French Finance Committee Adopts Targeted Universal Tax Through Citizenship-Based Taxation

In a recent move, the French Finance Committee adopts a targeted universal tax system for its citizens.The Committee has approved groundbreaking legislation that could fundamentally change how French citizens abroad are taxed. The newly adopted bill proposes a "targeted universal tax" system that would require French nationals living in low-tax countries to pay the difference to match French tax rates.

The comprehensive legislation would affect French citizens who lived in France for at least three years in the decade before relocating. Unlike the American model of citizenship-based taxation, the French proposal specifically targets residents of countries with tax rates 50% lower than France's. The scope extends beyond basic income tax to encompass inheritance tax, capital gains, and dividends, with provisions for tax credits to prevent double taxation.

Approved Or Not?

The proposal has garnered support from both the left-wing LFI-NFP and the National Rally party, marking a significant shift toward citizenship-based taxation. However, the plan faces opposition from centrists and conservatives, who raise concerns about implementation challenges and fairness to citizens abroad.

The bill now heads to the National Assembly for a final vote, where its fate remains uncertain. Committee Chairman Eric Coquerel acknowledges that implementing the measure would require renegotiating 129 bilateral tax agreements.

If passed, this legislation would represent one of the most significant changes to French tax policy in recent years, potentially affecting thousands of French citizens residing abroad and setting a new precedent for international taxation.