Expatriate taxation, new for 2019

Increase in minimum tax rate and inclusion of alimony payments

Starting with the taxation of income received in 2018. The minimum tax rate for non-residents will be raised, for the fraction of net taxable income. Exceeding the upper limit of the 2nd bracket of the income tax scale (i.e. €27,519 for 2018), from 20 % to 30 % in mainland France and from 14.4 % to 20 % for income sourced in the French overseas departments.

Finally, still from the taxation of income received in 2018. Non-residents will be able to take into account. To determine the overall tax rate they would bear in France on their worldwide income, alimony paid subject :

• they are taxable in France
• they have not already given rise to a tax advantage in the taxpayer's state of residence.

Social security deductions

Real estate capital gains and real estate income realized since August 17, 2012. By taxpayers domiciled outside of France are subject to social security levies. However, following the 2019 Social Security Finance Law. Are now exempt from CSG and CRDS. Persons who are under the compulsory social security scheme of another EU, EEA or Swiss member state and are not dependent on a French compulsory social security scheme.

This exemption does not apply to the new solidarity levy at the rate of 7.5%. The procedures for justifying the conditions required are not defined in the text, which refers to a later decree. This measure applies:

• As of the 2018 income tax on income from assets (such as capital gains on the sale of securities by individuals resident in France for tax purposes, and income from real estate received by individuals regardless of their tax residence)
• For events occurring on or after January 1, 2019. For investment and similar income (such as interest and dividends received by individuals resident in France for tax purposes, capital gains on real estate realized by individuals regardless of their tax residence).

Real estate

Note that the 2019 Finance Act changes the rule for the future. These new rules therefore apply to transfers of domicile made on or after January 1, 2019. Taxpayers already subject to the exit tax system on that date will continue to be subject to the current rules and deadlines. The retention period required of the departing taxpayer for the tax deferral obtained on the unrealized capital gain of his securities to be transformed into a definitive exemption of this capital gain would be. As of January 1, 2019 (departures decided as of this date). Reduced to two years for holders of a portfolio of securities with a total value not exceeding €2.57 million and to five years for holders of a portfolio with a value exceeding this amount.

The 2019 Finance Act removes certain monitoring procedures. Indeed, the 2019 Finance Act broadens the spectrum of countries to which the automatic stay would be granted. Thus, the transfer of domicile to a State that is not a member of the EEA. But having concluded the above-mentioned conventions and not considered as an uncooperative state would also give right to the deferment of payment by right. No representative and also no guarantee would be required.

Real estate

The time limit for this 150,000 € deduction, which applies to the capital gain on the sale real estate is increased to 10 years following the departure. And for the former principal residence in France? Taxpayers leaving France have 1 year to benefit from the exemption for the transfer of the principal residence (no later than December 31 of the year following the transfer and the property must not have been made available. For free or against payment, during this period). This is one of the measures of the 2019 finance law.