The French government is tightening rules that have long allowed French taxpayers to lower their burden by relocating to neighboring Belgium. A new double‑taxation treaty, which takes effect on 1 January 2023, introduces residency‑based conditions that make Belgium far less attractive for French “tax‑exiles”.
How the treaty changes the landscape
- Residency test – To benefit from Belgium’s low‑tax regime, a person must have lived in France for at least six of the ten years preceding the move to Belgium. If this condition is not met, French tax authorities can still levy French tax on profits earned from French‑registered companies.
- Tax rates applied – Under the treaty, France can tax:
- 12 % on large shareholdings in French companies, and
- Over 25 % on other profits derived from French assets.
- Impact on French expatriates – High‑profile French individuals who previously moved to Belgium to escape France’s higher rates (e.g., the case of Gérard Depardieu) will now face French taxation unless they satisfy the six‑year residency rule.
Why this matters beyond Belgium
- Precedent for other jurisdictions – France’s approach mirrors earlier restrictions on moving to Monaco, where French residents could not fully exploit Monaco’s zero‑personal‑income‑tax regime. The Belgian treaty suggests a broader trend toward limiting “tax‑haven” options for French citizens.
- Potential EU‑wide moves – While a Europe‑wide “block‑wide” tax is unlikely in the short term, individual EU states could adopt similar residency‑based measures, especially if they perceive a loss of tax revenue from outbound high‑income residents.
- Comparison with citizenship‑based taxation – Unlike the United States, which taxes citizens regardless of residence, France’s new rules are based on where a person has lived and paid tax. However, the effect is similar: reduced freedom to relocate without tax consequences.
Practical considerations for high‑tax residents
- Timing – Those currently residing in France who are considering a move to Belgium should act before the treaty’s start date, or ensure they meet the six‑out‑of‑ten‑year residency requirement.
- Alternative low‑tax jurisdictions – If Belgium is no longer viable, other jurisdictions with favorable tax regimes include:
- Mauritius – French‑speaking, low corporate and personal tax rates.
- Portugal, Italy, Greece – Offer “golden visa” or tax‑incentive programs for foreign investors and returning residents.
- Residency planning – Establish clear residency records (e.g., utility bills, tax filings) to demonstrate compliance with any future residency tests.
- Risk of retroactive taxation – Be aware that moving without satisfying the new criteria could trigger back‑taxes on previously earned French‑source income.
Outlook
France’s treaty with Belgium signals a willingness to close off traditional tax‑avoidance pathways. While larger EU economies may be slower to adopt comparable measures, the precedent could encourage other high‑tax states to introduce residency‑based restrictions. High‑net‑worth individuals should monitor legislative developments, assess the durability of any tax‑friendly jurisdiction, and consider diversifying assets across multiple jurisdictions to mitigate the risk of sudden policy changes.
