American citizens moving to France: what taxes? (2024)

• 23 February, 2023
• Durée de lecture

Many American citizens decide to expatriate to France, particularly for their retirement. The purpose of this article is to clarify the French taxation of US-source income of US citizens.

1 – IN WHICH COUNTRY WILL MY US PENSIONS BE TAXED?

France and the United States have signed a tax treaty to avoid double taxation. Under this convention, retirement pensions and payments recognized as such are taxable only in the “payer” country. Thus, US-source pensions are taxable only in the United States.

For the purposes of Article 18 of the Tax Convention, France recognizes :

• Qualified plans covered by Section 401 (a) of the Internal Revenue Code;
• Individual retirement plans (including individual retirement plans that are part of a simplified employee retirement plan that meets the conditions of section 408 (k), retirement individual accounts, individual life annuities and accounts covered by section 408 (p));
• Qualified plans covered by section 403 (a) and those covered by section 403 (b), are generally considered to correspond to a pension plan constituted, established and recognized for tax purposes in France.

2 – IN WHICH COUNTRY WILL MY US PROPERTY INCOME BE TAXED?

Once again, France and the United States have signed a tax treaty to avoid double taxation. The rule under the treaty is taxation in the country where the property is located, i.e. the United States.

3 – WHAT ABOUT OTHER REVENUES?

For the most part, the treaty neutralizes taxation in France on U.S.-source income received by U.S. citizens resident in France. It is therefore strongly recommended that you consult your tax advisor in order to clearly determine the place of taxation for each category of income, and to avoid errors in reporting.

4 – DO YOU HAVE ANY TAX OBLIGATIONS IN FRANCE?

Yes, as a French tax resident you are required to declare all your worldwide income. Article 24 of the same tax treaty sets out the procedures for avoiding double taxation. Income that is taxable only in the United States must be declared on the French tax return, but taxation in France is offset by a tax credit equal to the amount of the corresponding French tax.

Please note that this analysis is applicable as of today, and does not take into account any changes in the law brought about by the Finance Acts published each year.

If you have any further questions, please do not hesitate to contact us and we will be happy to assist you.

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Circular written by Maud MESTRE – Tax Manager at Ruff & Associés