From France to Cyprus (2026): CSG/CRDS, Centre des Intérêts Économiques & 183-Day Exit Playbook

The 2026 French tax landscape is harder than the 2025 one, and harder again than 2024. The Loi de financement de la Sécurité sociale 2026 raised CSG on financial capital income by 1.4 percentage points from 1 January 2026, pushing total social contributions on dividends and interest from 17.2% to 18.6%. The Contribution Différentielle sur les Hauts Revenus became a permanent 20% floor on high earners. The exit tax, once a paper tiger for EU moves, is a live filing obligation with security requirements. French founders who were on the fence in 2023 about Cyprus have increasingly taken the decision in 2025 and 2026. This guide walks through the French side of the move and the Cyprus landing.

Why French founders are leaving in 2026

The driver is usually one of: a founder approaching exit who faces a PFU on sale proceeds plus CDHR top-up on the year of sale; a long-standing business owner whose accumulated portfolio is now paying 18.6% social every year on dividends and interest whether or not they are distributed; a family whose real estate sits above €1.3 million and has paid IFI for a decade; a remote-working professional who no longer needs a Paris base. The 2026 CSG hike was modest in absolute points but meaningful in signalling. The CDHR was presented as exceptional in 2024; it was made permanent in 2025. The direction of French personal taxation on capital is up, not down.

The tax gap: France vs Cyprus in 2026

PFU + the 2026 CSG hike to 18.6%

The Prélèvement Forfaitaire Unique is the default flat tax regime for dividends, interest and most securities gains held by French-resident individuals. It combines a 12.8% income tax component with the social contributions layer. Until the end of 2025 the social layer was 17.2% — CSG 9.2%, CRDS 0.5%, solidarity levy 7.5%. From 1 January 2026 the CSG on capital income rises to 10.6%, a 1.4-point increase, taking total social contributions on financial investment income to 18.6%. The combined PFU is therefore 31.4% from 1 January 2026.

The 18.6% rate applies to financial products — dividends, interest on taxable bank deposits and bonds, and securities gains outside the PEA. A carve-out keeps 17.2% for real-estate rental income, real-estate capital gains, life insurance (assurance vie) and certain regulated savings products such as the PEL. The dual-rate structure means a portfolio producing dividends and a rental property producing rent face different social layers from 2026 onwards.

CEHR and the new 20% CDHR floor

The Contribution Exceptionnelle sur les Hauts Revenus is the classical high-earner surtax: 3% on reference income between €250,001 and €500,000 (€500,001 – €1,000,000 for a couple), 4% on the excess. It sits on top of the progressive scale and is unaffected by the PFU election.

The Contribution Différentielle sur les Hauts Revenus, effective for 2024 income onwards, ensures a 20% minimum effective tax rate on reference income above €250,000 single / €500,000 couple. Where the effective rate — the total of income tax plus CEHR divided by reference tax income — falls below 20%, the taxpayer tops up to 20%. For a founder with large PFU-taxed dividends, the PFU's 12.8% income-tax component typically produces an effective rate well below 20% on reference income; the CDHR catches that up. It is a structural response to the flat-tax arbitrage and it is, in practice, the binding constraint for many French entrepreneurs considering relocation.

The French exit tax on founders

The exit tax under article 167 bis of the General Tax Code taxes unrealised gains on qualifying securities when a French resident transfers tax residence abroad. The eligibility gateway:

• French tax-resident for at least 6 of the 10 years immediately preceding the move.
• Holding either a single direct or indirect stake representing 50% or more of a company's profits, or an aggregate qualifying portfolio worth at least €800,000 on the departure date.

The taxable base is the unrealised gain — fair market value at departure minus acquisition cost. Tax is charged at PFU rates unless the progressive-rate option is taken. Payment is deferred automatically for moves to the EU or EEA (no collateral required in most cases), and suspended for moves elsewhere on application with security. The tax is cancelled (dégrèvement) if the securities are still held two years after departure where their departure value was below €2.57 million, or five years after where it was €2.57 million or more.

In practice, for an EU move to Cyprus, the exit tax is a filing obligation with an immediate assessment that defers to sale. A founder who holds onto the shares for five years after the Cyprus move sees the assessment cancelled. A founder who sells in year three crystallises the assessment at sale. Annual declarations keep the deferral alive.

IFI: the wealth tax that does not move when you do

The Impôt sur la Fortune Immobilière taxes the net value of French real estate assets held by a tax-resident household above €1.3 million. The scale runs from 0.5% to 1.5% with brackets capped at 1.5% above €10 million. A principal residence benefits from a 30% abatement on its market value.

After a clean move to Cyprus, the household is non-resident for French tax. IFI then applies only to French-situate real estate — a Paris flat, a SCI holding French property, beneficial ownership of French real estate through foreign structures. A non-resident owning no French property pays no IFI. A non-resident keeping a Paris pied-à-terre above the abatement-adjusted threshold continues to pay. Pre-move IFI planning — sale, gift to children, corporate restructuring — is a standard feature of the exit work.

Breaking French tax residence

French residence under article 4 B of the General Tax Code is triggered by any one of four tests. You are resident if you meet any one:

• Foyer — your household (spouse and school-age children) is in France.
• Principal place of stay — you spend more time in France than in any other single country (commonly referenced as 183 days, but the test is comparative, not absolute).
• Principal professional activity — your main professional activity is in France.
• Centre of economic interests — the main centre of your investments, business and sources of income is in France.

The centre of economic interests is the hardest test to break for a founder who keeps a French operating company. An SAS still running from a Paris office with French staff, French customers and French director presence is prima facie the taxpayer's economic centre even if the taxpayer spends 300 days in Cyprus. The answer is usually to restructure: either sell the French company, move its effective management to Cyprus (with substance), or interpose a Cyprus holding and migrate the personal capital.

Evidence package for a French leaver: Cyprus tenancy or deed, Yellow Slip, Cyprus bank account, Cyprus health cover, children enrolled in Cyprus schools, spouse resident in Cyprus, termination of French primary residence or durable letting, closure of French professional registrations that are no longer needed, French tax filings as non-resident from the year after departure. Build the pack contemporaneously.

The France–Cyprus treaty: 1981 still in force

The 1981 France–Cyprus Convention remains the operative treaty in April 2026. A replacement treaty was signed on 11 December 2023 and ratified by Cyprus on 22 December 2023, but French ratification is outstanding. Until France completes its parliamentary process and the instruments of ratification are exchanged, the 1981 treaty governs. The treaty allocates dividend withholding with a 10% or 15% source cap depending on the holding, interest with a 10% source cap (further reduced by the EU Interest-and-Royalties directive where applicable), and capital gains on shares taxable only in the seller's state of residence with a real-estate-company exception. The dual-resident tie-breaker follows the OECD cascade — permanent home, centre of vital interests, habitual abode, nationality, mutual agreement.

Corporate and SCI considerations

French corporate income tax (IS) is 25% on the standard rate and 15% on the first €42,500 of taxable profit for small and medium enterprises meeting the turnover and control tests. A SAS generating €1 million profit therefore pays roughly €244,000 in IS (15% on the first €42,500, 25% on the rest). A Cyprus company on the same profit pays €150,000 at the new 15% rate. The delta is meaningful but requires a real business move: the Cyprus company must have effective management in Cyprus, real activity, and cannot be a paper holder for a France-run operation without triggering French permanent establishment and place-of-effective-management issues.

SCIs holding French real estate are transparent for French tax and remain transparent after the owner moves. Gains on sale of SCI shares by a non-resident are taxed in France under the real-estate-rich company carve-out in most treaties. Selling the underlying property and winding down the SCI before emigration is often cleaner than keeping the structure alive from Cyprus.

Landing in Cyprus: non-dom and the 60-day rule

A French national moving to Cyprus is a Cyprus non-dom by default. The non-dom regime exempts worldwide dividend, interest and — in most cases — rental income from the Special Defence Contribution. The base window is 17 tax years, extended to 22 under the reform effective 1 January 2026 with an optional paid extension to 27. See our non-dom guide.

Residence is established under either the 183-day rule or the 60-day rule. The 60-day rule allows a Cyprus tax resident to hold real mobility across the Schengen area and the UK without tipping back into French residence, provided no other country becomes primary. See the 60-day guide.

A 12-month execution timeline

Mistakes French founders make

1. Believing the new treaty is already in force. As of April 2026 it is not. Plan on the 1981 treaty and monitor ratification.
2. Keeping the family in France for the school year. Foyer test catches you; spouse and children in France is prima facie French residence.
3. Running the Cyprus holding from Paris. Centre-of-economic-interests test re-anchors residence in France.
4. Thinking EU deferral means zero exit tax. Deferred, not waived. A sale in year 3 crystallises the pre-departure gain.
5. Missing the annual continuation declarations. Late filings can lose the deferral and trigger early collection plus penalties.
6. Ignoring CDHR in the year of sale. A founder with a €20 million PFU sale plus CEHR at 4% can still face a CDHR top-up to the 20% floor. Model it.
7. Forgetting IFI on French-situate real estate. Leaving does not clear IFI on a Paris flat retained for visits.