Can I reinvest lump sum to avoid French tax?

Reader question: I have just received a French-taxable lump sum from a foreign pension. I have changed a large chunk of this into euros. I am now worried that my 2026 revenues will rise into the 41% tax band. Is it possible for me to reinvest some of my money to avoid this high tax?

Your pension lump sum income will be assessable for French income tax from the date when you received the money into a bank account, so, no, it does not change the tax treatment of the lump sum received if you reinvest it into something else.

Nor does the date when it was converted have any bearing, though sums declared should be converted to euros using the rate on the date when it was received.

With regard to one-off sums received from foreign pensions, there are several possible options.

Some lump sums from foreign private pensions are eligible to be treated in a similar way to lump sums taken from a French ‘PERP’ private pension scheme, which is to say they are taxed at a flat 7.5% income tax rate (plus French social charges, where applicable).

Where this option exists and is taken up, the 7.5% tax is applied separately to this income and is definitive, and the income will not also be added to other taxable income assessed under the standard progressive scale.

Another option is to make use of the ‘Quotient’ system.

Not to be confused with the ‘family quotient’, which reduces the tax bills of larger families compared to smaller ones, this system is designed for exceptional one-off income and aims to reduce the impact of such sums on the taxpayer moving into higher tax bands.

Income subject to the Quotient should be declared in a specific box (0XX), not in the standard pension income boxes.