The impatriation bonus (prime d'impatriation) is a special form of remuneration intended to compensate expatriate employees for the costs and inconvenience associated with international mobility, as well as an incentive to come and work in France.
Declaring this bonus correctly on your tax return can make it possible to benefit from the tax exemptions and to limit the risk of tax penalties.
The purpose of this article is to guide readers through the declaration of the impatriation bonus, focusing solely on taxation and tax issues.
In brief
- The impatriation bonus paid to an employee or executive who comes to work in France is in principle exempt from income tax (article 155 B of the CGI), for its actual amount or, on option, at a flat 30% of net remuneration.
- The part of remuneration relating to business trips abroad may also be exempt, within an overall ceiling.
- The exemption in principle applies until 31 December of the eighth year following the year in which the employee took up their position, provided they were not tax-domiciled in France during the previous five calendar years.
- Exempt amounts are in principle declared in boxes 1DY or 1EY of return no. 2042 C; certain foreign-source investment income and capital gains may be 50% exempt (boxes 2DM and 3VQ).
- A filing error may cause the exemption to be lost or lead to reassessments; a lawyer can help check the amounts.
Contents
Understanding the impatriation bonus
Definition and purpose of the impatriation bonus
The impatriation bonus is a special form of remuneration paid by employers to impatriate employees, with the aim of compensating for the additional costs and inconvenience associated with international mobility. It also serves as an incentive to come and work in France.
It may take various forms, such as a lump-sum allowance, an increase in base salary or benefits in kind. The purpose of this bonus is to encourage employees to accept positions in France and to help them adapt to their new situation.
Eligibility criteria for the impatriation bonus
To be eligible for the impatriation bonus, the employee must meet certain criteria, which vary from company to company. In general, the eligibility conditions include:
- Impatriate status: in principle, the employee is seconded to France by their employer for a fixed period. This is the most typical case. But the employee may also have been approached by a French company or even, under certain conditions, have applied directly for positions in France.
- Length of assignment: some companies reserve the bonus for assignments of a minimum duration, for example one year; tax law, however, does not require any minimum duration.
- Employment contract: to be exempt for its actual amount, the bonus must in principle be provided for in the employment contract or in an amendment drawn up before the employee takes up the position (amount or objective calculation criteria).
- Tax residence: the employee is in principle tax-domiciled in France (within the meaning of Article 4 B of the CGI), and not in their country of origin.
The tax advantages of the impatriation bonus
In France, the impatriation bonus can offer significant tax advantages for impatriate employees, in particular:
- Income tax exemption: the impatriation bonus is in principle exempt from income tax. It may be valued on an actual basis or on a flat-rate basis; in the latter case, it is set at 30% of total net remuneration. The share of remuneration relating to work carried out abroad may also be exempt, the total being capped at 50% of total remuneration (or, by option, the exemption of the “foreign” share being limited to 20% of taxable remuneration)
- Deduction of certain contributions: impatriate employees may deduct, under certain conditions and within certain limits, contributions paid to foreign social security and pension schemes (Article 83 of the CGI).
It is advisable to consult a tax lawyer to ensure that the eligibility conditions are met and to take full advantage of the tax benefits in France.
The tax treatment of the impatriation bonus
Exemption of the impatriation bonus
In France, the impatriation bonus benefits from specific exemptions granted to impatriate employees under certain conditions. It is therefore advisable to find out, ideally from a lawyer, about the applicable rules in order to determine the appropriate tax treatment.
In France, impatriate employees may benefit from income tax exemptions on their impatriation bonus if certain conditions are met:
- The employee must in principle be recruited abroad by a company established in France, or sent by a foreign company to work in a company established in France
- The employee must in principle not have been domiciled in France for tax purposes during the five calendar years preceding the taking up of the position; no minimum period of impatriation is required, however.
- The impatriation bonus must, as a general rule, be paid to compensate for the difficulties associated with carrying out a professional activity in France.
If these conditions are met, the impatriation bonus is exempt from income tax for its actual amount; by election, it may also be valued on a flat-rate basis at 30% of total net remuneration.
If the employee is required to travel abroad regularly for his or her French company, the portion of remuneration relating to this activity abroad is also exempt, subject to an overall cap of 50% of total remuneration (or, by election, 20% of taxable remuneration for this portion alone).
Duration of the Tax Exemption for the Impatriation Bonus
It runs, in principle, until 31 December of the eighth calendar year following the year in which the employee took up their position in France (i.e. 8 to 9 years).
Exemption of interest, dividends and capital gains on sales of shares abroad
The impatriate may in principle benefit from a 50% exemption on certain foreign-source interest, dividends and capital gains on the sale of securities. Note: this exemption only concerns income tax; social security contributions (18.6% since the LFSS 2026, 17.2% previously) in principle remain due on the whole of this income.
Tax deductions and tax credits
In France, the impatriation bonus may affect the tax deductions and tax credits to which the employee is entitled. For example, contributions paid to foreign social security and pension schemes may be deductible from taxable income, under certain conditions and within the statutory limits.
In summary, the tax treatment of the impatriation bonus in France varies according to the eligibility conditions and the specific features of the employee's situation. It is therefore advisable to consult a tax lawyer in order to analyse one's situation and comply with the legal obligations regarding the declaration of the impatriation bonus.
Declaring the impatriation bonus
The documents and information required
Supporting documents
To declare the impatriation bonus, the impatriate in principle relies on the documents provided by their employer (payslips, employer certificate…) and, where applicable, on those from their foreign bank (summary of income received abroad). These documents in principle show the amount of the bonus and any tax withheld at source.
It is also useful to keep the supporting documents needed to benefit from the impatriate regime: documents showing that there was no tax domicile in France during the 5 years preceding arrival (foreign tax residence certificates, foreign tax returns and assessments…).
Tax returns
The benefit of the impatriate regime is in principle indicated in the income tax return. In principle, income tax return no. 2042 and the supplementary return no. 2042 C are to be completed.
Boxes to complete:
- Exempt salaries and bonuses: boxes 1DY or 1EY;
- Foreign interest and dividends 50% exempt: box 2DM;
- Gains on disposals of foreign securities 50% exempt: box 3VQ.
The net taxable salary, after deduction of the exempt portion, is in principle entered in boxes 1AJ or 1BJ of the main return 2042.
If the impatriate opts for the flat-rate valuation of the bonus (rather than its actual amount), this option is in principle indicated in the “other information” section of the general income tax return (form 2042).
Reporting of foreign accounts and financial assets
Impatriate employees are also, in principle, required to declare their bank accounts and financial assets held abroad on form 3916-3916-bis. These reporting obligations aim to combat tax evasion and ensure the transparency of financial information. The declaration is in principle to be renewed every year.
Filing the return online or on paper
The income tax return is, as a general rule, completed with the information relating to the impatriation bonus: the amount of the bonus and any applicable deductions and tax credits. The return is in principle filed online, on the tax authorities’ website (impots.gouv.fr), or exceptionally on paper, within the deadlines and in accordance with the procedures laid down by French legislation.
Common mistakes when filing in France
When declaring the impatriation bonus in France, certain mistakes are common, such as:
- Failing to report the impatriation bonus in boxes 1DY or 1EY, which may result in losing the benefit of the exemption, or, conversely, overstating its amount, which may lead to tax penalties.
- Overlooking the tax deductions and tax credits to which the employee is entitled, which may reduce his or her tax
- Failing to comply with the deadlines and procedures for filing the income tax return, which may also result in penalties.
To avoid these mistakes, it is advisable to consult a tax lawyer in order to receive personalised assistance.
Consequences of failing to declare or of an incorrect declaration
Tax penalties
In the event of failure to declare, or incorrect declaration of, the impatriation bonus in France, impatriate employees may be exposed to tax penalties, in particular:
- Financial penalties: taxpayers who do not correctly declare their impatriation bonus may be subject to financial penalties, such as surcharges on the tax due and late-payment interest.
- Tax audits: in the event of blatant irregularities or inconsistencies in their returns
Consequences for the tax position
In addition to tax penalties, failing to declare or incorrectly declaring the impatriation bonus may also have consequences for the tax position of the impatriate employee, in particular with regard to the calculation of income tax and the applicable tax deductions and tax credits. It is therefore advisable to consult a lawyer in case of doubt or questions, in order to check compliance with French tax rules.
What I see in my cases
The impatriation bonus is rarely handled properly, on the employer’s side as well as the employee’s: drafting of the employment contract, certificate of the reference salary, compliance with the substantive conditions. Yet the tax authorities refuse the exemption as soon as something is not in perfect order. I therefore check these elements before the return and, where necessary, have whatever can be corrected put right upstream: a solid file then makes it possible to answer the tax authorities’ questions calmly.
In concrete terms, the most serious errors I come across are often the simplest: an employment contract that does not mention impatriation, a clumsily drafted certificate of the reference salary. The tax authorities may then reject the regime, reassess over three years and ask the taxpayer to stop applying it in subsequent years, heavy consequences that could easily have been avoided. In my cases, when the option is available, it is almost always the 30% flat rate that is chosen.
Conclusion
Declaring the impatriation bonus correctly is important to limit the risk of tax penalties and benefit from the advantages provided for.
The key points covered in this article include understanding the impatriation bonus, its tax treatment, declaring the bonus, and the consequences of failing to declare or of an incorrect declaration.
For the calculation itself, with three worked examples (actual bonus or 30% flat rate, days abroad, ceilings), see the guide French impatriate regime: how is the exemption calculated?
Compliance with the applicable tax rules is important, and a tax lawyer can be consulted in case of doubt or questions.
FAQ
What is the difference between the actual amount and the 30% flat rate?
Where the bonus is provided for in the contract, its actual amount is in principle exempt. The employee may also opt for a flat-rate valuation of the bonus at 30% of total net remuneration, in particular where the bonus is not individualised. The choice depends on each situation.
How long does the exemption last?
In principle until 31 December of the eighth calendar year following the year in which the employee took up their position in France, i.e. between eight and nine years depending on the date of arrival.
Which prior residence conditions apply?
The employee must in principle not have been tax-domiciled in France during the five calendar years preceding their taking up of the position, and must be so during the exemption period.
In which boxes do the exempt amounts appear?
In principle in boxes 1DY or 1EY of return no. 2042 C for exempt salaries and bonuses; foreign-source investment income and capital gains that are 50% exempt in principle appear in boxes 2DM and 3VQ. Taxable salary appears, as a general rule, in boxes 1AJ or 1BJ.
Are bank accounts kept abroad covered by the reporting obligation?
In principle yes: an impatriate tax-domiciled in France reports every year their accounts opened, held, used or closed abroad on form no. 3916-3916-bis, from their first year of residence.
