We’ve been hearing a lot lately about Italy’s particular attractiveness to impatriates. However, Italy is neither the first nor the only country in Europe to have set up this type of attractive regime: here are a few quick examples, showing that France is by no means lagging behind on the subject.
- Spain
Spain’s so-called Beckham Law (Royal Decree 687/2005, “Régimen fiscal aplicable a los trabajadores desplazados a territorio español”) is the name given to a specific tax regime introduced in 2005, which allows foreigners moving to work in Spain to pay a fixed income tax of 24% on their Spanish income up to 600,000 euros. Beyond that, the tax rate is 47%.
Adopted in June 2005, it got its nickname after footballer David Beckham was one of the first foreigners to benefit from it. This special regime is highly attractive to foreign executives and company directors.
But Spain is not the only country with an impatriation regime.
- Luxembourg
Luxembourg also has a special scheme for new arrivals: subject to certain conditions, the tax system exempts eligible impatriates from tax on 50% of their total gross annual salary (excluding benefits in kind and certain cash benefits), up to a maximum of 400,000 euros per year.
- Italy
Since 2015, and after modifications in 2024, subject to strict and recently reinforced conditions (see our newsletter of September 26, 2024, available on our website, in the “news” section), Italy offers workers who impatriate an exemption of up to 50% of income tax (IRPEF), provided that income does not exceed 600,000 euros. This reduces the tax rate to around 20 to 25%, compared with a potential rate of almost 50%.
In addition to this system for workers and researchers, there is also a system for retirees settling in certain towns in southern Italy (flat-rate tax at 7%, after deduction at source in the taxing state and application for a tax credit in Italy), as well as a flat-rate tax system of 200,000 euros on foreign income.
- Belgium
For almost 40 years, Belgium has attracted foreign workers with a special tax regime for foreign executives, known as “expats”. Until 2022, some 20,000 executives and researchers benefited from this special tax regime. In 2023, this regime, which was based on a 1983 administrative circular, was replaced by a regime for “impatriate taxpayers and impatriate researchers” incorporated into the Income Tax Code.
From now on, subject to certain conditions, recurring costs incurred by the employer on behalf of the impatriate (e.g. cost of living or housing) are not taxable. These reimbursements are therefore exempt from tax and social security contributions, up to a double limit of 30% of gross remuneration and/or 90,000 euros per year. Reimbursement of tuition fees at an international school, as well as removal and installation costs, can also be reimbursed as employer’s own expenses, over and above the 30% limit.
- Switzerland
Switzerland has also introduced a flat-rate tax on expenses (see our newsletter of June 19, 2025, available on our website under “news”).
- The United Kingdom
In the United Kingdom, too, a preferential tax regime exists for impatriates who decide to settle there. However, after 200 years in existence, the “non-dom” regime has just been replaced by the “FIG” (Foreign Income and Gain) scheme, which has been refocused and is far less attractive than its predecessor (see our newsletter of March 8, 2025, available on our website in the “news” section). The result was not long in coming: many English people decided to move to the Mediterranean sunshine, or to cross the Channel and come to… France, whose regime is now more attractive than its English counterpart.
- La France
Introduced in 2008, France has codified its scheme to attract foreign workers in article 155 B of the French General Tax Code (CGI).
Subject to numerous strict conditions (as only France knows how to do), eligible impatriates can choose between the following two options:
- Total exemption from income tax on remuneration elements directly linked to the impatriation situation: this applies in particular to all impatriation bonuses, housing expenses, tax and/or social equalization, moving expenses…. Or :
- Optionally, you can opt for a flat-rate exemption of 30% of total remuneration, without having to identify precisely the portion relating to impatriation.
But also, and this is an undeniable asset of our system :
- An exemption of 50% of the remuneration linked to the activity carried out abroad in the interest of the employer during the impatriation period;
- A 50% exemption applies to dividends and interest received abroad;
- A 50% exemption on capital gains from the sale of foreign securities (shares) also applies.
And that’s not all. In addition to the strict impatriation regime referred to above, other advantages are granted to new French residents, including :
- For the 5 years following their move, new French residents benefit from an IFI exemption on their real estate assets located outside France (article 964 of the CGI);
- Impatriate employees may benefit from an exemption from affiliation to French pension schemes (basic + supplementary) for 3 years, renewable once, under certain conditions (article L. 767-2 CSS);
- If you continue to pay social security contributions abroad (particularly in the event of secondment), social security contributions paid abroad (statutory scheme, supplementary pension, additional provident fund) are deductible from taxable income in France;
- Since 2016, employers have been eligible for a payroll tax exemption on the portion of remuneration relating to impatriation (article 231 bis Q CGI).
However, the conditions governing the impatriate regime are strict and highly regulated by law and jurisprudence. In summary, the conditions are as follows:
- The impatriate must be an employee, an assimilated manager or, under certain conditions, a self-employed person (in this case, it must be ensured that the activity contributes to France’s economic development and, for specific activities, that prior approval has been obtained in good time);
- He/she must not have been domiciled in France for tax purposes for the 5 calendar years preceding the year in which he/she takes up his/her post in France;
- Tax domicile in France: the impatriate must establish his or her tax domicile in France within the meaning of a and b of article 4 B 1 of the CGI, i.e. have his or her home (center of family interests and normal place of residence) or main place of stay there, and carry out his or her main professional activity there;
- There is a double capping system: the impatriation bonus plus income from stays abroad may not exceed 50% of overall net remuneration, and the exemption for the portion of remuneration corresponding to the activity abroad may not exceed 20% of the taxpayer’s taxable remuneration. In addition, the remaining taxable remuneration must be in line with the taxable remuneration of persons exercising similar functions. Once again, this point calls for a number of verifications: existing reference systems should be validated.
- Recruitment from abroad: only people recruited directly from abroad by a company established in France are eligible. This condition is the most contentious, and the most difficult to document in practice. From now on, the following two situations will be allowed in practice:
-
- Recruitment through intra-group mobility. This refers to people previously employed by a company based abroad who are called upon to work for a company in France linked to the former. In practical terms, this may involve the transfer of an employee from a foreign parent company to its subsidiary in France.
- Recruitment through out-group mobility. This refers to people recruited directly abroad by a company established in France. To benefit from the scheme, it is important that the person is not already in France. Proof of non-domiciliation for tax purposes in France is required.
The impatriation scheme applies until December 31st of the 8th year following the year in which the employee takes up employment in France.
Special cases, tolerances and limits :
- Please note: these exemptions do not apply to social security contributions, which remain due (for example, for foreign investment income, these contributions amount to 17.20%. Thus, after a 50% exemption on the income tax due, the impatriate is taxed at 23.80%, compared with a PFU of 30%).
- Similarly, these exemptions do not apply to the 3 to 4% CEHR, when payable by the taxpayer or household.
- Strict, annual reporting obligations are laid down.
- Under certain conditions, in the event of a delay in the establishment of the household in France for professional or family reasons, you can benefit from the scheme, provided that you settle in France no later than one year after taking up your new post.
- The scheme is not available to civil servants and government employees working abroad who are domiciled in France under article 4 B, 2 of the CGI.
- Combination with other exemption schemes (headquarters, logistics centers, article 81 A of the CGI) is not possible: an irrevocable option must be exercised.
On the employer’s sideFor the employer, there are many pitfalls, both in the drafting of employment contracts and/or endorsements providing for the benefits of mobility and impatriation, and in the drafting of a reliable, long-term internal policy.
These sometimes technical schemes are real HR and tax levers for companies, which should be seized.
They are also an undeniable strategic and economic asset for the countries that implement them.
–
Our firm regularly assists corporate officers, employees and employers with their mobility needs:
- Are you an impatriate or future impatriate looking to secure your status?
- Are you a company looking to audit or implement a mobility policy tailored to your business?
Contact the team at contact@polaris-avocats.fr, or via the contact section of our website: we’ll be delighted to help you with your project.
