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.
Sequencing a Move: What Belongs Before the Move and What Belongs After
Relocating into a French tax framework front-loads the planning. A great deal of it has to happen before arrival and cannot be replicated afterwards, because once you are resident, decisions are assessed under the rules of your new residence — and options that were open a month earlier have simply closed.
Work through the following before you go, with advice on both sides.
Establish the date you will cease to be resident where you are now, and how you will evidence it. This is the foundation for everything else and it is not established simply by leaving. Keep contemporaneous records of movements, accommodation and ties.
Review the portfolio for products that do not travel. Wrappers and reliefs that are efficient in one country are frequently inefficient in another, and some are not recognised at all. The question to ask of every holding is not "is this a good investment" but "is this a good investment to own as a resident of my destination". Where restructuring is indicated, the timing of any disposal relative to the change of residence matters and should be modelled rather than assumed.
Take pension decisions deliberately, not by default. How pension income will be taxed, where, and with what withholding is a question to settle in advance. So is whether any irreversible decision — a transfer, a crystallisation, a change of arrangement — is better taken before or after the move. Irreversible is the operative word.
Deal with property. If you are keeping a home in your current country, understand how it will be taxed while you are away and on eventual sale. If you are selling, the timing relative to your change of residence can materially change the outcome in both countries.
Sort out wills and nominations. A will drafted for one legal system may behave unexpectedly where forced heirship applies. Beneficiary nominations on pensions and policies frequently pass outside a will altogether and are frequently out of date.
Set up banking before you need it. Opening accounts is easier while you still have a verifiable address and existing relationships than it is afterwards from a distance.
Insure before you travel, not on arrival. Confirm what cover applies from the day you land and what is excluded.
And a general principle: do not do any of this on the strength of a summary. The pre-departure year is the point at which advice is cheapest relative to its value.
Buying Property as a New Arrival
For anyone acquiring a home, a few features of a French-system purchase are worth understanding in advance, because the process differs from what British and many other buyers expect.
The transaction is handled through a notary rather than through competing solicitors, and the same notary may act for both parties, although a buyer may appoint their own. The signed preliminary agreement is a substantive commitment rather than an expression of interest, so the conditions written into it — finance, surveys, planning enquiries — are what protect you, and they must be right at that stage rather than negotiated later.
Practical points to establish before signing anything:
- The total acquisition cost, including notarial and registration charges and agency commission, and which party bears each.
- What conditions the preliminary agreement contains, particularly a finance condition if you are borrowing, and what happens to your deposit if a condition fails.
- What the surveys and diagnostics actually cover, and what they do not — commissioning your own additional inspection is often sensible, particularly for an older property or one in an exposed location.
- How the property will be held, and by whom. Joint ownership arrangements have direct consequences for succession, and they are far easier to set correctly at purchase than to change afterwards. Take advice on this before completion, not after.
- Insurance availability and cost for the specific location, including exposure to storms and other natural hazards, and what is excluded.
- Running costs, including local property taxes and any co-ownership charges, which continue regardless of occupancy.
Where a purchase is financed, take advice on the currency of the borrowing relative to the currency of your income. A mortgage in one currency serviced from income in another is a long-duration exposure that can become uncomfortable.
Healthcare and Social Security: Register Early
Access to the French social security healthcare system is one of the genuine advantages of a DOM relocation, and the practical point is that it is not automatic on arrival.
Establish before you travel what route to cover applies in your circumstances — employment, self-employment, retirement or another basis — and what documentation will be required. Registration processes take time, and the interval between arrival and effective cover is a gap that should be bridged deliberately with private insurance rather than left to chance. Confirm what the state system does and does not cover, and whether complementary cover is appropriate for your situation.
For anyone arriving with an existing condition, or with dependants, this is a question to resolve before committing to a move rather than after it.
The Mauritius Interface
The proximity noted above is a genuine practical advantage and also the point at which compliance risk concentrates.
Where an individual resident in one jurisdiction holds companies, accounts or structures in a neighbouring financial centre, three questions arise and all three should be answered in advance. Are the holdings properly declared where you are resident, including annual declarations that apply whether or not income arises? Where is any company actually managed and controlled — because a structure directed from your kitchen table may be treated as resident where you are, not where it is registered? And does the arrangement have a genuine commercial purpose that you would be comfortable explaining?
Information is exchanged automatically between a wide range of jurisdictions, so the practical assumption should be that anything held offshore is visible. That is not an argument against holding it; it is an argument for holding it transparently and with advice on both sides.
The Uprating Point Is Larger Than One Line Suggests
Of the features distinguishing Réunion from the alternatives a British retiree might weigh, the one most likely to be skimmed is the UK State Pension continuing to be uprated here. Set against destinations where it is frozen — South Africa and Australia among them, as noted above — that is not a detail at the margin of a comparison.
The mechanism is what makes it compound. A frozen pension is fixed in cash terms from the point it is first claimed in a frozen country and never rises, so the gap against an uprated pension opens slightly in year one and considerably by year twenty. Because that income is the inflation-linked element of most retirement plans, losing the link transfers the entire job of keeping pace with prices onto the private provision — which means either a larger fund or a more aggressive one, and neither is free.
Set against that, Réunion is an expensive place to be tax resident. Worldwide income taxation, social charges levied separately from income tax, and a property wealth tax that catches anyone holding substantial real estate. So the comparison is not cheap against expensive. It is a higher lifetime tax cost against an income stream that holds its real value, together with healthcare access through a functioning state system rather than through private cover bought at retirement ages.
Which way that resolves depends on how large the State Pension is within the plan, how long a retirement is being assumed, and how much of the rest is inflation-linked already. It is a modelling question and it deserves numbers rather than instinct.
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, and you may get back less than you invested. Nothing on this page is personal advice.
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.