A new bill, currently under review in France’s parliament, contains measures concerning easing the taxation of French qualifying shares and liberalizing the rules of the so-called “inpatriate tax regime.” These measures may help to ease the tax burden pressures raised by recent French budgets.
A new bill, currently under review in France’s parliament, contains measures concerning easing the taxation of French qualifying shares and liberalizing the rules of the so-called “inpatriate tax regime.”
There weren’t many changes in the recent budget law for 20151 that impacted individuals. Indeed, last year’s budget legislation2 contained some multi-year measures that have raised the burden of tax for many taxpayers. This is one reason why the government introduced some provisions in this new bill to provide a modicum of relief, in particular by encouraging employee share ownership and fostering inbound assignments.
The so-called “economic growth and activity” bill3, commonly known as the “Macron Bill” represents a pot-pourri of measures on extending Sunday work hours, Labor Courts reform, and the reform of legal professions, etc. The bill aims to stimulate economic activity and enhance job creation. Parliament began discussing the bill on January 26, 2015. It is expected to be enacted in April 2015, at the latest.
Among the numerous provisions, the draft bill contains some key measures regarding the favorable tax regime for qualifying free shares schemes and the favorable regime for inpatriates, which we discuss below.
After years of rising taxation, several provisions aim at making the social insurance and tax regime applicable to French qualifying free shares4 (RSUs) more favorable:
The new rules are expected to make French qualifying free shares more attractive. A review of employers’ plans is advised.
It is expected that the final legislation will be enacted by April 2015.
The favorable French tax regime5, that applies to employees temporarily transferred to France, has typically provided a general exemption of tax for assignment-related compensation until the end of the fifth year following arrival, but only if the employees did not change position within their company.
A new provision extends the tax regime to employees who change positions in their company or are hired by another group company within the five-year period.
Employers thinking of transferring inpatriates within their company or group should discuss with their qualified tax professional whether it is worth waiting until the Macron bill is definitively adopted.
1 For the 2015 budget legislation (in French), see Projet de loi de finances pour 2015 at : http://www.assemblee-nationale.fr/14/projets/pl2234.asp.
2 For prior coverage, see Flash International Executive Alert 2013-135, 3 October 2013.
3 See (in French) Projet de loi pour la croissance et l'activité, n° 2447, déposé le 11 décembre 2014, at: http://www.assemblee-nationale.fr/14/projets/pl2447.asp.
Also commonly known as le projet de loi Macron, named after Emmanuel Macron, the new Minister of the Economy.
4 For prior coverage of tax measures regarding French qualifying free shares, see Flash International Executive Alert 2013-014, 13 January 2014.
5 For prior coverage of France’s inpatriate (or ‟impatriate”) tax regime, see the following issues of Flash International Executive Alert : 2009-171 (10 September 2009) and 2008-153 (16 September 2008).
For further information or assistance, please contact your local KPMG International member firm GMS or People Services professional or the following GMS professionals with FIDAL Direction Internationale at tel. +33 (0) 1 55 68 43 07:
Alain Loehr, Partner
Ann Atchadé, Partner
Marie Lynn Simmons, Partner
Estelle Cupillard, Director
Gérôme Gbaya, Director
Cyril Klajer, Director
Nathalie Ferrari, Senior Manager
Stéphanie Giraudet, Senior Manager
The information contained in this newsletter was submitted by FIDAL Direction Internationale in France. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
The following information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
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