(FRANCE) French lawmakers have advanced a plan to create a form of citizenship-based taxation, adopting a measure for a so-called targeted universal tax on high earners who leave for low-tax countries. The regime would require certain French citizens abroad to pay the difference between what they owe under French rules and what they pay in their new country. It covers worldwide income and key assets, and it moved through the Finance Committee and the Senate in late 2024 and early 2025, with final approval pending in the National Assembly.
Under the measure, the tax applies if a French national’s income is above about €235,500 in 2025—defined as five times the annual social security ceiling—and the person relocates to a country where tax rates are at least 40% lower than France’s. Lawmakers say the goal is to curb tax avoidance by a small group of wealthy movers and to protect the French tax base, while critics warn it could be complex, hard to enforce, and unfair to compliant French citizens abroad.
The policy marks a clear shift away from France’s residence-based approach and toward a model closer to the United States 🇺🇸, where tax duties attach to citizenship, not just residence. Supporters in left-wing and nationalist parties frame it as a matter of “citizenship duties.” Opponents among centrists and conservatives argue the new rules could backfire by pushing investment and talent away, and by adding heavy compliance burdens for families who move for work or personal reasons.
What the measure would do
If enacted, the targeted universal tax would apply to French nationals who have lived in France for at least three of the last ten years before moving. It would treat the taxpayer as if still resident in France for the purpose of calculating tax on:
- Worldwide income
- Inheritance
- Capital gains
- Dividends
Any tax already paid in the country of residence would count as a credit, but the person would owe the difference to reach French tax levels.
Key points set by lawmakers include:
- Income threshold: about €235,500 in 2025.
- Low-tax test: country of residence has overall taxes at least 40% (some drafts mentioned 50%) lower than France’s.
- Scope: worldwide income and certain assets taxed as if the person remained in France.
- Double taxation relief: credits for tax paid abroad, with a top-up to French levels.
The measure also sits alongside enforcement steps in the 2025 Finance Act. Lawmakers confirmed the primacy of double tax treaties over domestic law when determining tax residency, which means treaty tie-breaker rules still guide where someone is resident for treaty purposes. They also extended the statute of limitations for false foreign domiciliation from 3 to 10 years, signaling stricter follow-up on cases where people claim to live abroad but are considered resident in France.
Important: treaty tie-breakers still matter for residency determination, but the targeted universal tax would operate in parallel by imposing a French top-up for those who meet the income, low-tax, and recent-residence tests.
Implementation challenges and global context
Officials have acknowledged a major legal and diplomatic hurdle: France would likely need to renegotiate more than 120 bilateral tax treaties to fully align a citizenship-based taxation approach with existing treaty commitments.
- Tax treaties prevent double taxation and provide rules for residency, permanent establishments, and relief.
- While lawmakers say the new system includes credits to avoid double taxation, aligning treaty language with a citizenship-based model would take time and careful drafting.
- The Finance Ministry and the French tax authority would be central to this work; general information on cross-border taxation is available from the French tax authority.
The political debate is sharp:
- Supporters say the plan targets a narrow, wealthy group and promotes fairness by asking high-income movers to keep contributing.
- They argue it could reduce incentives to relocate purely for tax reasons and help maintain funding for public services.
- Critics counter that it could capture people who move for non-tax reasons—such as a spouse’s job, caregiving, or international careers—and that the compliance load will be heavy, with complicated asset reporting and coordination with foreign tax systems.
According to analysis by VisaVerge.com, the move would be a clear departure from France’s long-standing framework and closer to the U.S. citizenship-based taxation model, though France’s version is narrower because it’s limited to high earners and low-tax jurisdictions. VisaVerge.com reports that practical questions will shape how many people are actually affected:
- How to define the 40% threshold
- How to measure foreign taxes
- How to handle timing differences (e.g., when gains are taxed in different years)
Practical impact for taxpayers
For French citizens abroad, the change could reshape tax planning in several ways:
- A mid-career executive earning above the threshold in a low-tax country could owe a top-up to France, even after using tax credits.
- A founder who sells shares while abroad might face a French capital gains top-up tax, depending on treaty protections and rule details.
- Estate planning for families with property in and outside France could become more complex under a citizenship-based approach to inheritance tax.
At the same time, lawmakers kept treaty primacy intact for residency determination, which offers some guardrails. If a treaty assigns residency abroad, that status still matters for many treaty protections. Yet the targeted universal tax would still require a top-up for those who meet the income and low-tax tests and who have the recent French residence tie (three out of ten years).
Administrative and compliance considerations
If approved, the government would need to issue guidance, likely through administrative instructions and FAQs, to explain:
- How to calculate income for the threshold.
- How the comparative rate test (40% rule) will be measured.
- What constitutes proof of taxes paid abroad.
- How to claim credits and the timing for top-ups.
Coordination with foreign tax authorities will matter, especially where there are timing differences—such as when gains are taxed in one year abroad but would be taxed in a different year in France.
French business groups and expatriate associations are watching closely. Concerns include:
- Unintended effects on cross-border assignments and relocation packages.
- Employers potentially needing to gross up compensation for French top-up tax.
- Incentives for some to weaken French ties before a move (e.g., avoiding the three-in-ten-year test), though lawmakers argue anti-abuse rules and the extended 10-year statute reduce gaming opportunities.
Political framing and next steps
In committee debates, supporters stressed the measure is targeted, not universal, because it only applies above a high income line and only when moving to much lower-tax countries. Opponents emphasized compliance risks and an uneven playing field: people with complex cross-border portfolios could face audits and penalties if they miscalculate, while others may decide not to relocate at all—potentially limiting France’s reach in global business.
The National Assembly’s next steps will decide whether the measure becomes law and how fast it would phase in. If approved, implementation will depend on:
- The Assembly vote and any amendments
- The speed and scope of treaty renegotiations
- Administrative guidance and FAQs to clarify operational details
For now, the proposal signals a strong policy message: if you keep French citizenship and move to a low-tax country while earning above the set threshold, France wants you to keep paying at French levels. Whether that becomes reality depends on the Assembly vote, the speed of treaty talks, and the fine print still to come.
This Article in a Nutshell
France has moved a proposal through the Finance Committee and Senate to impose a targeted universal tax on certain high-earning French citizens who relocate to low-tax countries. The measure would apply to nationals who lived in France for at least three of the last ten years and whose income exceeds roughly €235,500 in 2025, if their new country’s overall tax burden is about 40% lower than France’s. It treats worldwide income, inheritance, capital gains and dividends as if the taxpayer remained resident in France, allowing credits for foreign taxes but requiring a top-up to French rates. The plan shifts France toward a citizenship-based concept similar to the U.S. model but limited to wealthy movers; it raises legal, administrative and diplomatic challenges, notably the need to renegotiate over 120 bilateral tax treaties and to define measurement rules for the 40% test, foreign tax calculations and timing differences. Final enactment depends on the National Assembly, treaty talks and detailed administrative guidance.
