France:
Taxation in France - Taxation of Expatriates and Non-residents
17 March 1995
HSD Ernst & Young
To print this article, all you need is to be registered or login on Mondaq.com.
An expatriate performing a business activity in France is considered a French resident taxable on worldwide income.
Salaries are generally taxable in France if the business activity is performed in France. Salaries include base pay, cost-of-living adjustments, contributions to profit-sharing plans, relocation bonuses, employee tax reimbursement, housing allowances and payments in kind.
If an individual has income exempt from tax under treaty provisions (such as rental income from property located abroad and income from securities), the effective rate rule applies. Under this rule, a hypothetical tax is calculated on total world-wide income using the progressive rates and other French tax rules. The effective rate of total hypothetical tax will then apply to income taxable in France to determine income tax payable in France.
Taxation of Non-residents
A non-resident is taxed in France on French-source income, which includes rental income from property located in France; income from securities; income from commercial, industrial and agricultural activities; and capital gains from sales of real estate, royalties and copyrights.
The tax is calculated using the progressive rates and other French tax rules for income not liable to a specific withholding tax. The tax cannot be less than 25% of the net taxable income.
A non-resident without French-source income who has disposed of a residential property located in France is taxed on three times the actual rental value of the property. Most treaties disallow use of this method, however.
Luxembourg is not only a well-known fund hub but it is also a very attractive jurisdiction for holding or financing special purpose vehicles (SPVs), which attracts...
Welcome to our to the point newsletter. Every month, we are looking back at the most relevant developments in the area of financial regulation in the CEE region.