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Repatriated employees : exemption from affiliation to French pension schemes

Repatriated employees

The decree 2019-606 of June 118th 2019 allows employees repatriated in France (which we will call now “impatriés”) to be temporarily exempted from joining basic and complementary French pension plans.

We will, first of all, recall the definition of “impatriation” and give the main tax consequences, then we will expose the recent decree.

I – Definition of employee “impatrié”

  1. Definition

“Impatriation” concerns persons domiciled outside France for five calendar years prior to taking up their duties in a company established in France in the two following cases:

  • Either the employee is called by a company that has links with the company of origin established abroad (intra-group mobility);
  • Or the employee is called from abroad to hold a job in France (external hire).

The duration of the contract has no influence on the quality of “impatrié”.

  1. Tax benefits linked to the “impatrié” plan

This plan exempts from income tax:

  • The additional remuneration linked to the exercise of an activity in France “impatriation premium”;
  • The portion of the remuneration relating to the activity performed abroad in the interests of the employer;
  • 50% of movable capital income (RCM) from a foreign source coming from a state that has signed a tax treaty with France;
  • 50% of certain intellectual  or industrial property products from a foreign source coming from a state that has signed a tax treaty with France;
  • 50% of foreign capital gains on sales of securities and shares in companies.
  1. Conditions to benefit from the exemption

The taxable salary of the “impatrié”, after deduction of the impatriation premium, must be at least equal to that of another “non-impatrié” employee performing similar duties.

The impatriation premium must be indicated separately in the employment contract or be determined on the basis of objective criteria.

  1. Duration of the “impatriation” regime

The scheme applies for the years during which the “impatrié” is a French resident and carries on his professional activity in France. However, he may have time to set up his home in France according to certain family constraints.

The plan ceases to apply to December 31st of the 8th year following the taking of office in France, or earlier if the employee leaves the host group before that term.

  1. The other advantages of this regime

  • Imposition to the I.F.I. (under certain conditions) only real estate located in France;
  • Exemption from the impatriation premium of tax on wages (taxe sur les salaires).

II –
Temporary exemption from affiliation to French pensions schemes

  1. Purpose and duration of the exemption

Employees concerned may jointly apply with their employer not to join compulsory French pension plans (basic social security pension and supplementary schemes).

During the period of exemption from affiliation, the employee is not entitled to any benefit from a French pension insurance scheme.

This plan applies to employees who took office from July 11th 2018. It is granted only once for the same employee for a period of 3 years renewable once.

  1. Conditions to respect

The “impatrié” employee must meet two conditions:

  • Justify a minimum contribution of € 20,000 per year paid otherwise under his old-age insurance. This amount is assessed globally regardless of the distribution of payments between the employee and the employer.

The contribution must have the effect of opening effective rights at the time of retirement, it cannot be represented by an investment allowing a liquidation (even partial) unrelated to the retirement.

However, there is one exception: these are early exit cases provided for in the French retirement savings plans (P.E.R.) provided for in the “PACTE” law.

  • Not having been affiliated in the 5 years preceding the year of taking up employment with a compulsory French old-age insurance scheme.
  1. Procedures to be carried out with the URSSAF

  • Employer’s request countersigned by the employee

This request can be formulated by any means, it must conform to the model provided by the decree of June 27th 2019.

The request must be made at least 60 days before the date of affiliation of the employee in France.

  • Supporting documents to attach
    • Document attesting the commitment to pay a contribution of at least € 20,000 per year to a French or foreign old-age insurance fund;
    • Declaration on the employee’s honor that he has not been subject to a French pension plan during the previous 5 calendar years;
    • Copy of salary slips (or equivalent documents) of the employee for the previous 5 years.
  • Reply from URSSAF

When the application is complete and regular, the URSSAF grants the benefit of the exemption within 30 days.

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