Tax domicile in France of French major companies’ corporate executives

The French draft Finance Bill for 2020, submitted on Friday 27 September to the French Council of Ministers, confirms the government’s wish to tax the executives of companies in France.

In December 2018, President Emmanuel Macron, during a television statement in response to the “yellow vests” movement, announced that “the executive of a French company must pay his taxes in France and large companies that make profits there must pay taxes there, that’s simple justice”.

Article 3 of the draft finance bill amends article 4B b of the French tax code as follow:

“Executives of companies whose head office is located in France and which have an annual turnover in France above one billion euros are considered as carrying on their professional activity mainly in France.

For companies that control other companies under the conditions defined in Article L. 233-16 of the French Commercial Code, turnover is the sum of their turnover and that of the companies they control.

“The officers referred above include the Chairman of the Board of Directors, the Chief Executive Officer, the Deputy Chief Executive Officers, the Chairman of the Supervisory Board, the Chairman and members of the Supervisory Board, Managing Director and other executives with similar functions.”

Thus, article 3 of the draft Finance Bill for 2020 presented by the Government proposes to consider the executives of companies located in France and which have an annual turnover of more than one billion euros, as exercising their professional activity in France and therefore, as French tax residents.

It should also be noted that the proposed text is not limited to corporate officers, since “executives with similar functions” are also included.

Finally, this measure would be retroactive and would apply as of the taxation of 2019 income.

The parliamentary debates should be carefully monitored.

Orianne Achéritéguy

Orianne advises companies and individuals in an international context on legal and tax issues regarding equity, executive compensation and governance. In particular, she assists her clients in the implementation of […]

Sophie Johann

Sophie is an attorney, specialized in tax law. In 2016, she joined the Deloitte Société d’Avocats Global Rewards team in Paris. She advises companies regarding the implementation of equity schemes […]

Sarah Vaillant

Sarah joined Deloitte Société d’Avocats in 2011. She is specialized in designing rewards and investment schemes. Sarah has over 8 years’ experience providing advice in the individual tax and Global […]