Amendment I-CF380: a universal tax contrary to EU law and tax treaties

On 21 October 2025, the Finance Committee of the French National Assembly adopted amendment I-CF380 to the 2026 finance bill. Tabled by the La France Insoumise group, the text sought to introduce a "targeted universal tax" applicable to taxpayers leaving France for low-tax countries. The stated objective: curbing tax-driven emigration by maintaining, for ten years after departure, a French tax liability on worldwide income. Behind the political headline, however, lies a fragile construction that collides with both EU law and the international treaty network.

I. The mechanics of amendment I-CF380

Amendment I-CF380 targets two categories of taxpayers. First, French nationals, regardless of how long they previously resided in France. Second, persons who resided in France for at least three years during the ten years preceding their departure, regardless of nationality. This second category matters greatly: it captures foreign executives on assignment, international entrepreneurs and investors who built temporary tax ties with France.

For the universal tax to apply, three cumulative conditions must be met:

• A connection with France: either French nationality, or at least three years of French residence within the last ten years;
• High income: annual income above EUR 230,000 — five times the annual social security ceiling;
• A low-tax destination: relocating to a country whose taxation is more than 40% lower than France's.

The mechanism is a differential tax. The taxpayer remains taxable in France on worldwide income for ten years after departure. A tax credit is granted for tax already paid in the country of residence. In practice, the taxpayer pays the difference between the theoretical French tax and the actual foreign tax. The mechanics resemble the United States' citizenship-based taxation, but with a broader reach, since it also covers former non-French residents.

Illustration. Take Marc, a French entrepreneur who moves to Dubai after selling his start-up. His annual income is EUR 500,000. The theoretical French tax would be approximately EUR 200,000, given the 45% top marginal rate and social levies. In Dubai, there is no personal income tax. Under amendment I-CF380, Marc would therefore owe France EUR 200,000 per year for ten years — a total tax burden of EUR 2 million — even with no remaining economic connection to French territory.

II. The major legal incompatibilities

A. A clear breach of EU law

The fundamental freedoms enshrined in the Treaty on the Functioning of the European Union — free movement of workers (Art. 45 TFEU), freedom of establishment (Art. 49) and free movement of capital (Art. 63) — prohibit any national measure that deters departure or mobility within the Union. Amendment I-CF380 produces an obvious deterrent effect: an executive accepting a transfer to the Netherlands, or an entrepreneur setting up a subsidiary in Portugal, would remain taxable in France for ten years. Such a constraint infringes free movement, as the Court of Justice held in de Lasteyrie du Saillant (ECJ, 11 March 2004, Case C-9/02), which struck down the French exit tax of the time precisely because it discouraged taxpayer mobility.

The Court further specified, in National Grid Indus (CJEU, 29 November 2011, Case C-371/10), that any exit tax must comply with the principle of proportionality: it must target artificial arrangements, be limited in time and offer deferral guarantees. Amendment I-CF380 disregards these requirements: ten years of universal taxation, with no possibility of early release, amount to a manifest and disproportionate restriction.

Moreover, the irrebuttable presumption that any move to a State whose taxation is 40% lower constitutes tax avoidance runs contrary to the Thin Cap Group Litigation case-law (ECJ, 13 March 2007, Case C-524/04), which requires that the taxpayer be able to demonstrate that the transfer reflects genuine economic reasons. The French mechanism thus erects a generalised suspicion of abuse into a principle — incompatible with EU law.

B. A breach of international tax treaties

France's treaty network, built on the OECD Model Convention, rests on the principle of exclusive residence: a taxpayer can only be tax-resident in one State at a time, and only the State of residence may tax worldwide income. The treaties signed by France allocate taxing rights precisely: salaries, dividends, capital gains. Amendment I-CF380 upsets this balance by purporting to tax income whose taxing rights belong exclusively to the State of residence.

The saving clause "subject to tax treaties" solves nothing; it is, rather, an admission of legal powerlessness. In virtually every relevant case (Switzerland, Belgium, Portugal, Singapore, the United Arab Emirates, Malta, and so on), the treaties prohibit any French taxation of foreign-source income. The amendment would therefore be inapplicable in more than 95% of real-world expatriations.

Nor does the tax-credit mechanism eliminate double taxation: diverging tax bases, income exempt abroad, or French social levies not covered by the treaties. Residual taxation would be unavoidable. Finally, renegotiating France's tax treaties to allow such an extension of taxing rights belongs to diplomatic fiction: each negotiation takes years, and no attractive State will agree to weaken its tax sovereignty.

III. Conclusion

Amendment I-CF380 would be inapplicable within the European Union because of the free-movement rules, and in virtually all treaty countries because of the primacy of tax treaties (Art. 55 of the French Constitution). The few non-treaty, low-tax States account for a negligible fraction of real expatriations. The tax yield would be nil; the administrative and litigation costs, considerable.

Economically, the text would send a disastrous signal: that of a country prepared to disregard EU law to satisfy an ideological reflex. It would create major legal uncertainty for taxpayers and undo a decade of efforts to restore France's attractiveness. The fight against tax avoidance deserves better than a symbolic measure doomed from the outset. The tools exist: targeted control of artificial arrangements (French Book of Tax Procedures, Art. L. 64), a measured extension of the exit tax, automatic exchange of information, OECD and G20 cooperation.

In sum, amendment I-CF380 violates the free-movement guarantees of the TFEU and the principle of exclusive residence derived from the OECD Model. Given its excessive reach, disproportionate duration and incompatibility with the treaty network, it would be inapplicable in virtually every situation. A reform grounded in tax justice cannot exist without respect for the law. The intention may be laudable; the method, here, is legally flawed.

Keywords: targeted universal tax — amendment I-CF380 — exit tax — EU law — CJEU — tax treaties — OECD Model — tax-driven emigration — proportionality — Article 55 of the French Constitution — L. 64 LPF.