French General Tax Code
In forceI. - 1. Employees and the persons referred to in 1°, 2° and 3° of b of Article 80 ter called from abroad to take up employment with a company established in France for a limited period are not subject to tax on the elements of their remuneration directly linked to this situation or, by option, up to 30% of their remuneration.
The first paragraph is applicable provided that the employees and persons concerned have not been domiciled for tax purposes in France during the five calendar years preceding that in which they took up their post and, until 31 December of the eighth calendar year following that in which they took up their post, in respect of the years for which they are domiciled for tax purposes in France within the meaning of a and b of 1 of article 4 B.
The benefit of the exemption scheme is retained in the event of a change of functions, during the period defined in the second paragraph of this 1, within the company established in France mentioned in the first paragraph or within another company established in France belonging to the same group. For the application of these provisions, the group is understood to be the whole formed by an undertaking established in France or outside France and the undertakings it controls under the conditions defined in Article L. 233-3 of the French Commercial Code.
If the portion of the remuneration subject to income tax pursuant to this 1 is less than the remuneration paid for similar functions in the company or, failing that, in similar companies established in France, the difference is reintegrated into the taxable income of the person concerned.
2. The portion of the remuneration corresponding to the activity carried out abroad during the period defined in 1 is exempt if the stays abroad are carried out in the direct and exclusive interest of the employer.
3. At the option of the employees and persons mentioned in 1, either the fraction of the remuneration exempted in accordance with 1 and 2 is limited to 50% of the total remuneration, or the fraction of the remuneration exempted in accordance with 2 is limited to 20% of the taxable remuneration resulting from 1.
4. The employees and persons referred to in this I may not avail themselves of Article 81 A.
II. - The employees and persons mentioned in I are, during the period in which they benefit from the provisions of the same I, exempt from tax up to 50% of the amount of the following income:
a) Income from transferable securities, the payment of which is ensured by a person established outside France in a State or territory which has concluded a tax treaty with France which contains an administrative assistance clause with a view to combating tax fraud or evasion;
b) Income mentioned in 2° and 3° of 2 of article 92 whose payment is made by a person established outside France in a State or territory that has concluded a tax treaty with France that contains an administrative assistance clause with a view to combating tax evasion or avoidance ;
c) Gains realised on the disposal of securities and corporate rights, where the custodian of the securities or, failing that, the company whose securities are disposed of is established outside France in a State or territory that has entered into a tax treaty with France that contains an administrative assistance clause with a view to combating tax evasion or avoidance. Correspondingly, capital losses realised on the disposal of these shares are recognised at 50% of their amount.
