Consequences of lockdown and travel restrictions measures: no special treatment for French business travellers and inbound expatriates

Posted on 8th January, 2021

Estimated reading time 4 minutes

As explained in our Q4 2020 newsletter, France entered into various amicable agreements with bordering countries to neutralize the tax consequences of COVID-19 restrictions for cross-border employees. While the application of these agreements was extended until September 30, 2021, France confirmed that no comparable provisions would be available for French tax residents benefiting from tax exemptions based on days travelled outside of France for professional purposes.

French tax law provides for two specific tax regimes allowing French tax residents to benefit from tax exemption on part of their salaries, provided certain conditions are met:

  • Section 81A I of the French tax code provides that French tax residents who spend more than 120 days abroad in the interest of their employer (which may reside in France or in another EU Member State) to carry out commercial prospection services may be exempt on the portion of their salaries corresponding to the days worked abroad;
  • The same exemption applies for employees working on assembly, construction or resource extraction sites and spending more than 183 days outside France during the year;
  • Finally, inbound expatriates benefiting from the provisions of section 155 B of the French tax code are fully exempt on the salaries corresponding to days worked outside of France.

While cross-borders employees have been entitled, for 2020 and 2021, to use the deeming provisions included in the amicable agreements, French tax residents with cross-border duties who benefited from sometimes rather large tax exemption on their salaries on the basis of the above-mentioned provisions were hoping for a gesture from the French government to grant them a special tax relief in these particular years.

The French government however confirmed, in a Ministry letter dated 27 April 2021, the minimum periods of work outside of France required to benefit from the tax exemption under the special regimes are “not to be adjusted because of the COVID-19 epidemic and the measures taken to deal with it.”

Such position is based on the fact that the exemption is justified by the importance of the employee's actual travel abroad and the expenses incurred by this expatriation. According to the letter, the exemption “therefore concerns only the remuneration paid to the employee in respect of such travel. Exempting remuneration that does not correspond to an activity actually carried out abroad would therefore not be justified”.

The letter further adds that it remains possible for the employer to grant employees who did manage to travel, but not sufficiently to reach the 120- or 183-days threshold, an additional compensation based on the actual number of days worked abroad, which, provided the conditions of section 81 A II of the tax code are met, would be exempt from personal income tax up to 40% of the employee’s total compensation.

This does not, however, really address the issue for employees in such situation, who generally do not receive additional compensation for the days spent abroad.

For further information or to discuss any of the issues raised, please contact Stéphanie Le Men-Tenailleau at

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