France - Special considerations for short-term assignments

France - Special considerations for short-term...

Taxation of international executives

Related content

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year.

Residency rules

Are there special residency considerations for short-term assignments?

The residency rules are the same for short- or long-term assignments, although it is often more likely that an employee will remain resident in the home country under a tax treaty during a short-term assignment. If the employee is a non-resident of France, it may be possible to structure the assignment in such a way as to make use of a dependent personal services clause in the tax treaty with the country of residence in order to exempt the employee from income tax in France on his/her compensation earned for services in France. 

Payroll considerations

Are there special payroll considerations for short-term assignments?

No.

Taxable income

What income will be taxed during short-term assignments?

If the employee is a non-resident of France during the assignment, then only French-sourced income will be taxed. In this respect, it may be possible to exempt from taxation French-sourced salary by making use of the dependent personal services clause of the tax treaty signed between France and the country of residence.

If the employee is a resident of France, worldwide income earned during the assignment will be subject to income tax, subject to treaty exemptions.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in France?

Generally speaking, a short-term assignment spread out over two calendar years will yield a better overall tax result than an assignment that takes place in the same year.

If the assignee is a non-resident of France under the terms of a tax treaty, the personal services clause of the treaty should also be reviewed in order to determine whether any actions can or should be taken in order to exempt the salary from taxation in France. In some cases, taxation may be eliminated by carefully monitoring the number of days the employee spends in France. 

© 2016 FIDAL, a French société d’exercice libéral à forme anonyme à directoire et conseil de surveillance. FIDAL is an independent legal identity that is separate from KPMG International and its member firms. All rights reserved.

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