France’s Finance Commission has adopted an amendment that would create a “targeted universal tax” that would require French citizens living in low-tax countries to continue paying taxes to France.
The proposed system would require French nationals who lived in France for at least three years in the 10 years before moving to pay a tax equivalent to their hypothetical French tax liability.
To prevent double taxation, the amendments outline a tax credit mechanism for French nationals living abroad. Under this framework, you will have to pay taxes equal to those owed in France, but you will have to receive a credit equal to the taxes you have already paid in your country of residence.
The scope of application is not limited to income tax, but also extends to inheritance tax, capital gains, dividends, etc.
The amendments echo recommendations from a 2019 fact-finding mission by Finance Committee Chair Eric Cockerel and Jean-Paul Mattei and apply to low-tax jurisdictions.
Its authors claim compatibility with European law and existing tax treaties.
LFI-NFP Group developed this targeted approach to address international tax competition and prevent the shifting of the tax burden to the working and middle classes.
Unlike the U.S. citizenship-based tax model, which affects all U.S. citizens worldwide, France’s proposal only targets people living in countries with tax rates at least 50% lower than France’s.
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The National Rally party supports the bill, with MP Jean-Philippe Tanguy linking it to the rights and duties of citizenship.
The former president and the Republican majority oppose the bill. Roland Lescure, who represents French nationals in the United States and Canada, cited concerns about its implementation and the impact on nationals abroad.
Jean-Paul Mattei of the centrist MoDem party questioned the structure of the proposal, pointing out that citizens living abroad would not be able to access French public services despite the possibility of taxation. It is showing.
The amendments aim to strengthen France’s position in international tax harmonization negotiations while addressing what the government calls the “problem of declining revenues.”
The bill now requires a vote in Congress. The government retains the option to override this using Article 49(3) of the Constitution, but the current composition of parliament, which has 126 RN and 193 NFP members, could influence this decision.
Coquerel points to the challenge of amending 129 bilateral tax agreements for implementation. He indicated that the text could be revised before the final vote.
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Ahmad Abbas is the Director of Content Services at Investment Migration Insider and an eight-year veteran of the investment migration industry.
