Taxation of expats: what you need to know before you leave

Expatriate or tax resident? The first question to ask

It all starts with a key concept: tax residency. An expatriate does not automatically become a non-tax resident when leaving France. The French tax authorities consider you a tax resident if at least one of the following criteria is met:

1. You spend more than 183 days per year in France.
2. Your family home remains in France (spouse, children).
3. Your primary professional activity is carried out in France.
4. Your economic interest (investments, assets, sources of income) are in France.

Double taxation is possible, be cautious!

An expatriate may end up paying taxes both in France and in their country of residence. To avoid this, France has signed tax treaties with over a hundred countries. These agreements help define:

1. Which country has the right to tax the income earned.
2. The application of a tax credit or exemption in France to avoid double taxation.

In most cases, taxes are paid in the country where the income is generated. However, each treaty is different, and some situations can be more complex. In countries without a tax agreement with France, double taxation can become a reality.

Understanding international tax systems

Depending on your country of expatriation, you will be subject to a specific tax model.

Worldwide income taxation

This system, applied in France, the United States, and Germany, taxes income regardless of where it is earned. A French tax resident must therefore declare all of their income, including income generated abroad.

Advantage: If a tax treaty exists, a tax credit helps avoid double taxation.
Disadvantage: All income must be declared, which can increase the overall tax burden.

Territorial taxation

In countries like Singapore, Hong Kong, or Dubai, this system only taxes income generated within the country. Foreign income is not taxed.

Advantage: Exemption from tax on income coming from abroad.
Disadvantage: Some countries do not have tax treaties with France, which can complicate the declaration process.

Countries with no income tax

Certain countries, such as Qatar or the Bahamas, do not impose income tax. This may seem ideal, but a French expatriate living there could still be considered a tax resident in France if they maintain significant economic ties.

Which income is always taxable in France?

Even if you are a tax resident abroad, some income remains taxable in France:

• Rental income: If you own property in France and rent it out, the rent received will be taxed in France.
• French pensions: These remain taxable in France unless there is a specific agreement.
• Capital gains on property: If you sell property in France, you will have to pay French taxes on the capital gain.
• Wealth Tax on Real Estate (IFI): If the value of your French real estate exceeds 1.3 million euros, you will be liable for this tax.

Anticipate your tax expatriation

A well-prepared departure is a departure without surprises. Here are some actions to take before moving abroad:

1. Check your tax status with a tax advisor or specialized accountant.
2. Declare your change of tax residency to the French tax authorities.
3. Analyze the tax treaty between France and your host country to understand your obligations.
4. Adapt your wealth management according to the applicable tax regime.
5. Ensure that your employer has planned for compliant tax structuring if the expatriation is job-related.

Relocation company support

An international move is not something you can improvise. Between administrative formalities, finding accommodation, and dealing with tax issues, it’s easy to feel overwhelmed. This is where a relocation company comes in.

Our role is not limited to moving boxes. We help our clients prepare for their expatriation under the best conditions by taking care of:

1. Administrative procedures: tax declaration, visa application, residency transfer.
2. Housing search: selection, viewings, lease negotiation.
3. On-site settlement: school enrollment for children, bank account setup, practical advice.
4. Managed international relocation: adhering to deadlines, detailed follow-up, protection of belongings.
5. Anticipating each step ensures a smooth and stress-free transition.

Expatriate taxation, in short

Expatriate taxation is a complex but essential topic. It’s best to gather information and plan your departure in advance to avoid any surprises.

If you are planning an expatriation project, surround yourself with professionals who are experts in every aspect of this transition. At Grospiron Mobility Solutions, we are here to help you succeed in your relocation with complete peace of mind.

Need support for your international move? Contact us today.