France seeks to attract Brexit leavers
In the wake of the Brexit vote, the French Prime Minister, Manuel Valls, has announced that France intends to enhance its beneficial tax regime for expatriate workers and lower its corporate income tax rate in a move that seeks to make France an attractive location for businesses thinking about relocating part of their business into the EU.
Under existing French rules, a foreign worker is exempt from French income tax on earnings directly related to their days abroad spent working for their employer. In addition, a foreign worker also benefits from exemption for amounts directly related to their assignment to France (such as mobility premium, benefit in kind for housing etc) up to certain limits. Remaining income will be taxable in France at the personal income tax rate (up to 45%).
This regime currently applies for five calendar years following the year of arrival of the foreign worker in France. The Prime Minister has proposed that this should be extended to eight years.
Equally significantly, the French Government intends to introduce an exemption from payroll tax paid by employers of foreign workers on such assignment-related income.
Finally, the Prime Minister also announced that the corporate income tax rate in France will be cut from 33⅓% down to 28%.
The announcement is clearly designed to enhance Paris’ attractiveness to businesses thinking of relocating part of their business into the EU from the UK, such as banks and other businesses in the financial services sector where loss of EU passporting may be a significant issue.
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