Expertise — International taxation

Tax return for non-residents

Non-residents of France for tax purposes are taxable only on their French-source income, subject to the applicable bilateral tax treaties. The minimum rate is 20% up to EUR 29,579 of net taxable income, then 30% beyond that threshold — unless the more favourable average rate applies. Since the de Ruyter ruling, persons affiliated to a social security scheme in the EEA or Switzerland are exempt from CSG/CRDS but remain liable for the 7.5% solidarity levy on French real-estate income and real-estate capital gains.

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Non-resident taxation: reporting without over-reporting

A non-resident of France for tax purposes is taxable only on French-source income, and only to the extent that such income is effectively taxable in France under domestic law (French Tax Code art. 4 A and 4 B) and under the applicable bilateral tax treaty with the State of residence. The whole difficulty lies in the precise characterisation of each flow and in the interplay between the two bodies of rules.

The point is not merely to complete a form 2042 NR: it is to choose between the minimum rate (20% then 30%) and the average rate, to handle correctly the withholding taxes specific to non-residents (salaries, pensions, dividends), and to verify the proper treatment of social levies under the de Ruyter case law. A poorly calibrated return may result in an avoidable over-taxation of several thousand euros.

The firm assists non-residents established in Switzerland, the United Kingdom, the United States, the Emirates, Portugal, Israel and other jurisdictions, as well as French expatriates during their year of transfer and retirees receiving French pensions. A cross-cutting practice between the Paris and Geneva offices.

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Four categories of French-source income to report

01

Real-estate and property income

Rental of property located in France — falling within property income (unfurnished letting) or industrial and commercial profits (BIC) (furnished letting, para-hotel activity) depending on the nature of the activity.

  • Unfurnished letting: micro-foncier regime (up to EUR 15,000) or actual-expense regime
  • Furnished letting: LMNP or LMP depending on the thresholds
  • Real-estate capital gains: French Tax Code art. 244 bis A — 19% income tax + 17.2% social levies
  • Allowances for holding period: income-tax exemption after 22 years, social levies after 30 years
  • Accredited fiscal representative required for sellers resident outside the EEA/Switzerland where the sale price exceeds EUR 150,000
02

Activities carried out in France

Profits from a business located in France or from an employed/self-employed activity carried out on French territory — including for only a few days (days worked in France by a non-resident employee).

  • Commercial, craft or professional activity carried out in France
  • Salaries corresponding to days worked in France
  • Corporate office — case-by-case analysis (place of effective management)
  • Possible permanent establishment within the meaning of the treaty
  • Interplay with the inbound-assignee status (French Tax Code art. 155 B) where applicable
03

Salaries, pensions, retirement income

French-source salaries and wages subject to the specific withholding tax for non-residents (French Tax Code art. 182 A). French retirement pensions taxable according to the applicable treaty.

  • Final withholding tax up to a certain threshold, then non-final
  • Brackets: 0% / 12% / 20% depending on income (specific scale)
  • Retirement pensions: variable regime depending on the treaty (sometimes taxable only in the State of residence)
  • Inclusion of income in the annual 2042 NR return on the applicable lines
  • Consistency check with the withholding certificates (form 2494 SD)
04

Employee shareholding and deferred compensation

Gains linked to employee shareholding (stock options, free shares, BSPCE) or to deferred compensation (golden parachutes, supplementary pensions) — precise characterisation between French and foreign source depending on the acquisition period.

  • Stock options and free shares: characterisation between salary and capital gain depending on the regime
  • BSPCE: specific regime, France/foreign vesting pro rata
  • Carried interest: favourable regime under strict conditions
  • Interplay between domestic law and OECD art. 15 (income from employment)
  • Risk of double taxation without treaty optimisation
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Minimum rate, average rate, social levies

Three levers shape the non-resident's final tax burden — knowing how to combine them determines the quality of the return.

The central trade-off — minimum rate vs average rate

By default, the non-resident is taxed at the minimum rate of 20% (up to EUR 29,579 of French net taxable income in 2026), then 30% beyond that threshold. This rate is a floor: it applies even where the progressive scale would result in lower taxation. The taxpayer may nevertheless opt for the average rate by demonstrating that the taxation resulting from applying the scale to all of their worldwide income would be more favourable. This option, to be exercised each year, may represent several thousand euros in savings for taxpayers with modest French income.

Three mechanisms to master

Minimum rate (20% / 30%)

Floor taxation applicable by default. French income is taxed at 20% up to EUR 29,579, then at 30% beyond. No progressive scale unless the average rate is elected. Certain reductions and tax credits are limited or even excluded compared with residents.

Option for the average rate

The taxpayer may opt for the application of the French progressive scale to their worldwide income, the rate thus obtained then being applied only to French-source income. A relevant approach where worldwide income is moderate. It requires reporting worldwide income to the French authorities (with supporting documents).

Social levies after de Ruyter

Since the de Ruyter case law (CJEU 26 Feb. 2015 + transpositions), non-residents affiliated to a social security scheme in the EEA or Switzerland (and, depending on the case, in the United Kingdom) are exempt from CSG/CRDS but remain liable for the 7.5% solidarity levy on French real-estate income and real-estate capital gains (CSS art. L. 136-7).

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Lead counsel — International taxation

A cross-cutting practice between the Paris and Geneva offices. Maître Jonathan Bensaid, founding partner, and Maître François Ouairy, partner in charge of the Paris office, assist non-residents established in Switzerland, the United Kingdom, the United States, the Emirates, Portugal, Israel and other jurisdictions, as well as French expatriates during their year of transfer.

  • French Tax Code art. 4 A & 4 B (tax domicile)
  • Minimum rate / average rate
  • France-Switzerland treaty 1966
  • France-Portugal treaty 1971
  • de Ruyter ruling (CJEU 2015)
  • Accredited fiscal representative
  • Inbound-assignee status (French Tax Code art. 155 B)
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Frequently asked questions — Non-resident tax return

Does a non-resident still have to report income in France?

Yes, on their French-source income taxable in France under domestic law and the applicable tax treaty. This notably includes: real-estate income (rental, capital gains), salaries corresponding to days worked in France, French dividends/interest, French retirement pensions (depending on the treaty), and employee-shareholding gains for the French portion.

Is the minimum rate always 20%?

No. The minimum rate is 20% up to EUR 29,579 of French net taxable income (in 2026), then 30% beyond. This rate may be set aside by the option for the average rate where the latter is more favourable — an option to be exercised each year in the annual return, with substantiation of worldwide income.

Must salaries and pensions subject to withholding tax be reported?

Yes, in most cases. Income subject to the specific non-resident withholding tax (French Tax Code art. 182 A for salaries, treaties for pensions) must generally be included in the annual 2042 NR return, on the dedicated lines. The withholding is credited against the final tax. Part of it may be final depending on the threshold and the type of income.

Do non-residents still pay social levies?

Yes, on French real-estate income and real-estate capital gains. But since the de Ruyter case law, persons affiliated to a social security scheme in the EEA or Switzerland (and, depending on the case, in the United Kingdom) are exempt from CSG/CRDS. The 7.5% solidarity levy remains due. Those not affiliated to the EEA/Switzerland remain liable for the full amount (17.2%).

What is a "Schumacker non-resident"?

A doctrine arising from the CJEU Schumacker case law (1995): a non-resident whose French-source income represents the bulk of their worldwide income may benefit from a tax treatment aligned with that of residents — notably for deductible expenses, reductions and tax credits. A mechanism to be examined carefully for European expatriates whose main source of income is France.

Why be assisted by a tax lawyer?

Because the stakes go beyond completing the form: characterisation of income (French or foreign source), reading of tax treaties, trade-off between the minimum rate and the average rate, management of withholding taxes and their crediting, verification of residence status (French Tax Code art. 4 B + treaty criteria), and where applicable the challenge of social levies unduly applied. An optimised return may represent several thousand euros in annual savings.

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A non-resident tax return to prepare?

Set out the context (country of residence, types of French income, social security scheme) — to assess the minimum-rate / average-rate trade-off, verify the correct application of the treaties and arrange an initial consultation within 24 hours.

Contact the firm See the International taxation practice
Jonathan Bensaid, avocat fondateur

Written by

Me Jonathan Bensaid, avocat fiscaliste, fondateur du cabinet Bensaid Avocats, inscrit aux Barreaux de Paris & Genève.

© BENSAID Avocats — The information published on this site does not constitute legal advice. French Tax Code (CGI) art. 4 A, 4 B, 155 B, 167 bis, 182 A, 197 A, 244 bis A. CSS art. L. 136-7. CJEU 26 Feb. 2015, de Ruyter. CJEU 14 Feb. 1995, Schumacker. Editorial update: April 2026.