De la France à Chypre

French founders in 2026: PFU at 31.4%, CDHR floor at 20%, IS surtax to 35%, exit tax on any €800k+ portfolio

Q: What's the headline combined tax saving for a €500k-dividend French founder?

A French-resident receiving €500,000 of dividends from a French company pays: 31.4% PFU = €157,000, plus CEHR 4% effective on RFR above €500k, plus potentially CDHR ensuring 20% effective floor on combined IR+CEHR. Round-number annual burden: ~€160–170k. A Cyprus non-dom receiving the same €500,000 from a Cyprus company pays: 0% SDC, 2.65% GESY on the cap (capped at €180k of combined base so ~€4,770), combined ~€5–10k. The €150k+ annual delta compounds materially over the 17-year non-dom window.

Q: My company is SAS with a holding structure. Will the exit tax catch me?

Very likely. Art. 167 bis catches anyone resident 6 of 10 years with either portfolio >€800k or ≥50% of a company. A typical founder with an SAS worth €1m+ is inside both tests. But EU deferral is automatic and without guarantee, and dégrèvement after 5 years for ≥50% holdings removes the liability entirely provided you stay EU-resident and don't sell. The planning challenge is timing dividends and disposal: any substantial dividend during the deferral period can trigger partial collection.

The 2026 Loi de Finances raised CSG to 10.6%, pushing the PFU (flat tax on investment income) to 31.4%. The CDHR (Contribution Différentielle sur les Hauts Revenus) is prolonged and imposes a 20% minimum effective rate on RFR above €250k. The corporate surtax is hardened, taking large-group IS to ~35%. Article 167 bis exit tax triggers on any €800k+ securities portfolio or ≥50% holding. Cyprus is the EU-law route that resolves all five in one move.

✓PFU 31.4% on dividends/CGT (2026) — Cyprus non-dom 0% SDC
✓45% IR top + 4% CEHR + CDHR 20% floor — Cyprus tops at 35%
✓IS 25% + 2026 surtaxe → ~35% effective for large groups — Cyprus 15%
✓Art. 167 bis exit tax on >€800k portfolio or ≥50% — EU automatic deferral into Cyprus

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France vs Cyprus at a glance

All figures verified against primary sources listed at the bottom of the page. Estimates, not legal or tax advice.

What matters	France	Cyprus
Corporate tax	25% standard; ~35% for large groups in 2026 with surtaxe (€3bn+ CA); 15% on first €42,500 for SMEs	15% flat from 2026; IP Box effective ~3%
Top personal income tax	45% above €181,917 + CEHR 3/4% above €250k/€500k + CDHR 20% effective-floor	35% top marginal; 0% up to €22,000
Dividend / interest / CGT (PFU)	31.4% = 12.8% IR + 18.6% prélèvements sociaux (CSG raised to 10.6% in 2026)	Non-dom: 0% SDC for 17 years; 0% CGT on non-RE shares
Wealth tax	IFI on real-estate holdings >€1.3m; top 1.5% on >€10m	None
Social charges on investment income	18.6% prélèvements sociaux (CSG 10.6% + CRDS 0.5% + solidarité 7.5%)	GESY 2.65% capped at €180k combined income base
Exit tax	Art. 167 bis: ≥50% holding OR >€800k portfolio; 31.4% on latent gain; EU deferral automatic	No personal exit tax on shares
IHT / gift tax	Ligne directe 5–45%; unrelated up to 60%; €100k per parent per child abatement; 15-year renewal	No inheritance tax; no gift tax

Why French founders are looking at Cyprus in 2026

PFU up to 31.4% — CSG hike in 2026

The Loi de Financement de la Sécurité Sociale 2026 raised the CSG rate from 9.2% to 10.6%, pushing the Prélèvement Forfaitaire Unique (PFU) from 30% to 31.4% on dividends, interest, fixed-income products, and capital gains on securities. The PFU applies automatically; the option for barème progressif exists but is rarely favourable. Cyprus non-doms pay 0% SDC on dividends and interest for 17 years, plus 2.65% GESY capped at €180,000 of combined income — a €500,000 annual dividend pays €157,000 in France vs €13,250 in Cyprus. Service Public — PFU 2026.

CDHR prolonged — 20% effective floor on high incomes

The Contribution Différentielle sur les Hauts Revenus (CDHR), introduced as a one-shot for 2025 income, has been prolonged by the Loi de Finances 2026 until the French public deficit falls below 3% of GDP. It imposes a minimum 20% effective rate on revenu fiscal de référence (RFR) above €250,000 single / €500,000 couple, combining IR + CEHR. A 95% acompte is due 1–15 December each year. Combined with existing CEHR (3% on €250k–€500k, 4% above) and 45% top IR, high earners regularly face 49%+ effective rates. Cyprus tops at 35% with no equivalent surcharge. impots.gouv.fr — CDHR.

The 2026 corporate surtaxe hits large groups at ~35% effective

Loi de Finances 2026 prolonged and hardened the Contribution exceptionnelle sur les bénéfices: +20.6% additional IS for CA >€1.5bn and +41.2% for CA >€3bn — pushing effective IS to ~30.1% or ~35.3% for affected groups, computed on two-year average IS. For SMEs, the headline 25% and the reduced 15% on first €42,500 remain. Cyprus's 15% flat rate, with ~3% effective under IP Box for qualifying IP income, is a structural advantage. LCP — surtaxe prolongée 2026.

Article 167 bis — the exit tax that catches most founders

French exit tax (Art. 167 bis CGI) triggers on tax-residence transfer abroad when the taxpayer was French resident ≥6 of the last 10 years AND holds securities worth >€800,000 OR ≥50% of a corporation's profit rights. The latent gain is deemed realised and taxed at PFU (31.4% in 2026), plus CEHR/CDHR where applicable. Automatic sursis de paiement (deferral without guarantee) applies for moves to EU/EEA — Cyprus qualifies. The assessment lapses (dégrèvement) after 2 years for smaller holdings or 5 years for larger ones, provided the taxpayer remains EU-resident and does not sell. Art. 167 bis CGI — Légifrance.

IFI on real estate — an annual drag you can't invest around

IFI (Impôt sur la Fortune Immobilière) replaced ISF in 2018 and now taxes only real estate (direct ownership + real-estate component of SCPI/OPCI/insurance contracts). Threshold €1.3m net; barème runs 0.5% (up to €1.3m) / 0.7% (to €2.57m) / 1% (to €5m) / 1.25% (to €10m) / 1.5% above €10m. A global 75% cap (IR+IFI+PS) provides some relief but depends on income profile. Non-residents only pay IFI on French-situs real estate — moving to Cyprus immediately ends IFI on non-French real estate; French real estate can be restructured before departure or held as non-resident going forward. Service Public — IFI.

Leaving France: what breaks residency and what follows you

Residency test (Art. 4 B CGI). You're French-resident if you meet any of: foyer or principal abode in France; professional activity in France (unless accessory); centre of economic interests in France. Breaking residency requires relocating the foyer (family home) AND centre of economic interests abroad. Day-count (>183 days) is typical but not determinative — the family-home test is heavily weighted.

Exit tax (Art. 167 bis CGI). Triggered on transfer of tax residence abroad for taxpayers resident ≥6 of 10 prior years, holding securities worth >€800k OR ≥50% of a corporation. 31.4% on latent gain (PFU rate). Automatic deferral (sursis) for EU/EEA moves without security. Dégrèvement after 2 years (smaller holdings <€2.57m) or 5 years (larger holdings ≥50% or ≥€2.57m). Form 2074-ETD mandatory on departure and annually thereafter until relief.

Social charges (CSG/CRDS) post-departure. CSG/CRDS on investment income ends on genuine non-residency for non-French assets. French-source investment income (French real estate, French company dividends in some cases) may remain subject to reduced social levies.

French-source income post-departure. Non-residents remain subject to French tax on French real estate (IFI + income + CGT), French-employment days, French board-member fees, French pensions (with treaty carve-outs), and French-company dividends (with treaty/PSD reductions).

IHT / gift tax. French IHT applies to worldwide assets of French-resident decedents/donors and to French-situs assets of non-residents. The 15-year rule resets abatements on donations (€100,000/parent/child), so genuinely moving abroad 15+ years before a lifetime gift unlocks the full French abatement again. Cyprus has no inheritance or gift tax — net-neutral for pure Cyprus-Cyprus wealth transfers.

The France–Cyprus double tax treaty

The current in-force DTT between France and Cyprus is the Convention of 18 December 1981. A new treaty was signed on 11 December 2023 modernising the 1981 convention with BEPS anti-abuse provisions; it was approved by the French Conseil des ministres on 28 January 2026 and is going through accelerated parliamentary procedure — entry into force pending mutual notifications. Under the new treaty: 0% dividend WHT where corporate beneficial owner holds ≥5% for 365 days; 15% otherwise. PPT (Principal Purpose Test) applies. Tie-breaker (Art. 4): OECD cascade — permanent home → centre of vital interests → habitual abode → nationality → competent authority. Separately, the EU Parent-Subsidiary Directive (2011/96/EU) provides 0% WHT for intra-group French→Cyprus dividends with ≥10% holding for ≥24 months, independently of the treaty.

FAQs

What's the headline combined tax saving for a €500k-dividend French founder?

A French-resident receiving €500,000 of dividends from a French company pays: 31.4% PFU = €157,000, plus CEHR 4% effective on RFR above €500k, plus potentially CDHR ensuring 20% effective floor on combined IR+CEHR. Round-number annual burden: ~€160–170k. A Cyprus non-dom receiving the same €500,000 from a Cyprus company pays: 0% SDC, 2.65% GESY on the cap (capped at €180k of combined base so ~€4,770), combined ~€5–10k. The €150k+ annual delta compounds materially over the 17-year non-dom window.

My company is SAS with a holding structure. Will the exit tax catch me?

Very likely. Art. 167 bis catches anyone resident 6 of 10 years with either portfolio >€800k or ≥50% of a company. A typical founder with an SAS worth €1m+ is inside both tests. But EU deferral is automatic and without guarantee, and dégrèvement after 5 years for ≥50% holdings removes the liability entirely provided you stay EU-resident and don't sell. The planning challenge is timing dividends and disposal: any substantial dividend during the deferral period can trigger partial collection.

Does the new 2023 treaty affect my planning today?

Not yet — the 1981 treaty remains in force until ratification completes and both states notify. The new treaty will introduce a 5%/365-day corporate threshold for 0% dividend WHT (vs current 1981 treaty's less favourable rates). For planning now, we use the 1981 treaty + EU PSD as the governing framework, with the new treaty as an upgrade once ratified.

I have IFI exposure via French rental properties. Does moving help?

Moving cuts IFI on non-French real estate immediately (you lose French-resident status → IFI applies only to French-situs real estate). French rentals stay in IFI. Options: (1) sell before departure and harvest any BAD losses against other gains, accepting French CGT on the sale; (2) hold as non-resident — IFI still due on French real-estate value; (3) contribute to an SCI and restructure (complex, fact-specific). We model each during the relocation plan.

What about my status in AGIRC-ARRCO and French pension rights?

Past contributions stay credited — you retain pension rights when you retire. Ongoing French employment income + cotisations end on departure. The 1981 treaty (and the 2023 replacement) typically allocates pension taxation to the residence state — so French pension benefits paid to a Cyprus resident are taxed in Cyprus, where the 5% flat option on foreign pensions above €3,420 (or progressive PIT) usually produces a materially lower outcome.

How does the CDHR interact if I move mid-year?

The 2026 LF added technical precisions on CDHR for residency changes and family-situation changes. A mid-year move doesn't avoid CDHR for the French-resident portion of the year — the RFR threshold (€250k single / €500k couple) is applied to the French-period RFR, pro-rated in some cases. We handle the split-year mechanics in the relocation plan. The cleanest move is early in the calendar year so the French-period RFR stays below the threshold.

Page last reviewed April 2026. This page provides general estimates only — not legal, tax or financial advice. No solicitor–client relationship is created by reading it. Personal situations depend on family, source of income and timing. Book a free consultation for written advice.

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