes social             this scheme for a longer period
    treaty, it is sometimes                  security basic coverage (sickness,      (five or six years depending on
    calculated under the                     maternity, disability, death,           the country of the EEA and
    ‘exemption with progression’             work-related accident benefits          Switzerland), if certain
    (EWP) method. The average                and old age state pension),             conditions are met.
    rate of French tax on total              unemployment benefits,
                                             compulsory complementary             43. According to the France-US
    income (including any income
                                             retirement plans, complementary          social security agreement,
    exempt from French income tax
                                             death/disability coverage and            employees working in France can
    under the treaty) is first
                                             complementary health coverage.           continue to benefit from the US
    determined and then that
                                                                                      social security system, provided
    average rate is applied to
                                         38.The contributions are shared              the duration of the assignment is
    French taxable income.
                                            between employer and employee;            not expected to exceed five years.
35. Under renegotiated tax treaties         on average the employer's share           This applies where the employee
    including notably those signed          of contributions represents 45%           can show that he has been sent
    with Germany, Sweden, Italy,            of the gross salary, the                  by his employer from the United
    Spain, Switzerland, the UK, the         individual's share 23%                    States to France and will remain
    United States, a tax credit             (including ‘CSG’ & ‘CRDS’).               subject to US social security
    system applies under which the                                                    (‘FICA’) and can demonstrate to
                                         39.However, since the contributions          the satisfaction of the French
    foreign income is subject to
                                            are assessed using various                immigration authorities that he
    French personal income tax
                                            ceilings, the average rate will           has adequate private medical
    and a tax credit is granted
                                            decrease as the gross salary              coverage in the United States.
    corresponding to the French
                                            increases.                                However, the bi-lateral social
    income tax attributable to this
    income.                              40.      Generally, for any employee         security treaty between France
                                            who carries out a salaried activity       and the USA does not cover the
     The main practical difference                                                    unemployment charges.
                                            in France, the employer
     between the two systems is the
                                            withholds the employer's and          44.If an expatriate is not on the
     possibility to deduct from the
                                            employee's share of French social        payroll of a French resident
     net taxable basis under the
                                            security charges. However,               company and is liable to French
     ‘exemption with progression’
                                            France has entered into                  social security taxes, the foreign
     the amount of actual tax borne
                                            agreements with more than 40             employer is responsible for the
     in the State where the income is
                                            countries whereby expatriates            payment of French mandatory
     fully taxable.
                                            temporarily transferred to               social security contributions. The
     Both systems result in France          France may remain under home             employee will have to be
     taxing French source income            country social security schemes          registered as an isolated
     taking into account the rate           and exempt from French charges           employee of a foreign company
     applicable to worldwide income.        provided they hold a valid               without a permanent
     France rarely uses the actual tax      certificate of coverage.                 establishment with the URSSAF
     credit method used by many                                                      of Strasbourg. The same
                                         41. A European Regulation
     countries (in particular the US),                                               standard rates and rules as for an
                                             n°883/2004 provides that an
     at least for employment income                                                  employer established in France
                                             individual temporarily assigned
     or rental income from foreign                                                   are applicable. Please consult
                                             by a foreign company from a
     source.                                                                         your advisor for further
                                             country of the European
                                             Economic Area (EEA) and                 information.
Social security taxes
                                             Switzerland to work in France        45. Employee contributions to the
36.The French social security                may, under certain conditions,           French social security schemes
   system is composed of various             remain subject to the social             are fully deductible for French
   schemes providing a wide range

12       People and Organisation
personal income tax purposes          Generalized social                      Deductible expenses
   (except CRDS and no deductible        security tax ('CSG')                    and tax credits
   part of the CSG).
                                         and Contribution to                    52. Certain specific expenses allow a
46. However, contributions paid to       the Reimbursement of                       French resident taxpayer to
    compulsory and supplementary         the Social Debt                            reduce the final French personal
    optional provident plans and                                                    income tax liability.
    supplementary pension plans by
                                         ('CRDS') and other
    both employers and employees         social surtaxes                       53. While some of these qualifying
    are tax deductible within                                                      expenses are deductible from
                                         48.      French tax residents subject
    certain limits.                                                                total net taxable income, others
                                            to French mandatory social
                                                                                   can be offset against the personal
    The excess contributions over           security schemes are liable to
                                                                                   income tax resulting from the
    the legal limits may be re-             these levies assessed on their
                                                                                   application of progressive tax
    characterized as taxable income.        gross income related to
                                                                                   rates. These qualifying expenses
    Thus, that part of the excess           professional activity with a 1.75%
                                                                                   are outlined in Appendix E.
    attributable to an employee's           deduction limited to four times
    contributions is not deductible         the social security ceiling. The        The global tax reduction is
    from his taxable employment             CSG rate is 9,2% and the CRDS           limited to € 10,000 per year
    income whilst that part                 rate is 0.5%.                           subject to certain exceptions.
    attributable to the employer         49.These levies are not deductible
    constitutes a taxable fringe            for French personal income tax
    benefit for the employee.               purposes with the exception of
47. There is a comparable rule              6,8 % of CSG tax for income
    applicable for social security tax      subject to French progressive
    purposes which may increase             income tax rates.
    both the employer's and              50.The CSG and CRDS taxes are also
    employee's liability.                   due on French rental and
   Given the complexity of this             investment income. The CSG on
   issue, please contact your social        French rental and investment
   security advisor for further             income rate is 9.9% and the
   advice.                                  CRDS on French rental and
                                            investment income rate is 0.5%.
   Mandatory contributions made
   to foreign social security systems    51. CSG on investment income
   are also deductible for French            exempted from French personal
   personal income tax purposes.             income tax does not give rise to
                                             personal income tax
   In addition, deduction of                 deductibility. In the same way,
   contributions made to foreign             CSG tax on capital gains and on
   complementary health/                     income qualifying for
   disability/death and pension              withholding tax at source as a
   funds are allowed for taxpayers           final payment (fixed return
   qualifying as inbounds under the          investment or French bonds, for
   law applicable to inbounds.               example) is not deductible from
                                             taxable remuneration.
   Nevertheless, these funds must
   comply with specific conditions          Additional social surtaxes are
   in order to be tax deductible. We        due on French rental and
   recommend contacting our                 investment income.
   experts to determine whether the         Consequently, the rate of all
   foreign plan contribution                social surtaxes is 17.2%.
   qualifies for tax deductibility.

                                                                       Global Mobility Country Guide (Folio)       13
Step 3:
What to do before you arrive in France
Work permits (for                            employment contract only)             contract of at least one year,
salaried employees)                          category is now called ICT (intra     assuming all other
                                             corporate transfer) salarié           requirements for use of fixed-
54. If an assignee is a non-European         détaché, and the salarié en           term contracts are met, or a
    Economic Area (EEA) national,            mission salarié (simultaneous         standard ‘indefinite-term
    they cannot perform a salaried           home and host contract) category      contract’) with a gross
    activity in France without a work        is now called passeport talent        minimum annual salary of EUR
    permit or a work visa depending          salarié en mission.                   53,876,11 (as of October 2016).
    on the assignee's immigration
    status. A work permit or work           To qualify for this type of work       These categories of admission
                                            authorisation, the assignee must:      below do not require
    visa may take the form of either a
                                          • be paid a gross monthly salary of      establishing proof that no
    temporary assignment work               no less than one and a half times
    permit or a salaried worker             the minimum wage                       qualified candidate is available
    permit.The appropriate type of          (approximately 2,200 euros             locally and also grant the
    work permit will depend on the          gross per month, for ICT salarié       candidate’s spouse the right to
    job position, level of salary,          détaché and 2,700 euros for            work in France.
    seniority within the group,             passeport talent - salarié en
                                            mission );                             It is also possible for a French
    reporting line, management
                                          • have at least three months of          employer to hire an individual
    functions, etc. Work permits are        seniority with an entity of the        who does not fulfil the
    required even for short-term            assigning group (consequently,         conditions of the European
    assignments in France (less than        this category is therefore not
                                                                                   Blue Card Category, and has no
    three months).                          appropriate for new hires); and
                                          • be performing a function for his       pre-existing employment
     In 2007, the French legislature        or her home employer within a          relationship with another
     created a new category of work         French entity of the same group        company of the same group in a
     authorisation designed to              for a period of no less than three     salaried employee capacity
                                            months and no longer than three        (salarié). This latter category of
     facilitate temporary intra-group
                                            years for ICT salarié détaché ;        work authorisation results in
     transfers of assignees, a category     authorisations for passeport
     of authorisation named salarié                                                the assignee having salaried
                                            talent - salarié en mission are
     en mission authorisations. There       renewable beyond three years.          employment status under an
     are two sub-categories of salarié     - To have either a certificate of       employment contract with the
     en mission: one where the                 coverage for social security        French host entity. It should be
     assignee only has an employment           purposes or an attestation that     noted that this category of
     contract with the home employer           French social security              authorisation could receive a
     (salarié en mission type détaché)         affiliation will be requested, in   refusal from the French labour
     and one where the assignee has            the visa application file.          authorities as the future
     an employment contract with the                                               employer should check within
     home employer and the host           56. Since 2012, the European Blue        the unemployment market if
     entity simultaneously (salarié en        Card category applies to highly-     somebody else could not
     mission type salarié).                   qualified employees (three-year      occupy the job that one
                                              level university diploma or five     proposes to one's candidate.
55. The reform of March 7, 2016 and           years of professional experience
    November 2, 2016 modified the             in the area of the post to be        There are several other types of
    nomenclature, but not the basic           filled) being offered an             authorisations, notably those
    aspects of these two intra-group          employment contract with the         for corporate officers and
    work authorisations. The salarié          French host entity valid for at      several smaller categories for
    en mission détaché (home                  least one year (a fixed-term         specific professions.

14        People and Organisation
‘Work’ in France will trigger          uninterrupted previous residence
    French social security liability,      in France of at least five complete
    unless a treaty exemption              years and a French speaking
    applies, and the application of        level.
    French labour law to a degree
    that will depend on the             Importing personal
    structure of the work.              possessions
    The administration gives            60.     EU nationals may import a
    priority to a rapid processing of      car duty-free if owned for at least
    salarié en mission and                 six months. One may import
    European Blue Card work                other possessions duty free if
    authorisations, which take             these possessions have already
    approximately 2 to 3 weeks             been used for a certain period of
    from the time of filing of the         time. For non-EU nationals, one
    application with the French            must own a car for 12 months
    consulate depending on the             and other goods for six months.
    assignee's home address or             An inventory of goods imported
    country of residence until the         must be filed in duplicate.
    time the assignee can pick
                                        61. All tax-free goods imported by
    up one's visa. For most other
                                            non-EU citizens must be kept for
    main types of work
                                            at least a 12-month period from
    authorisation, it generally takes
                                            the date of importation.
    between eight and twelve
    weeks.

57. If the assignee is an EEA or a
    Swiss national, they are exempt
    from a French work permit as
    well as from a residence permit.

Residence permits
58. A residence permit is generally
   required for non-EEA nationals
   who plan to stay more than three
   months in France. This residence
   permit can be issued for a 12-
   month period or three years for
   ICT salarié détaché or passeport
   talent - salarié en mission and
   European Blue Card categories,
   renewable for the duration of the
   assignment or as long as the
   person still has the same
   conditions of salary and
   employment.

59. Furthermore, a full residence
    permit could be valid for ten
    years and allows an individual to
    perform a salaried or non-
    salaried activity. This permit is
    granted only to individuals who
    can prove, inter alia, an

                                                                       Global Mobility Country Guide (Folio)   15
Step 4:
What to do when you arrive in France
Registration
62.You are not required to register
   with the French tax authorities
   on arrival in France. Your
   registration will be made when
   filing your first French personal
   income tax return (i.e. the year
   following that of arrival in
   France).

Social security
obligations
63.Usually, a French employer will
   undertake the registration
   formalities with the social
   security authorities on behalf of
   an employee. If you remain
   covered under your home
   country social security schemes,
   you must have a certificate of
   coverage issued by the competent
   authorities. Depending on the
   expatriate's normal place of
   employment, immigration status
   and the social security treaty
   applicable, such certificates
   (some non-EU states, for
   example) may not exempt the
   expatriate and his employer from
   contributing to the French
   unemployment fund.

16      People and Organisation
Step 5:
What to do at the end of the tax year
Tax return                                66.No income tax is paid in the year          adjustment is possible under
                                             of arrival in France (except for           certain conditions. The balance
French tax residents (French                 non French tax residents liable            of personal income tax is paid in
nationals and all other nationals)           to tax withholdings – see                  November and December.
must generally file an income tax            paragraph 22).                             Payment of income tax by
return before mid/end of May at                                                         'prélèvements mensuels' must be
midnight of the calendar year             Payment of tax due                            requested in writing or online by
following that during which income        67. If you have not been already              the taxpayer as the installments
was earned. The taxpayers, whose              liable to French income tax, you          are withheld directly from the
main home is equipped with an                 must paid tax in one time, when           individual’s bank account.
access to Internet, are invited to file       the tax bill is sent to you during
                                              the summer or fall of the year
                                                                                     Moving to a
their tax return on-line on the
government website when their                 following the year of your arrival     withholding tax
reference income is more than:                in France.                             (WHT) system
                                          68.      If you have already been          71. On 1 January 2019, for French
· € 28,000 in 2017.
                                             liable to French personal income            resident taxpayers, income taxes
· € 15,000 in 2018.
                                             tax the previous year (income tax           would now be paid on a pay as
                                             on 2016 income), installments               you earn basis. The scope of
In 2019, this e-filing requirement
                                             must be paid by 15 February and             income subject to the new
will concern all taxpayers regardless                                                    withholding tax system is very
                                             15 May 2018 (toward the income
of their income level.                                                                   wide and covers most categories:
                                             tax liability due on 2017 income).
A fixed € 15 fine per form will be                                                       employment income, pensions,
                                             Each installment amounts to
applied after two failures to file                                                       replacement income, annuities,
                                             one-third of the income tax paid
using this process, except in                                                            self-employment income
                                             in the preceding year i.e., based
particular cases (for example the                                                        (industrial and commercial, non-
                                             on your 2016 French personal
elderly who have no access to                                                            commercial, agricultural) and
                                             income tax liability. A tax bill will
internet).                                   then be issued during the                   rental income.
                                             summer, indicating the balance
64.For non French tax residents, the
                                             of income tax due.
                                                                                     First and last year
   same deadline as for French
                                                                                     in France
   residents applies now.                 69.Please note that amounts in
                                             excess of € 1,000 must be paid to       72. Allowances and annual
65. The main French personal                                                             progressive tax rates apply in the
                                             the French tax authorities by
    income tax return (Form no.                                                          same way to part-year and full-
                                             automatic payment or online via
    2042) must be filed together with                                                    year tax residents.
                                             the website of the French Tax
    specific tax returns relating to
                                             Authorities (impots.gouv.fr).           73. Because of French income-
    particular categories of income.
                                             This new process requires, in               splitting rules, a married
    In particular, a specific return
                                             practice, a French bank account             taxpayer with children may not
    (Form no. 2047) must be be
                                             or an account held in the SEPA              reach the maximum marginal tax
    completed when receiving
                                             area.                                       rate (45% for 2017 income) in the
    foreign source income as well as
    form no. 3916 for foreign bank        70. The French system allows French            first year in France.
    accounts held by French resident          tax to be paid on a monthly basis
    taxpayers.                                                                       74. Depending on your situation, an
                                              upon request. Monthly payments             Exit tax can be due (see
                                              are equal to 1/10th of the prior           paragraph 33).
                                              year's income tax liability but an

                                                                          Global Mobility Country Guide (Folio)          17
When a French tax resident leaves
France during the course of a tax
year, he remains liable to French
personal income tax on the
aggregate of world-wide income
earned as a French tax resident and
also his sole French-source income
earned as a non-French tax resident,
subject to the provisions of an
applicable tax treaty.

18      People and Organisation
Step 6:
What to do when you leave France
75. All of the departure-related tax    76. In addition, personal taxes (i.e.       practical tax issues (e.g., change
    obligations have been cancelled         personal income tax, CSG and            of the address, follow up
    for individuals leaving France as       CRDS surtaxes and habitation            correspondence with the tax
    of 1st January 2005 and a French        tax) must be paid by the normal         administration, payment
    tax return must be filed by the         deadlines (see paragraph 69).           requests, etc), we recommend
    normal deadlines.                                                               contacting our offices before
                                            Nevertheless, since a departure         leaving France.
                                            from France may create

                                                                       Global Mobility Country Guide (Folio)       19
Step 7:
Other matters requiring consideration
Gift and inheritance
tax
77.   French inheritance or gift tax          French domestic rules                   This allowance is not
      may be due by beneficiaries of          described above.                        applicable in case of gifts.
      assets transferred by way of
      gifts or inheritance (heirs,      79.   Inheritance tax is levied on      84.   Gift tax is subject to the same
      legatees and donees).                   assets at their fair market             standard rules. However,
                                              value, with allowances taking           there are some differences.
78.   If the deceased or the donor is         into account the relationship           Debts in relation to the
      a tax resident of France upon           between the deceased and the            property transferred are not
      date of inheritance/gift, tax           beneficiary. Debts existing at          deductible and if the donor
      will be due in France on the            the time of death are                   pays the gift tax himself, this
      value of world-wide assets              deductible in full.                     is not considered to be a
      transferred.                                                                    taxable benefit.
                                        80.   Inheritance tax is levied
      If the deceased or donor is not         according to tax schedules        85.   In addition, a favorable tax
      a tax resident of France, tax           which vary depending on the             regime is granted for gifts of
      will be due on world-wide               family relationship between             specific assets made during
      assets transferred only if the          the beneficiaries and the               the lifetime of the donor
      heir/legatee/donee is a tax             donor or deceased.                      provided certain conditions
      resident of France upon                                                         are met.
      inheritance/gift and has been     81.   Since 2007, no inheritance
      a tax resident of France for at         tax is due for inheritance open   86.   A reduction 50% of the gift
      least six years any time during         between spouses (or partners            tax applies on gifts of business
      the ten years preceding the             of a PACS) and for inheritance          assets provided certain
      year in which he receives the           between brothers and sisters            conditions are met if the
      assets by way of inheritance            living together under specific          donor is less than 70 years
      or gift.                                conditions.                             old.

      Regardless of whether the         82.   Progressive tax rates ranging     87.   It must be noted that parents
      deceased/ donor or                      from 5% to 45% (i.e.,                   can grant tax-free gifts to
      heir/legatee/done are tax               marginal rate applicable to             their children (and
      residents of France, tax will           the portion of assets                   conversely) every fifteen years
      be due on value of all personal         exceeding € 1,805,677) apply            up to a maximum limit of
      and real property located in            after a rebate of €100,000 for          €100,000 per child, €80,724
      France transferred by way of            2018 when beneficiaries are             between spouses (applicable
      inheritance or gift.                    direct dependents.                      to gifts only as inheritance
                                                                                      between spouses are tax-
      Please note that applicable       83.   Between non-related parties,            exempt) and €31,865 for
      double tax treaties addressing          the rate is 60% after an                grand-parents to grand-
      inheritance and/or gift tax             allowance of €1,594 for 2018            children for 2018. These
      matters may modify the                  granted to each beneficiary.            allowances are reviewed
                                                                                      each year.

20     People and Organisation
Local rates
88. A habitation tax or 'taxe                  residence, to be applied over a          ceiling, a progressive decrease
     d'habitation' is levied on any            three year period starting with          would be provided for
     individual who occupies a                 the 2018 tax year. 80% of all            households whose fiscal
     dwelling on 1 January, even if            households are expected to be            reference revenue is between
     he is not the owner. The tax is           exempted from the payment of             these limits and 28 000 € for a
     levied on a deemed rental                 this tax by 2020 as a result.            single taxpayer (increased by 8
     value and specific deductions                                                      500 € for the first two half
     are granted according to the              This decrease in habitation tax          parts for dependents) that is
     number of dependent                       will be applicable to                    45 000 € for a couple
     children. There is also a                 households whose fiscal                  (increased by 6 000 € per
     property tax, 'taxe foncière',            reference revenue does not               additional half part for
     to be paid by the owner of                exceed 27 000 € for a single             dependents).
     a dwelling.                               taxpayer, increased by 8 000 €
                                               for each of the first two half     89.   For eligible households, the
      The Finance Act Bill for the             parts for dependents, then by            decrease will amount to 30%
      year 2018 provides a gradual             6 000 € for each additional              in 2018 and then to 65% in
      decrease in the dwelling tax             half part. In order to avoid             2019
      applicable to a principal                detrimental impacts of the

Wealth tax on real
estate properties
90.   Article 31 of the 2018 finance           called “impatriates” is                  wealth in excess of
      bill cancels the wealth tax              maintained; similarly to                 €10,000,000.
      (ISF) in place in France since           individual taxpayers with a tax
      1982, and replaces it with a tax         domicile outside of France,         96. Unlike French personal
      on real estate property (IFI)            individual taxpayers who have           income tax, wealth tax is
      beginning January 1, 2018,               not been domiciled in France            determined by the taxpayer
      which is aimed at only real              during the five years preceding         and paid on filing the return,
      estate properties.                       the transfer of their domicile          normally by 15th June of the
                                               to France are only taxed on the         relevant year (deadline
91.   The IFI applies to real estate           property located in France,             applicable for French tax
      property which is not                    until December 31st of the fifth        residents – the deadline will
      attributed to the professional           year following the year of              be 15th July for non resident
      activity of the owner.                   arrival in France.                      taxpayer).

92.   The relevant date (January 1st),   94.   The applicable range and the        97. Under certain double tax
      the threshold for taxation (€            taxable base for the IFI are            treaties addressing wealth tax,
      1,300,000), the tax brackets             significantly reduced; only             citizens of certain countries
      and the definition of taxpayers          non-professional real estate            are fully exempt from IFI tax
      subject to the tax remain                property is taxable, leading to         on non-French assets for the
      unchanged compared to the                the exemption of financial              first five years of their
      rules applicable to the ISF.             assets (notably cash, stock and         residence in France.
      Similarly, the flat 30%                  equity) and moveable assets.
      reduction applicable to the                                                  98. Under French domestic rules,
                                               In parallel, the rules regarding        if an individual arrived in
      value of a principal residence           the exemption of professional
      is maintained.                                                                   France after 6 August 2008
                                               assets are redefined and re-            and was regarded as a non-
93.   The five-year exclusion of               centered on real estate.                French tax resident for the 5
      assets located outside of          95.   Rates are progressive from              years preceding his arrival in
      France from the taxable base             0.50%, after an allowance of            France, his real estate assets
      for new French tax residents             €800,000 to 1.5% for net                located outside of France are

                                                                        Global Mobility Country Guide (Folio)       21
exempt from IFI until 31st               Considering the specificities of    sought at the earliest possible
      December of the fifth year               this regime, we recommend           stage.
      following the year of arrival in         that professional advice be
      France.

3% annual property                           is therefore no income tax or        to grants of qualifying free
tax                                          social security due upon             shares. A free share plan is
                                             exercise with the exception of       qualifying if certain corporate
99. Any company based in France              the “excess discount” (grant         law requirements are fulfilled.
    or abroad which directly or              price less than 95% of the           Otherwise, it is considered as
    indirectly owns property located         average price over the 20            additional compensation and
    in France which is not involved          trading days preceding               taxed as such. Please note that
    in an industrial or commercial           the grant).                          the timing of taxation as well as
    activity falls within the scope of                                            the tax regime will be different.
    the annual 3% property tax.              The excess discount (over the
                                             authorized 5%), if any, would be     For “French Qualified” free
     Companies may benefit from an           subject to taxation as additional    shares, the taxation of the
     exemption by fulfilling certain         compensation and would be            acquisition gain is due the year
     requirements, e.g., an annual           offset against the taxable basis     of the sale.
     return or a commitment to               of the subsequent taxable
     provide the French tax                  acquisition gain.                    Grant of “French Qualified”
     authorities with information                                                 free shares: the grant of free
     concerning the property and         103. Stocks disposal: a distinction      shares to the beneficiary
     their shareholders.                      depending on the date of grant      remains exempt from French
                                              should be made to determine         personal income tax as well as
Stock option plans                            the tax and social security         French social security
                                              treatment applicable to the         contributions.
100. French law provides a specific
                                              acquisition gain (i.e., the
     tax and social security                                                      Vesting of the “French
                                              difference between the fair
     treatment of qualifying stock                                                Qualified” free shares: the
                                              market value of the shares at
     subscription or purchase                                                     taxable event is deferred upon
                                              the date of the exercise and the
     options on both French and                                                   the time of sale of the
                                              option price). The capital loss,
     foreign stocks.                                                              underlying shares. There is
                                              if any, is deductible from the
                                              acquisition gain. Please see        therefore no income tax or
     A stock option plan qualifies in
                                              table below summarizing the         social security due upon the
     France if certain corporate law
                                              applicable tax and social rates.    vest date of the free shares.
     requirements are fulfilled.
     Otherwise, it is considered as                                               Stocks disposal: A distinction
                                              The capital gain (i.e., the
     additional compensation and                                                  depending on the date of grant
                                              difference between the sale
     taxed as such. Please note that                                              and on the date the
                                              price and the fair market value
     the timing of taxation as well as                                            shareholders approved the
                                              of the shares at the date of
     the tax regime will be different.                                            grant (especially to benefit from
                                              exercise) to a 30% flat tax rate
                                              (including social surtaxes).        the “Macron” regime) should be
101. Grant of “French Qualified”
                                              Please refer to paragraph 30. In    made to determine the tax and
     options: the grant of the option
                                              addition, exceptional surtax on     social security treatment
     to the beneficiary remains
                                              high level income may be due if     applicable to the acquisition
     exempt from French personal
                                              applicable.                         gain (i.e., the fair market value
     income tax as well as French
                                                                                  of the shares at the date of vest,
     social security contributions.
                                         Free grant of shares                     less deduction of the capital
102. Exercise of “French Qualified”      AGA                                      loss if any). Please see table
     options: the taxable event is                                                below summarizing the
     deferred upon the time of sale      104. Specific personal income tax        applicable tax and social rates.
     of the underlying shares. There          and social security rules apply

22       People and Organisation
The capital gain (i.e., the          subject to a 30% flat tax rate          high level income may be due if
  difference between the sale          (including social surtaxes).            applicable.
  price and the fair market value      Please refer to paragraph 30. In
  of the shares at the date of vest)   addition, exceptional surtax on

Applicable tax and                     The rates are applicable to             As in many countries, the
social rates for                       French tax residents subject to         taxation of stock options and
                                       French social security on a             free grant of shares in France is
“French Qualified”                     mandatory basis at the date of          very complex and requires
stock-options and free                 grant for the employer’s part           specific advice from a tax
shares                                 and/or at the date of sale of the       advisor.
                                       shares for the employee’s part.

                                       The rates mentioned above do
  Due to the complexity of the
                                       not take into account the
  system, the below table
                                       exceptional contribution on
  summarizes, for information
                                       high income of 3% and 4%.
  purposes only, the applicable
  social and tax rates.

                                                                 Global Mobility Country Guide (Folio)        23
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