If you’re an American dreaming of living in France, understanding French taxation is crucial. Whether you’re relocating or investing, this article will help you get more inside in French taxation for Americans.
Staying in France: Visa Requirements and More
As an American, you can stay in France for up to three months without any documentation. For longer stays, you’ll need a visa. France offers various types of visas, including student, long-stay, work, and talent visas.
To determine your visa requirements, use the simulator on the France-visa website. For personalized advice, feel free to contact us for recommendations from our network of specialists.
Becoming a French Tax Resident
Determining your status as a French tax resident is the first step. French tax residents are required to declare all worldwide income, including income from American sources. Not sure about your residency status? Watch our video on tax residence or use our free simulator to clarify your situation.
The French-American tax treaty is designed to prevent double taxation, ensuring that most American income remains taxable in the US. When you declare your worldwide income in France, you’ll often receive a tax credit equal to the tax paid in the US or the French tax, whichever is lower. This means that many US citizens living in France pay little or no additional French income tax.
Your First French Tax Return
Your initial tax return in France must be submitted in paper format and mailed to your local tax center. Subsequent returns can be filed online. The first return is typically due around May 23 of the following year. Expect your first tax assessment between August and December, as the initial process may take some time.
Taxation of American Source Income in France
You might now wander how your specific income is taxed in France. We have listed different categories of income below:
US Salaries
If you’re working for an American employer, your salary is taxable in France unless the employment is physically carried out in the US. In such cases, it remains taxable in the US.
US Pensions
Retirement pensions from the US are always taxable in the US, providing peace of mind for your golden years.
US Dividends and Interest
Dividends and interest are generally taxable in France, with the US applying a withholding tax of up to 15%. However, for US citizens, these incomes remain fully taxable in the US.
Capital Gains
Real Estate: Capital gains from US real estate are taxable in the country where the property is located – the US.
Other Capital Gains: Gains from other types of assets are taxable in your state of residence. If you’re a French resident, these are taxed in France.
US Rental Income
Income from US rental properties is taxable in the US, not in France.
US Business Income
Freelance Income: If your US-based business has no fixed base in France, profits remain taxable in the US and are declared in France with a tax credit.
S-Corps and: For fiscally transparent entities like S-Corps, as long as there’s no fixed base in France, profits are taxable in the US and declared in France with a corresponding tax credit.
Partnerships: Profits from a partnership benefit from a tax credit equal to 50% of the amount received, with the remainder taxable in France.
Practical Advice and Support
Navigating the French tax system can be complex, but you don’t have to do it alone. Our team of professionals is here to provide guidance and support. Whether you have specific questions or need assistance with your relocation to France, we’re ready to help make your transition as smooth as possible.
Becoming a French tax resident doesn’t have to be overwhelming for American citizens. Thanks to the French-American tax treaty, your tax burden can be balanced, allowing you to enjoy your new life in France. For further assistance, feel free to contact us. We’re here to help you with your exciting journey!