Moving to France: the two exemption clocks that start the day you arrive

Neither window requires an application and neither generates a reminder. This article is for English-speaking residents and prospective residents of France holding between 500,000 and 5 million euros of assets, typically a mix of French property, property or investments retained in the country of origin, and pension rights accrued abroad. If you moved within the last five years, or expect to move within the next two, the arithmetic below applies to you directly. If you have been resident for more than six years, both windows have closed and the questions worth asking are different ones.

The most common finding in Avnear's cross-border case work is not aggressive planning left undone. It is a window that expired unnoticed while the family was still unpacking.

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Why the first five years in France are not like the years that follow

French tax residence is not a single status with a single set of consequences. For anyone arriving from abroad, the law suspends two significant exposures for a transitional period. Understanding both is the difference between arriving well and arriving expensively.

The wealth tax window: five years, Article 964 of the French tax code. France levies an annual wealth tax on real estate, the impôt sur la fortune immobilière or IFI, on households whose net taxable property exceeds 1.3 million euros. A French tax resident is normally liable on worldwide property. Article 964 provides that a person transferring their tax domicile to France, having not been domiciled there during the five preceding calendar years, is taxed only on property situated in France. The exemption on foreign property runs until 31 December of the fifth year following the year of arrival, covering up to five annual assessments depending on the month of arrival.

This provision is general. It carries no employment condition, applies whatever the nationality of the taxpayer, and benefits spouses without professional activity. It is distinct from the impatriate income tax regime described further below, which is narrower and runs for a different period.

The succession window: six years, Article 750 ter of the French tax code. French inheritance and gift duty applies to worldwide assets received by an heir who is tax-resident in France at the date of transfer. Article 750 ter, 3° adds a second cumulative condition: the heir must also have been tax-resident in France for at least six years during the ten years preceding the year of receipt. Below that threshold, only assets situated in France are taxable.

The practical consequence is stark. An inheritance received from a parent abroad in year five of your French residence may fall entirely outside French succession duty. The same inheritance received in year seven may not. The six years need not be consecutive, which complicates the count for anyone with a history of moving.

These are the two clocks. They run at different speeds and expire in different years. A household arriving in 2026 sees the wealth tax window close on 31 December 2031 and the succession window close during 2032. Planning that treats them as a single deadline gets one of them wrong.

When does French tax residence actually begin?

French tax residence is determined by Article 4 B of the tax code, which sets alternative criteria. Meeting any one is sufficient. This is the point most new arrivals get wrong, usually by assuming they are not resident when they are.

The first criterion is the household. France treats a person as resident if their foyer, the place where their family habitually lives, is in France, even where the individual spends substantial time elsewhere for work. The second is the principal place of physical presence, commonly summarised as more than 183 days, though the test is comparative rather than absolute. The third is professional activity carried on in France, unless accessory to a main activity elsewhere. A fourth applies where the centre of economic interests is located in France.

The widespread belief that spending fewer than 183 days in France prevents French tax residence is incorrect. A family home occupied by a spouse and children establishes residence under the first criterion regardless of the days the earner spends abroad.

Where the tests of two countries both point to residence, the applicable double tax treaty resolves the conflict through a tie-breaker sequence: permanent home, then centre of vital interests, then habitual abode, then nationality. The date residence begins is not a matter of choice or declaration. It is a matter of fact, established retrospectively, and it is the date from which both clocks run.

The four arrival profiles Avnear distinguishes

The term expatriate covers situations with almost nothing in common. Avnear works from four arrival profiles, because they call for different sequencing rather than different degrees of the same advice.

The retiree with pension income and property abroad. Typically British, Irish or North American, aged 58 to 72, holding a French principal residence, a retained property in the country of origin, and accumulated investments. The wealth tax window dominates, alongside social contribution status. Property disposals abroad are often best sequenced before the window closes rather than after.

The employee or executive on assignment. Arriving with a French employment contract, often with equity awards vesting across the move, sometimes eligible for the impatriate income tax regime. The dominant issue is the treatment of deferred compensation straddling the change of residence, and the interaction between two regimes that do not expire together.

The entrepreneur or investor relocating with liquid capital. Arriving with proceeds from a business sale or a concentrated portfolio, often before establishing French employment. The dominant issue is deployment: what enters which wrapper, in what order, over what period. This is the profile where staged market entry matters most, because the capital arrives in a single block at a moment the household did not choose.

The remote worker or dual-location household. Working for a foreign employer while living in France, frequently with unclear social security affiliation and an unexamined assumption of non-residence. The dominant issue is establishing the correct residence and affiliation position before an audit establishes it retrospectively.

The grid determines whether the first action is a property disposal, a compensation review, a deployment plan, or a compliance regularisation.

The impatriate income tax regime, and why it does not expire with the wealth tax window

Article 155 B of the French tax code provides a separate regime for individuals recruited from abroad, either by a French employer directly or through an intra-group transfer. It is narrower than the wealth tax window and rests on a comparable but distinct condition: not having been tax-resident in France during the five calendar years preceding the taking up of duties.

Three exemptions sit inside it. The impatriation premium, meaning the supplementary remuneration paid in compensation for the relocation, is exempt from income tax, either at its actual amount where the employment contract identifies it, or on a flat basis of 30 percent of net remuneration. The portion of remuneration corresponding to work physically performed outside France is also exempt, subject to statutory caps. And half of certain passive income of foreign source, principally investment income and securities capital gains, is exempt from income tax.

The regime runs until 31 December of the eighth year following the taking up of duties. That eight-year term is the source of a recurring planning error. A household eligible for both regimes has income tax relief running three years longer than its wealth tax relief. Disposals and income recognition planned around the eight-year horizon will sit three years outside the five-year window, at exactly the point where foreign property enters the wealth tax base.

Two limits deserve attention. The 50 percent exemption on foreign passive income covers income tax only; social contributions remain due on the full amount unless the position described in the next section applies. And the regime attaches to the individual and the post, not to the household, so a spouse without French employment falls outside it while remaining inside the wealth tax window.

The social contributions most English-speaking residents in France overpay

This is the single most under-claimed position Avnear encounters, and it is worth more annually than most of the planning that gets discussed instead.

French residents normally pay social contributions on investment income at 17.2 percent for life assurance products, direct rental income and property capital gains, and at 18.6 percent since the 2026 Social Security Financing Law for dividends, interest and securities capital gains. These headline rates combine three separate levies: the CSG, the CRDS, and a solidarity levy of 7.5 percent.

The CSG and CRDS are not payable by a person who is not covered by a compulsory French health insurance scheme but is instead affiliated to the health system of another EEA state or Switzerland under the European social security coordination rules. Where that is the case, only the 7.5 percent solidarity levy remains due. Despite the United Kingdom's withdrawal from the European Union, the French tax administration has confirmed that persons affiliated to the British system continue to benefit from this exemption.

For a French-resident household covered by an S1 certificate, typically retirees whose healthcare costs remain the responsibility of their country of origin, or an A1 certificate for workers posted or employed abroad, the effective rate on investment income falls from 17.2 percent to 7.5 percent, or from 18.6 percent to 7.5 percent depending on the income category. That is a gap of between 9.7 and 11.1 percentage points, applied every year, to every euro of investment return.

The position is not granted automatically. It is claimed by ticking the relevant boxes on the annual income tax return and evidenced, on request, by the certificate. A household filing without claiming it has been overpaying, and the amounts are recoverable only within the statutory claim period.

Two qualifications matter. The exemption depends on not being covered by a compulsory French health scheme, a condition that changes the moment a household member takes French employment or the certificate lapses. And it does not extend to residents affiliated to systems outside the EEA and Switzerland, which excludes households arriving from the United States, Canada and the Gulf. Whether a given household qualifies turns on its actual affiliation, not its nationality, and is verified individually.

The declaration obligations that catch new arrivals in year one

French tax residence triggers annual reporting obligations on assets held outside France that have no equivalent in most Anglophone systems, and that carry fixed penalties applied per account and per year.

Article 1649 A requires every French tax resident to declare each bank account opened, held, used or closed abroad during the year, on form 3916 filed with the annual income tax return. The obligation extends to accounts on which the taxpayer merely holds a power of attorney, and to joint accounts. What is reported is the existence of the account, not its balance.

Article 1649 AA imposes a parallel obligation for capitalisation contracts and similar investment products taken out abroad, including foreign life assurance policies, on form 3916-bis. Digital asset accounts held on foreign platforms fall under Article 1649 bis C, with its own penalty scale.

The penalty for failure to declare a foreign bank account or policy is 1,500 euros per account and per year, rising to 10,000 euros where the account is held in a state that has not concluded an administrative assistance agreement with France. The administration's recovery period on undeclared foreign accounts extends to ten years.

An ISA is not a French tax wrapper. It is a foreign account holding investments, reportable in France, and its income is taxable in France with no recognition of its British exemption. The same applies to its American, Canadian and Australian equivalents. The wrapper's protection stops at the border.

What inaction costs: the numbers by profile

The figures below rest on average assumptions drawn from Avnear's cross-border case work. They are indicative, intended to establish orders of magnitude, and do not substitute for a personalised audit.

Profile A, property retained abroad. A household with 1.5 million euros of French property and 1 million euros of property abroad. Inside the window, the wealth tax base is 1.5 million euros and the annual liability 3,900 euros. Once the window closes, the base rises to 2.5 million euros and the liability to 10,900 euros. The window is worth 7,000 euros a year, or up to 35,000 euros across the assessments it covers.

Profile B, social contributions unclaimed. A household holding an S1 certificate with a securities account generating 20,000 euros of taxable return a year. At 18.6 percent the contribution is 3,720 euros. At the 7.5 percent solidarity levy alone it is 1,500 euros. The annual gap is 2,220 euros, or 22,200 euros across a decade. Held instead inside an assurance-vie taxed at 17.2 percent, the same gap narrows to 1,940 euros a year, still 19,400 euros over the period.

Profile C, foreign accounts undeclared. A couple arriving with two current accounts, two savings accounts and an investment account holds five reportable accounts. Five accounts undeclared across four years exposes the household to 30,000 euros in fixed penalties, before any question of undeclared income arises.

Profile D, inheritance received after the sixth year. A 400,000 euro inheritance received from a parent abroad, in the direct line, by a single child. Received within the six-year window, no French succession duty arises on the foreign assets. Received afterwards, the same inheritance is taxable in France on worldwide assets: after the 100,000 euro allowance in the direct line, the progressive scale produces approximately 58,200 euros of duty. A succession treaty between France and the country concerned may reallocate the taxing right, and France has concluded such treaties with a limited number of states, so this exposure is real but not universal.

Three of these four exposures are not recoverable once crystallised. That asymmetry is the whole argument for acting during the windows rather than after them.

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Illustrative scenario: a British couple settling in Provence

Illustrative profile built on average assumptions, not a personalised simulation.

A British couple, aged 62 and 59, moved to Provence eighteen months ago. Neither has been French tax resident before. They hold a French principal residence worth 850,000 euros, a let property in London worth 950,000 euros, and roughly 600,000 euros across British investment and savings accounts including two ISAs. Both draw British pensions and hold S1 certificates, so their healthcare costs remain the responsibility of the British system.

Wealth tax. After the 30 percent statutory allowance on the principal residence, their French property base is 595,000 euros, below the 1.3 million euro threshold. Their liability is nil. Once the exemption window closes, the London property enters the base, taking it to 1,545,000 euros and producing an annual liability of approximately 4,215 euros. Across the assessments the window covers, it is worth roughly 21,000 euros.

Social contributions. Their S1 status removes the CSG and CRDS from their investment income, leaving the 7.5 percent solidarity levy. On the return generated by a 600,000 euro portfolio, the annual difference against the full rate exceeds 2,000 euros. Neither had claimed the position on their first French return, filed by an accountant who was not told about the certificates.

Declarations. Five reportable accounts, including both ISAs, none declared on their first return. Exposure of 7,500 euros for that year alone, before the ISA income is brought into charge in France.

Succession. One spouse expects to inherit from a parent in Britain. Whether that inheritance falls inside or outside French succession duty depends on the year it arises relative to the six-year clock and on the France-United Kingdom succession treaty, which allocates taxing rights by reference to the deceased's domicile. This turns on the precise treaty text and the individual facts.

Their eighteen-month position is therefore not a disaster. It is roughly 7,500 euros of penalty exposure, 3,000 euros of overpaid contributions, and a 21,000 euro window with three and a half years left on it. Acted on now, most of that is recoverable or preservable. Acted on in year six, none of it is.

What happens to the wrappers you already hold

Tax-advantaged wrappers are creatures of national law. They do not travel.

British ISAs. France does not recognise the ISA exemption. Income and gains inside an ISA are taxable in France under French rules from the date of French residence, and the account is reportable on form 3916. The wrapper continues to shelter the assets from British tax while held, so for a French resident it functions as an ordinary taxable account carrying an additional reporting obligation. Whether to retain or unwind depends on the expected residence horizon rather than on the wrapper alone.

Foreign pension arrangements. Treatment splits by treaty and by the nature of the payment. Most French treaties allocate the taxing right on private pensions to the state of residence and on government service pensions to the paying state, which is why a former civil servant and a former private-sector employee living on the same street can face entirely different treatment. Lump sum withdrawals raise separate questions, since the characterisation France applies to a payment that is tax-free in the source country is not automatic. Pension transfers out of a British scheme carry their own regulatory and charge regime and are not a step to take on general advice.

American accounts and American citizens. United States citizens and green card holders remain subject to American taxation on worldwide income regardless of French residence, and to American reporting on foreign financial accounts. The characterisation applied under American rules to non-American collective investment funds, including those held inside French insurance wrappers, can be materially unfavourable. Avnear's position on this is explicit: a French wrapper held by a person within the American tax system is structured in coordination with an American tax adviser, and the wrapper decision follows that exchange rather than preceding it.

The French wrappers available, and how they are used

France offers a set of wrappers with no direct equivalent in most Anglophone systems, and the sequencing between them matters as much as the choice of any one.

Assurance-vie is the central French wrapper. It is neither a pure life policy in the British sense nor a pension. Assets grow without annual taxation, and tax arises only on withdrawal, and then only on the gain element proportionate to the sum withdrawn, never on the return of capital. For premiums paid since September 2017, the income tax rate on that gain is 12.8 percent before the eighth anniversary and 7.5 percent afterwards on the portion corresponding to premiums up to 150,000 euros, with 12.8 percent above. From the eighth year an annual allowance of 4,600 euros of gain applies, or 9,200 euros for a couple filing jointly. Social contributions apply separately at the rates set out above.

The wrapper also operates outside the estate for succession purposes under Article 990 I, with a 152,500 euro allowance per beneficiary on premiums paid before the policyholder's seventieth birthday. Available within the Avnear offering are French-law contracts, accessible from 300 euros, and Luxembourg-law contracts for internationally mobile households.

The PEA is an equity wrapper capped at 150,000 euros of contributions, offering income tax exemption on gains after five years with social contributions still due. It is restricted to European securities, which limits its usefulness for a household holding predominantly American or global exposure, and it is open only to French tax residents.

The PER is the French retirement wrapper, offering deduction of contributions against income within an annual ceiling. For employees, that ceiling is calculated on the social security ceiling of the previous year; for the self-employed it is calculated on the current year's ceiling, a distinction that produces different numbers for the same household in the same year. Taxation is deferred to the withdrawal phase, so the arbitrage runs between the marginal rate at contribution and the expected rate at withdrawal, which for a household with foreign pension income is not a straightforward comparison.

The compte-titres is an ordinary securities account, without the wrapper advantages and without their constraints, used for holdings outside the eligible universe of the PEA or above its ceiling.

SCPI, French collective property vehicles, are accessible within the assurance-vie contracts available through Avnear, providing property exposure without direct ownership. Held inside a contract, their income follows the contract's tax regime rather than the direct rental income regime. For a household inside the wealth tax window, the interaction between French property exposure held inside a wrapper and the IFI base warrants specific attention.

For internationally mobile households, a Luxembourg-law contract addresses a constraint a French contract does not. Its legal framework, built on the arrangement between the insurer, the depositary bank and the Luxembourg insurance regulator, is designed to accommodate a further change of residence rather than being tied to French rules. Within Avnear's Luxembourg allocations, euro-denominated funds are excluded given the indirect exposure this asset class retains through reinsurance; portfolios are built from ETFs, bonds, dated funds and multi-currency share classes, with the option of denominating the contract in the household's reference currency.

Where capital arrives in a single block, from a property disposal, a business sale or a pension commencement lump sum, Avnear applies Gradual Security®, its proprietary framework for staged market entry. The relevance is specific to the arrival situation: a household that has just sold a house abroad holds cash at a moment it did not choose, and the deployment schedule is a decision in its own right rather than an afterthought to the wrapper decision.

Succession: choosing your national law does not change the tax bill

Cross-border households routinely conflate two separate questions, and the conflation is expensive.

Which law governs the distribution of your estate. European Regulation 650/2012 provides that the succession of a person resident in a participating member state is governed by the law of their habitual residence at death, unless they have elected in a will for the law of a state of their nationality. The United Kingdom, Ireland and Denmark do not participate, but the regulation's choice-of-law rules apply universally where a French authority has jurisdiction, so a British national resident in France may elect English law and thereby disapply French forced heirship, under which a fixed share of the estate is reserved to children.

That election is not unlimited. Article 913, third paragraph, of the French Civil Code, introduced in 2021 and applicable to deaths from 1 November 2021, permits children to take a compensatory levy on assets situated in France where the foreign law governing the succession provides no protective mechanism for children at all. The scope of that provision has been read narrowly, and whether common law jurisdictions offering family provision claims fall inside or outside it is genuinely contested. Anyone relying on an election of national law to disinherit a child should treat the outcome as uncertain rather than settled.

Which country taxes the estate. This is a different question with a different answer, and the election of governing law has no effect on it. French succession duty applies under Article 750 ter by reference to the deceased's tax domicile, the location of the assets, and the heir's tax domicile subject to the six-year test. A British national resident in France who elects English law will still, in the ordinary case, have a French-taxable estate. Where a succession treaty exists between France and the other country concerned, it reallocates the taxing rights.

Assurance-vie sits partly outside this framework. Sums paid to beneficiaries under Article 990 I are taxed under a separate regime, determined by the tax domicile of the insured person at death and, for the beneficiary, by French domicile held for at least six of the ten preceding years. For a household with beneficiaries spread across several countries, the interaction between the beneficiary clause, the treaty position and the residence of each beneficiary is not something a standard clause handles well.

Conclusion

The wealth tax window closes on 31 December of the fifth year following your arrival. The succession window closes during the sixth. Neither date will be communicated to you, and neither can be reopened.

Between now and those dates, three things remain fully available: a decision on whether property retained abroad is disposed of, restructured or kept before the base widens; a claim for social contributions charged at a rate that may not apply to your household; and the regularisation of any declaration obligation, at a cost rising with each year of delay and each additional account.

After those dates, the first is gone entirely, the second remains available only prospectively, and the third has accumulated four more years of fixed penalties.

Two questions this article deliberately leaves open, because they are settled on documents rather than in the abstract. Whether your household actually qualifies for the reduced social contribution position turns on your precise health insurance affiliation, not your nationality or your pension source. And whether your existing beneficiary clauses and will produce the intended result across the countries where your beneficiaries live depends on the specific treaty position between France and each of them. Both are examined together, and both are examined before the clocks run out rather than after.

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FAQ

Summary

• Two exemption windows open on becoming French tax resident: five years free of French wealth tax on property held abroad under Article 964, and six years before foreign inheritances become taxable in France under Article 750 ter.

• The wealth tax window is general, requires no application and no employment condition, and runs to 31 December of the fifth year following arrival. It is distinct from the impatriate income tax regime under Article 155 B, which is narrower and runs to the eighth year, a three-year gap that misleads planning built on a single horizon.

• French tax residence follows the alternative criteria of Article 4 B. Spending fewer than 183 days in France does not prevent residence where the family home is located there.

• Residents affiliated to the health system of another EEA state or Switzerland, evidenced by an S1 or A1 certificate, are exempt from CSG and CRDS on investment income, leaving only the 7.5 percent solidarity levy against headline rates of 17.2 or 18.6 percent in 2026.

• Foreign bank accounts and foreign investment policies must be declared annually on forms 3916 and 3916-bis. The penalty is 1,500 euros per account per year, rising to 10,000 euros for accounts in states without an administrative assistance agreement.

• Electing your national law to govern your estate under Regulation 650/2012 does not change which country taxes it. The two questions are separate and governed by different rules.

Key takeaways

• The two clocks expire in different years. Planning that treats them as one deadline gets one of them wrong.

• The social contribution position is claimed on the return, not granted automatically, and turns on health insurance affiliation rather than nationality.

• Three of the four principal exposures are not recoverable once crystallised, which is why sequencing matters more than the individual decisions.

• Tax-advantaged wrappers do not cross borders. An ISA held by a French resident is a reportable taxable account.

Sources and regulatory references

• Légifrance, French tax code, Article 750 ter, territorial scope of inheritance and gift duty and the six-year residence test, in force 07/2026: https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000024453202

• BOFiP, BOI-PAT-IFI-10-20-20, wealth tax scope for persons domiciled in France and the exemption for new residents under Article 964, consulted 07/2026: https://bofip.impots.gouv.fr/bofip/11293-PGP.html/identifiant=BOI-PAT-IFI-10-20-20-20180608

• BOFiP, BOI-ENR-DMTG-10-10-30, territorial scope of succession duty, consulted 07/2026: https://bofip.impots.gouv.fr/bofip/3543-PGP.html/identifiant=BOI-ENR-DMTG-10-10-30-20120912

• service-public.gouv.fr, social contributions on investment income and the reduced rate for persons affiliated to an EEA or Swiss scheme, 03/2026: https://www.service-public.gouv.fr/particuliers/vosdroits/F2329

• service-public.gouv.fr, taxation of assurance-vie income, holding periods and annual allowances, 06/2026: https://www.service-public.gouv.fr/particuliers/vosdroits/F22414

• impots.gouv.fr, declaration of foreign accounts and foreign life assurance policies, forms 3916 and 3916-bis, and applicable penalties, 03/2026: https://www.impots.gouv.fr/formulaire/3916/declaration-par-un-resident-dun-compte-letranger-ou-dun-contrat-de-capitalisation-o

• impots.gouv.fr, exemption from CSG and CRDS for persons affiliated to a social security scheme in the EEA, Switzerland or the United Kingdom, consulted 07/2026: https://www.impots.gouv.fr/international-particulier/questions/je-suis-non-resident-suis-je-redevable-des-contributions

• EUR-Lex, Regulation (EU) No 650/2012 on jurisdiction, applicable law, recognition and enforcement in matters of succession, consulted 07/2026: https://eur-lex.europa.eu/legal-content/FR/TXT/?uri=celex:32012R0650

Compliance clause

The information contained in this document is provided for informational and educational purposes only. It does not constitute individualized legal, tax, or financial advice. Despite the care taken in its accuracy and updating, Avnear cannot be held responsible for decisions made on the basis of this document. Any wealth planning decision should be subject to a personalized analysis taking into account the reader's specific situation, tax residence, objectives, and constraints. It is strongly recommended to consult a licensed professional (wealth management advisor, tax lawyer, notary) before any subscription or restructuring.