French Finance Committee Adopts Bill Aiming to Introduce Citizenship-Based Taxation

France’s Finance Committee has adopted an amendment to establish a “targeted universal tax” requiring French citizens living in countries with lower tax rates to continue paying taxes to France.

The proposed system will require French nationals who lived in France for at least three years within the decade before relocating to pay taxes equivalent to their hypothetical French tax burden.

To prevent double taxation, the amendment outlines a tax credit mechanism for French citizens living abroad. Under this framework, they must pay taxes equivalent to what they would owe in France but receive a credit matching any taxes already paid in their country of residence.

The scope extends beyond income tax to include inheritance tax, capital gains, and dividends.

The amendment, which repeats a proposal from a 2019 fact-finding mission by Finance Committee Chairman Eric Coquerel and Jean-Paul Mattei, applies to low-tax jurisdictions.

Its authors claim compatibility with European law and existing tax conventions.

The LFI-NFP group developed this targeted approach to address international tax competition and prevent tax burden shifts to the working and middle classes.

Unlike the American model of citizenship-based taxation, which affects all U.S. citizens globally, the French proposal targets only those living in countries with tax rates at least 50% lower than France’s.

The National Rally party supports the measure, with RN MP Jean-Philippe Tanguy linking it to citizenship rights and duties.

The former presidential majority and Republicans oppose the measure. Roland Lescure, who represents French citizens in the United States and Canada, cites concerns about implementation and its impact on citizens abroad.

Jean-Paul Mattei from the Democratic Movement (MoDem), a centrist political party, raises questions about the proposal’s structure, noting that citizens living abroad do not access French public services while facing potential taxation.

The amendment aims to address what the government has termed a “problem of lower revenue” while strengthening France’s position in international tax harmonization negotiations.

The measure now requires a National Assembly vote. The government maintains the option to override it using Article 49.3 of the Constitution, though the Assembly’s current composition of 126 RN and 193 NFP deputies could affect this decision.

Coquerel notes the challenge of modifying 129 bilateral tax agreements for implementation. He indicates the text may undergo revisions before the final vote.