Tax treatment for employees of the central government, local authorities and public hospitals posted abroad

Who this information is for

Civil servants who work elsewhere than in mainland France or an overseas département (Martinique, Guadeloupe, French Guiana, Réunion, Mayotte).

This includes:

- Central government employees (both civilian and military) who are either civil servants or salaried workers (both French nationals and non-French nationals), whose employment contract is with the French State, and who work abroad in this capacity

- For income earned in or after 2019, local government employees and hospital civil service employees whose duties are performed abroad or who are on assignment in a foreign country

How your earnings are taxed

In principle, unless otherwise stipulated in international tax treaties, you are resident of France for tax purposes and your public-sector earnings are taxable in France.

• You are considered a non-resident of France for tax purposes if:

- You are a civil servant in one of France’s overseas territories (TOM) or communities (COM) or in a country that taxes income earned from work performed in that country.

- You are a civil servant seconded to a private-sector organisation (e.g. an overseas assignment with Mission Laïque). In this case, your situation is the same as a private-sector employee working abroad.

In this case, you are not taxable in France on income earned in the country or territory where you perform your work, unless otherwise stipulated in an international tax treaty.

You have limited tax liability in France. You are only taxable in France on income from French sources (real estate income, commercial or non-commercial business activity).

• You are considered a tax resident of France if:

- You are not liable for personal income tax on your earnings in the country where you work.

In this case, you have unlimited tax liability in France on all your worldwide earnings (from both French and international sources). Your tax is calculated using the same rules that apply to residents of France.

Additional information

- If your earnings are subject to tax in the country where you work for an amount that is two-thirds or more than what you would owe in France:

You are totally exempt from paying income tax in France on these earnings. They will, however, count toward the calculation of your effective tax rate, unless otherwise stipulated in an international tax treaty or special agreement.

- If your earnings are subject to tax in the country where you work for an amount that is less than two-thirds of what you would owe in France:

You will be taxed in France on your earnings from the work you perform abroad up to the amount you would owe in France for the same work.

Any income supplements you receive for living in the other country (long-distance allowance, allowances for special expenses) are exempt from income tax in France, provided the following three conditions are met:

• The income supplements must have been paid for time spent living abroad in the direct and exclusive interest of your employer.

• They must be justified by a move requiring you to reside in another country for at least 24 hours.

• They must be determined before you leave France, they must be calculated based on the length, number and location of your periods of work abroad, and they cannot represent 40% or more of the earnings you would have received if you had stayed in France.

If you are considered as a tax resident of France, you are allowed to deduct expenses and claim tax reductions/credits under the same conditions as any other tax resident of France.

However, if you live abroad, there are certain expenses that cannot be claimed for tax credits. For example, expenses incurred for personal services performed in your main residence abroad cannot be claimed for a tax credit. This type of expense can only be claimed if the services are provided in France (Article 199 sexdecies of the General Tax Code).

How to file: Is your household in France or abroad?

• Your household is in France:

- If you are single, widowed, divorced or separated and you are working outside France but living in France.

- If you are married or in a civil partnership under a joint property regime and your spouse/partner and any children remain in France, even though you are required to live in another country for work temporarily or most of the year.

Then:

Your taxes will be handled by the Individual Tax Department (SIP) associated with your home address in France. You will file a single income tax return in France, jointly with your spouse/partner.

But: If you are married or in a civil partnership under a separation of property regime and your spouse/partner and any children remain in France, then you and your spouse/partner will need to file separate returns.

• Your household is outside France

- If you are single, widowed, divorced or separated and you are working outside France and living outside France.

- If you are married or in a civil partnership and your spouse/partner is also living outside France.

Then:

Your taxes will be handled by the Individual Tax Department for Non-Residents (SIPNR).

If you are living at the same address (regardless of your marriage or civil partnership regime) or if you are not living at the same address and have a joint property regime, then you and your spouse/partner will be taxed jointly and need to file a single return.

If you are not living at the same address and have a separation of property regime, then you and your spouse/partner will need to file separate returns.

Taxation in retirement

If you retire and maintain your tax residence outside France, your pension income will be taxable either in France or in your country of residence. It will depend on the tax treaty in effect between France and your country of residence.

If your tax residence remains outside France after you retire and you had, up to then, been working as a central government employee, local government employee or hospital civil service employee (with a tax situation similar to that of a tax resident of France with unlimited tax liability), then you will become a non-resident of France for tax purposes. If your pension income is taxable in France, it will be subject to non-resident withholding at source (RAS NR).

For more information, go to: “International” > “An individual” > “I am not a resident of France but I have interests in France” > “Tax liability and reporting obligations in France for non residents”. Then under “Your questions / Our answers” see: “I am non-resident. How is the withholding at source deducted by my employer or pension fund calculated? How should I file my return?”

Requirement to declare bank accounts held abroad

If you are considered a tax resident of France, you are required to declare any bank or digital asset accounts outside France that you have opened, held, used or closed, as well as any life insurance policies taken out abroad. The requirement applies whether you are the sole or joint holder of the account and also applies to accounts over which you have power of attorney.

Use form 3916, available online or on paper, and enclose it with your 2042 income tax return. On your 2042 return, check box 8UU if you are declaring any foreign bank accounts and box 8TT if you are declaring any foreign life insurance policies.

If you are the legal representative of a minor or a protected adult member of your tax household who holds foreign accounts, you can make this declaration on their behalf. For more information, see “Declaring foreign bank accounts and life insurance policies held abroad”.

UPDATED DINR-PART SEPTEMBER 14, 2022