Expatriates: 50% exemption on passive income and capital gains

An expatriate who meets the conditions of the regime under Article 155 B of the French General Tax Code (CGI) benefits from 50% of certain income and gains being exempt from income tax: income from movable capital, intellectual or industrial property proceeds, and capital gains from the sale of securities. An additional geographical condition applies: the income must be paid by a person established outside France, or the securities must be held with a custodian established outside France, in a country bound to France by a tax treaty with administrative assistance or an information exchange agreement.

This page follows the official tax guidelines (BOFiP) (BOI-RSA-GEO-40-10-30-10, -20 and -30) and the tax administration's page updated on April 8, 2026. It does not address the list of affected countries (BOI-ANNX-000087) or social security contribution rates. The tax administration's page updated on April 8, 2026, describes this system; any changes introduced by a finance law are verified at source. It does not apply to income not included in the list.

Who can benefit from it and until when?

The exemption is reserved for expatriates who meet all the conditions of the special regime: no tax residence in France for the five calendar years preceding their appointment, and tax residence in France thereafter. It applies for the same period as the regime, i.e., until December 31 of the 8th calendar year following their appointment (the BOFiP uses the 5th year for appointments prior to July 6, 2016), and from the date on which the taxpayer is considered to be tax resident in France.

It only benefits the expatriate member of the tax household. The income and earnings of other household members remain taxed according to standard tax law.

What is exempt at 50 %

The exemption applies regardless of the method of taxation of investment income: flat-rate levy or progressive tax scale. Under the progressive tax scale, it is calculated on the net amount of expenses, such as custody fees.

The geographical condition

For income from movable capital and intellectual property, the payer must be established outside France, in a country that has concluded a tax treaty with France containing a clause on administrative assistance, or an information exchange agreement. The BOFiP (French Official Tax Bulletin) states that the exemption does not apply when the paying establishment is located in France.

For capital gains, it is the custodian of the securities, or failing that, the company whose securities are being sold, that must be established outside France in such a state. According to the BOFiP (French Official Tax Bulletin), the condition relates to the location of the custodian.

Income or sale proceeds received abroad are exempt even if the sums are subsequently paid into an account in France.

Capital gains: capital losses, price adjustments, allowances

• Capital losses realized on these securities are retained up to 50 % of their amount.
• For securities resulting from the exercise of options, the exemption only applies to the capital gain on disposal, not to the benefit of exercising the option.
• Price supplements received during the scheme are exempt at 50 %, except those received after the end of the scheme.
• The taxable portion follows the provisions of paragraphs 1 or 2 of Article 200 A of the French General Tax Code (CGI). Allowances for holding period or the fixed allowance may reduce it where applicable.

Social security contributions: no 50% reduction %

For capital gains, the BOFiP (French Official Tax Bulletin) specifies that neither the 50 % exemption nor any allowances are taken into account when calculating social security contributions. This page does not indicate any rates: the social security contribution rate applicable to each product must be verified at source before any decision is made.

Foreign withholding tax and tax credit

When withholding tax has been deducted abroad, the taxable amount is the net amount received after exemption, plus the treaty tax credit withheld at 50 %. The credit cannot exceed the French tax corresponding to this income, and any excess is not refundable.

The statements

These references come from versions of the BOFiP in force since 20/12/2019: the lines are checked on the forms of the year.

Two paragraphs from the BOFiP that should not be used

Paragraphs 80 and 90 of BOI-RSA-GEO-40-10-30-10 are cancelled (decision of the Council of State of 21/10/2020, no. 442799, BOFiP update of 16/02/2023), although they remain displayed. This page does not use them.

Exemption from 50% of % for expatriates: numerical example (fictitious profile)

Situation. Inès, a fictitious expatriate, has been a tax resident of France since taking up her position. She receives €12,000 in dividends paid by a foreign company, through a paying institution established outside France in a country meeting the tax treaty requirements. She also sells securities held with a custodian established outside France, realizing a capital gain of €80,000.

Hypotheses. No foreign withholding tax. No capital losses. No holding period allowance. Amounts are gross of expenses. No tax rate is applied.

Issue. What portion of these earnings remains subject to income tax?

Strategy. Apply the 50 % exemption to each line, then add up the taxable fractions.

Result. Taxable dividends: €12,000 × 50 % = €6,000. Taxable capital gain: €80,000 × 50 % = €40,000. Total subject to income tax: €46,000 instead of €92,000.

With a capital loss of €10,000 on other securities of the same regime, only €5,000 would be retained, since capital losses are retained at 50 %.

For social security contributions, the 50% reduction (%) does not apply to capital gains (BOFiP). The profile is fictitious and its amounts are hypothetical. They do not reflect your specific situation.

50% % exemption for expatriates: what changes depending on your case

• The paying institution or the depositary: in France or outside France, and the State concerned.
• The nature of the income: movable capital, royalties, capital gains.
• The status of the rights holder: author, composer, inventor or other rights holder.
• The period: the exemption ends with the scheme.
• The home: only the expatriate person is concerned.
• Foreign withholding tax and the applicable convention.

The rule depends on your situation. No results are guaranteed.