Tax Expatriation
Departure Planning

French tax lawyer for expatriation and Dubai relocation

Departure Framework

Expatriation Tax Obligations

Expatriation—the transfer of tax residence outside of France—involves complex fiscal obligations that must be satisfied in the year of departure and thereafter. Proper planning before departure minimizes tax exposure and ensures compliance with both French and foreign tax authorities.

1. Departure Obligations in the Final Year

In the year you depart, you must: (i) notify the French tax administration (via form 2042) that you are changing tax domicile, (ii) file a final income tax return covering the period from January 1 to your departure date, (iii) declare any unrealised gains subject to exit tax (if applicable), and (iv) settle any outstanding tax balances.

In the year of departure, you file two returns: form 2042 covers worldwide income for the period of French residence (January 1 to departure date), and form 2042-NR covers French-source income for the period after departure (departure date to December 31), if you have French-source income taxable in France after departure. The articulation between these two returns requires careful analysis of the applicable tax conventions and the nature of each income stream to avoid double-taxation or omission of reportable amounts.

2. Non-Resident Taxation Framework

Scope of taxation as non-resident: After transfer of fiscal residence, you are in principle subject to French tax only on income from French sources (article 4 A, 2 CGI), subject to the provisions of applicable tax treaties which may modify the allocation of taxing rights. French-source income includes: real estate rentals, professional income from French business establishments, salaries paid by French employers, capital gains on French property (limited cases), and pensions from French-paying sources. Certain specific regimes (exit tax under article 167 bis CGI, IFI on French real estate assets) may apply regardless of residence status.

Non-resident status does not eliminate French tax obligations; it narrows their scope. If you hold French property and receive rental income, you must file annual non-resident returns on that income.

3. Non-Resident Return Requirements

Form 2042-NR (non-resident tax return) is required where the taxpayer retains French-source income taxable in France after departure. This form declares French-source income only. Post-departure reporting of foreign income depends on the nature of the income, the period concerned, and the applicable treaty; foreign income is not systematically reportable in the same manner as French-source income. Filing deadlines follow the annual tax campaign calendar published by the administration. Failure to file or under-reporting triggers assessment, penalties, and interest.

4. Common Errors & Traps

Incomplete departure notification: Failing to formally notify the tax administration of departure can result in continued billing for full-year resident tax. Written notification via form 2042 is essential.

Overlooked French-source income: Many non-residents fail to file required returns on French-sourced income (rental properties, business interests). This triggers automatic assessment and penalties.

Exit tax oversight: Failing to file form 2074-ETD if exit tax applies results in automatic assessment of the tax plus penalties and interest.

Retained French residency: The tax administration may challenge your non-resident status if you maintain a home in France, retain family members, or continue professional activities. Burden of proof falls on you to demonstrate complete severance.

Key takeaway: Expatriation requires systematic planning: ensuring none of the three residency criteria remain applicable, filing required departure forms, and organizing ongoing non-resident compliance if French-source income persists.

Expatriation Checklist
Before Departure:
□ Review exit tax thresholds
□ Plan asset sales
□ Notify French employer
□ Arrange new tax residency
At Departure:
□ Declare unrealised gains (if applicable)
□ Notify tax administration
□ Update address
□ Assess need for 2042-NR if French-source income persists
After Departure:
□ File annual non-resident returns
□ Report French-source income
□ Maintain documentation
□ Monitor French tax
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Process

Expatriation Steps

1
Residency Status Review
Confirm that none of the three CGI article 4 B criteria remain applicable (home, centre of vital interests, or habitual abode in France). Since any single criterion suffices to establish French residence, you must ensure no criterion applies. Document each change thoroughly.
2
Exit Tax Assessment
Review all securities and participations. If thresholds are met (EUR 800k or 50% participation), plan valuation and file form 2074-ETD. Consider deferral eligibility (transfer to a destination meeting the dual-treaty test of Article 167 bis IV CGI).
3
Final Tax Return
File pro-rata resident return covering income through departure date. Declare departure via form 2042. Settle any outstanding liabilities and arrange payment.
4
Non-Resident Compliance Setup
If French-source income remains (rentals, business), establish annual non-resident filing obligation. Register with appropriate tax authorities abroad for treaty relief at source (if applicable).
Resources

Related articles

Guidance

Expatriation FAQs

Exit tax is triggered by the date you transfer tax residence (when none of the three residency criteria remain applicable), not by when you physically depart France. Timing sales before that date is possible; once residency transfers, unrealised gains on remaining holdings are taxed. Planning asset sales before departure can reduce exit tax exposure, but the mechanism is complex and timing-dependent.
Exit tax applies based on French residency, not the taxation system of your destination. Moving to a non-tax jurisdiction does not exempt you from French exit tax. The automatic deferral under Article 167 bis IV CGI applies only where the destination is a Member State of the EU or any other State or territory having concluded with France both a mutual administrative assistance convention and a mutual recovery assistance convention of comparable scope to Council Directive 2010/24/EU, and provided that destination does not appear on the French list of non-cooperative jurisdictions (CGI, art. 238-0 A). Other destinations do not qualify for automatic deferral and require an election under Article 167 bis V CGI subject to three cumulative conditions.
Rental income from French property is subject to non-resident French tax even after you leave. Filing form 2042-NR with the SIPNR is required where you retain such taxable French-source income. Non-resident rental income is subject to either the micro-foncier regime or the régime réel (real-income regime), each with its own rules and provisions applicable to non-residents. Strategic tax planning (e.g., rental corporation) may reduce tax exposure; professional analysis is advised.
A return to France may lead to renewed French tax residency once the criteria of article 4 B CGI are satisfied again — assessed globally in light of the taxpayer's home, principal professional activity and centre of economic interests. Time spent in France is a factual indicator relevant to the habitual abode analysis, not a standalone statutory criterion. You file as resident from the date residency resumes. Exit tax paid is not refunded. Any gains realised while non-resident are not re-taxed. Proper documentation of the break in residency is essential to support your non-resident period against later challenges.
A minimum 6-month advance consultation is recommended to evaluate exit tax under article 167 bis of the French Tax Code, prepare transfer declarations (form 2074-ETD), structure the residential transition, and identify French-source income remaining taxable. A 12-month lead time is advised if you hold significant shareholdings in companies.
Me Sémon personally conducts complete tax analysis, evaluates applicable exit tax, selects the most favorable treaty mechanism, prepares your documentation, and coordinates with your local tax counsel (Dubai, Switzerland, UK, Luxembourg, etc.). You benefit from continuity of analysis from departure through defense in any subsequent tax audit.
Contact

Plan Your Departure

Expatriation requires advance planning to minimize tax and ensure compliance. Contact us early to structure your departure.

Address
7 rue Chateaubriand
75008 Paris · George V Metro
Phone
01 87 44 29 51
Email
contact@avocat-fiscal-semon.com