🇷🇪 Réunion

Highlights

Residency Programs (0)

Taxation overview

Tax system

Residence-based taxation

Countries with a residence-based taxation levy tax from your worldwide income for as long as you're a tax resident of that country. This is the most common taxation system.

Tax residence definition varies from country to country. General rule is you're a tax resident of a country if you spend 183 days or more in it in a year.

Tax summary

Personal income tax (PIT) (Impôt sur le revenu, IR)

Progressive tax up to 45% above €157,806 ($187,845). Plus surtax and social surcharges

Total income is split according to family status (i.e. 'the more children you have, the less tax you pay’). Under income-splitting rules, total taxable income is divided by the number of shares awarded to the taxpayer: one share for a single person, two shares for a married taxpayer without children, half a share for each of the first two dependent children, and one full share for the third and each subsequent child. Thus, the income of a married taxpayer with three children is split into four.

Corporate income tax (CIT) (Impôt sur les Sociétés, IS)

28%. Plus a social contribution of 3.3% assessed on the amount of CIT. For corporations having revenue in excess of €250,000,000 ($297,588,226), 31% rate applicable to tax result in excess of €500,000 ($595,176).

Value-added tax (VAT) (Taxe sur la Valeur Ajoutée, TVA)

20%

Social security contributions

The French social security system is composed of various schemes providing a wide range of benefits. On average, the employer's share of contributions represents 45% of the gross salary. On average, the employee’s share of French social contributions represents approximately 20% to 23% of the remuneration. However, since the contributions are assessed using various ceilings, the average rate will decrease as the gross salary increases.

Withholding tax (WHT)

• Resident WHT rates: Not applicable on Dividends, Interests and Royalties
• Non-resident WHT rates: 30% on Dividends, 0% on Interests, 33.33% on Royalties

Capital gains tax (CGT) (La Flat Tax)

• As Corporation: subject to standard Corporate income tax (CIT) rate
• As Individual: 30%. Plus exceptional income tax for high earners at 4%

Net wealth/worth tax (Import sur la Fortune Immobilière, IFI)

Progressive tax up to 1.5% above €10,000,000 ($11,903,529) on Real estate assets

Individuals who qualify as tax residents of France on 1 January of a given year are liable to tax on their worldwide real estate properties, unless otherwise provided by a tax treaty.Non-residents of France are only liable to the tax on their real estate properties located in France. IFI is due if net taxable wealth exceeds €1,300,000 ($1,547,459) (2020 tax year) on 1 January of that year.

Inheritance and Gift tax

No inheritance tax is due for inheritance between spouses (or partner of a Pacte civil de solidarité [PACS]) and for inheritance between brothers and sisters living together under specific conditions.

Progressive tax rates are applicable after a rebate of €100,000 ($119,035) when beneficiaries are direct dependants.

Between non-related parties, the rate is 60% after an allowance of €1,594 ($1,897) granted to each beneficiary. This allowance is not applicable in case of gifts.

Controlled foreign companies (CFCs)

• Controlled by Corporation: Yes. French corporations are required to include in their taxable income profits made by their more than 50% owned foreign subsidiaries and branches. The CFC rules are only applicable if the foreign legal entity is in a country with a privileged tax regime. A privileged tax regime is a tax regime in which taxable income of a foreign entity is at least 50% or lower of the income tax liability that would have been incurred in France.
• Controlled by Individual: Not provided

Disclaimer: This tax summary is for information only and shall not be construed as tax advice. Every situation is different. Should you consider moving to Réunion, we highly recommend you liaise with a local tax advisor to confirm your future tax regime.

Year of Assessment

YA 2021