Réunion is a French overseas département and région located in the Indian Ocean, approximately 700 km east of Madagascar. It is an integral part of the French Republic and a full EU outermost region — meaning EU law, French tax law, and the Euro all apply. For British expats and HNW individuals drawn to the Indian Ocean (perhaps with connections to Mauritius, the Seychelles, or South Africa), Réunion offers an unusual combination: French institutional infrastructure, EU membership, tropical lifestyle, and access to a dynamic Indian Ocean trade corridor.
Tax Residency Rules
French tax residency rules apply in full. Residence is established by foyer (home), principal activity, or economic centre of interests in France (Réunion), or by spending more than 183 days in French territory. French tax residence triggers worldwide income taxation.
The UK-France DTA applies to Réunion, providing treaty allocation of taxing rights over UK-source income, pensions, and capital gains. British nationals relocating to Réunion must manage their UK SRT position in the usual way. Breaking UK residence requires meeting the automatic overseas tests or demonstrating sufficient overseas ties under the SRT.
Income Tax and Social Charges
Standard French progressive income tax rates apply: 0% to 45% with the household quotient system. Social charges (CSG/CRDS) at 17.2% apply to investment income. The PFU flat tax of 30% on investment income is available.
Réunion qualifies for DOM Girardin tax incentives — both industrial (investment in productive equipment for local businesses) and social housing. Réunion has one of the most active Girardin markets among the French DOMs, driven by a large social housing deficit and ongoing economic development needs. For high-income French tax residents, Girardin can produce substantial income tax reductions — sometimes at more than 100% of the invested amount on an after-tax basis — but the schemes carry execution and anti-abuse risk. Only reputable, regulated operators should be used.
Capital Gains Tax
French CGT: PFU of 30% on financial gains; real property taper relief regime; principal residence exemption.
Inheritance and Estate Tax
Standard French IHT (droits de succession): children receive €100,000 per-child allowance; spouses/PACS partners are exempt; rates up to 45% (or 60% for unrelated beneficiaries) on amounts above allowances. Réserve héréditaire applies. Assurance-vie (life insurance contracts with named beneficiaries) remains the principal estate planning vehicle.
Wealth Tax (IFI)
French IFI applies to worldwide real property above €1.3m (net of debt). Réunion has an active real estate market — both residential in Saint-Denis and Saint-Pierre, and in the upmarket volcanic highlands (Cilaos, Salazie). HNW residents with significant real estate holdings will face IFI.
UK Pension Implications
As a French DOM, Réunion preserves UK State Pension uprating under the France-UK reciprocal social security arrangement. UK State Pension recipients living in Réunion receive annual increases — unlike residents of non-EU countries such as Australia or South Africa where the pension is frozen.
UK private pension income is subject to the UK-France DTA; generally taxable in France for French residents with credit for UK withholding. UK SIPP continuation is the norm for British expats.
Banking Environment
French metropolitan banking infrastructure operates in Réunion. The Euro is the currency. Crédit Agricole de la Réunion, BRED, BNP Paribas, and Caisse d'Epargne all have local branches. For HNW private banking, residents use French private banks or Luxembourg-based institutions. Réunion's proximity to Mauritius — one of Africa's leading offshore financial centres — also makes cross-border Indian Ocean planning practical.
Investment Climate
Réunion's economy is driven by public sector employment (supported by French government transfers and EU structural funds), tourism, agriculture (sugar cane, vanilla), and construction. The island has a young and growing population; its GDP per capita is significantly below metropolitan France but above most of its Indian Ocean neighbours.
Investment opportunities include:
- Girardin schemes: as noted, active and relevant for high French income tax payers
- Real estate: residential market driven by housing deficit; tourism property in coastal areas
- Indian Ocean trade: Réunion's strategic location makes it a potential hub for Indian Ocean commerce, fintech, and logistics businesses operating within EU/French regulatory frameworks
Cost of Living Context
Réunion is more expensive than neighbouring Indian Ocean islands (Mauritius, Madagascar) but similar to the French Caribbean DOMs. French public services — healthcare, education — are available to residents. The island has a high standard of healthcare for an Indian Ocean location. Living costs are driven up by import dependence; fresh produce from local agriculture is relatively affordable.
Social Security
Full French social security applies. EU freedom of movement (for EU citizens) and French citizenship status for long-term DOM residents is relevant for EEA nationals; British nationals post-Brexit have different rights and should take specific advice on social security entitlement.
Key Compliance Issues for Expats
Worldwide income declaration: Standard French DGFiP obligations apply. All foreign income must be declared.
Offshore declarations: Form 3916 declaration required for all foreign accounts and life insurance policies. Penalties for non-declaration are severe.
Proximity to Mauritius: HNW individuals with Mauritius-based structures (Global Business Companies, offshore accounts) must ensure those structures are properly disclosed to DGFiP and do not create French source income or management-and-control issues.
Exit tax: French exit tax on unrealised gains above €800,000 applies on departure from French residence.
Practical Financial Planning Tips
Girardin due diligence: Réunion Girardin opportunities are widely marketed but vary in quality. Engage an independent adviser to scrutinise the operator, the scheme structure, and the anti-abuse compliance position before investing.
Indian Ocean diversification: Réunion's proximity to Mauritius, Seychelles, and South Africa creates practical opportunities for portfolio diversification across Indian Ocean markets. Ensure any cross-border structures are disclosed and compliant.
Assurance-vie as the default wrapper: For investment savings and estate planning, Luxembourg or French assurance-vie contracts provide flexibility, tax deferral, and beneficiary designation outside the estate.
Healthcare advantage: Access to the French social security healthcare system is a genuine planning benefit — private medical insurance requirements are lower than in non-EU destinations.
Model the full French tax cost: Including social charges and IFI, effective rates can reach 35–50% for high earners with investment income and significant property. Full modelling before relocating is essential.
All information reflects the position as understood in 2026. Rules change; seek current professional advice before making any decision. Investments can fall as well as rise.
How Global Investments Can Help
Global Investments advises on French DOM and Indian Ocean financial planning, combining expertise in UK exit planning, French tax optimisation, and offshore portfolio structuring. Our services include tax modelling, Girardin scheme review, pension planning, and cross-border estate planning. Contact our team for a personalised consultation.
This guide is for general information only and does not constitute financial advice or a personal recommendation. The value of investments can fall as well as rise and you may get back less than you invest. Tax rules, pension legislation, and investment regulations change — always verify current rules and seek advice from a qualified independent financial adviser before making any financial decisions.