Leaving France to settle abroad, or returning there, rarely happens on 1 January. In the year of the change, part of the income in principle falls under the rules for French tax residents and the other part under those for non-residents. This raises practical questions: which income must be declared, on which forms, and which consequences should be anticipated?
This article presents the differences between residents and non-residents, the treatment of the year of departure or arrival, the formalities and the main consequences of a change of residence. As every situation is different, in particular in the light of tax treaties, an analysis with a lawyer is generally useful, preferably before departure.
In brief
- A French tax resident is in principle taxable in France on all their income; a non-resident, only on French-source income, subject to tax treaties.
- In the year of departure, income received until departure is in principle taxed as that of a resident, then only French-source income is taxed; the reverse applies in the year of arrival.
- In the year of departure, a return no. 2042 and a return no. 2042-NR are in principle filed together.
- It is useful to be able to prove the date of the change and the new residence through a body of evidence.
- A departure may have other consequences: exit tax on certain substantial shareholdings, loss of tax reductions, effects on IFI, inheritances and gifts.
Contents
Resident or non-resident: what changes
Tax domicile is assessed according to the criteria of article 4 B of the French General Tax Code: home or main place of stay, main professional activity, centre of economic interests. In some cases a person may be regarded as resident by two States: the tax treaty then in principle settles the matter (see the article can one be tax resident in two countries?). The main differences are as follows:
| Item | French tax resident | Non-resident |
|---|---|---|
| Income taxable in France | In principle all income, from French and foreign sources | In principle only French-source income |
| Tax rate | In principle, progressive scale | In principle a minimum rate (20% or 30% depending on the level of income) on French-source income, unless the average rate calculated on total income is lower |
| Tax reductions and credits | In principle applicable | In principle not applicable, subject to exceptions |
| Real estate wealth tax (IFI) | In principle, real estate located in France and abroad | In principle, real estate located in France only |
The year of departure or arrival
The year of the change is in principle split into two periods:
| Year | Before the change | After the change |
|---|---|---|
| Departure from France | In principle, all income, from French and foreign sources, declared on return no. 2042 | In principle, only French-source income, declared on return no. 2042-NR |
| Arrival in France | In principle, only French-source income, under the rules applicable to non-residents | In principle, all income, from French and foreign sources |
An example
Thomas leaves Paris on 30 June 2026 to settle in Canada, where he takes up a new job; he keeps his Paris flat, which he lets from July. In spring 2027, he in principle declares on return no. 2042 his French salary from January to June 2026, and on return no. 2042-NR the rent from his Paris flat received from July to December, which remains French-source income. His Canadian salary received after his departure is in principle not taxable in France, subject to the France–Canada tax treaty.
The formalities
Several steps are generally to be planned, ideally with the help of a lawyer:
- reporting the change of address and situation in the personal account on impots.gouv.fr, which also makes it possible to adjust withholding at source;
- keeping the evidence of the date of departure or arrival and of the new residence: employment contract, lease or deed of purchase, children’s school enrolment, tax residence certificate from the other State, etc. (see the article how to prove one’s tax residence abroad);
- filing, the following spring, the return for the year of the change, in principle with the tax office of the last domicile in France for the year of departure; the non-resident individuals’ tax office then becomes competent;
- reporting, for the year of departure, the accounts held abroad during the period of residence in France; the obligation in principle no longer applies to the following years, during which the person is no longer domiciled in France.
Other consequences to anticipate
A change of residence may have other effects, which deserve to be examined before departure:
- the exit tax (article 167 bis of the French General Tax Code), which may tax, on departure, unrealised gains on certain substantial shareholdings (in principle with an overall value of at least €800,000 or representing at least 50% of a company’s profits), with, depending on the case, a deferral of payment;
- the loss of certain tax advantages reserved for residents, such as tax reductions or credits, or even, depending on the case, the clawback of advantages linked to a holding commitment;
- the real estate wealth tax (IFI), which for a non-resident in principle only covers real estate located in France;
- inheritances and gifts: the tax domicile of the deceased or donor, and that of the heirs or donees, determines, as a general rule, the scope of the tax due in France (article 750 ter of the French General Tax Code; see the article on the taxation of foreign estates).
What I see in my cases
Those who are leaving mainly wonder about their tax residence and the exit tax, the formalities for leaving France properly and the good practices to adopt afterwards. The most frequent error, in the year of departure, lies in incomplete or poorly handled formalities, with the risk of still being regarded as a French tax resident. On returning, it is often the weight of taxation and the complexity of the system that come as a surprise.
FAQ
From when does one become a non-resident on departure?
In principle from the date on which none of the criteria of article 4 B of the French General Tax Code is met any longer in France (home, main activity, centre of economic interests), subject to tax treaties; the date of actual departure generally serves as the reference point.
How many returns in the year of departure?
In principle two, filed together: a return no. 2042 for income received until departure and a return no. 2042-NR for French-source income received afterwards.
Does a non-resident keep obligations in France?
Yes, if they receive French-source income (rents, French pensions, etc.) or hold real estate in France whose net value exceeds the IFI threshold.
What is the exit tax?
It is a mechanism (article 167 bis of the French General Tax Code) that may tax, on departure, unrealised gains on certain substantial shareholdings, with, in some cases, a deferral of payment. Its application deserves to be examined before departure.
How can one prove one’s new residence?
Through a body of evidence: employment contract, lease or deed of purchase, children’s school enrolment, tax residence certificate issued by the other State, etc. The assessment depends on each situation.
