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This chapter is not exhaustive and is limited to broadly outline the tax consequences of the main events occurring when doing business in France. It does not constitute a tax advice or a client - attorney relationship. Materials are not suitable for tax analysis. Visitors are invited to consult a tax lawyer before taking any decision.
 Full exemption of expatriates – Extension
Full income tax exemption on salaries received by employees who are French tax resident but assigned abroad has been extended (article 81 A I of the French tax code):
- to employees commercially prospecting foreign markets for more than 120 days over a 12 month period;
- to employees of companies located in the European Union and the European Economic Area
This measure will apply to income earned in 2006.
Partial tax exemption - Additional salary for business trips abroad
Partial exemption on salary bonus for business trip abroad of more than 24 hours must meet several tests (art. 81 A-II of the French tax code):
- Trips are made for the employer’s direct and exclusive interest
- Stay should be effective for at least 24hours in a foreign country
- Salary bonus must be determined prior to the stay and related to the number, duration and destination of the trip
- Level of bonus must be in related to the employee’s remuneration
- Salary bonus must not exceed 40% of the employee’s remuneration related to his activity in France
- Employer should be located in France, EU or EEA. Lichtenstein is excluded
These new dispositions will apply to income earned in 2006.
French Administrative Supreme Court ruled that, contrary to the guidelines published by French revenue, the supplementary remunerations paid to a French resident employee in respect of meetings organized abroad by the group of companies his employer belongs to are tax exempt. Employees who paid tax on such remunerations may claim with success the reimbursement of the related undue taxes.
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