France – New “Inpatriates” Tax Incentives: French Prime Minister Announced on July 6, 2016 a Package of Tax Measures to Improve the Attractiveness of Paris as a Financial Center, in Relation With the Recent Referendum on Brexit. This Package Is Focused on Tax Incentives for Employees and Employers in the Financial Services Industry

Sullivan & Cromwell LLP - July 7, 2016

The French inpatriates tax regime currently includes a reduction of the personal income tax basis up to 50% (or higher in certain situations) on both employment income and passive income. In addition, wealth tax is applicable in respect of French assets only, and not on a worldwide basis. The inpatriates regime is applicable during the first five years of French tax residence. No specific regime is currently applicable in respect of salary taxes paid by the employer.

The new package would include (i) an extension of the inpatriates regime from five to eight years; (ii) an exemption benefiting to financial institution employers in respect of the 20% salary tax currently applicable on compensation paid to employees; and (iii) various measures such as the reduction of corporate income tax from 33% to 28%.