This is a div block with a Webflow interaction that will be triggered when the heading is in the view.
Most Americans who settle in France discover the second tax system before the first one lets go. The French déclaration arrives in the spring; the US Form 1040 is still due, worldwide income and all, because the Internal Revenue Service (IRS) taxes US citizens and resident aliens on their foreign income regardless of where they live. The bank account opened to pay the rent, the assurance vie a French adviser suggested, the Livret A the children were given - each has a US reporting consequence that French institutions have no reason to explain.
This article is aimed at US citizens, green-card holders, dual US–French nationals and so-called accidental Americans who live in France, or are planning to, and who hold US retirement accounts, US brokerage assets or Social Security entitlements alongside French savings, pensions or property. It is the map, not the territory: it sets out how the two systems fit together and what each part of the household picture triggers, and it links to separate articles on how France taxes US retirement accounts and one state planning where US estate tax meets French forced heirship. It does not cover moving to the United States from France, which other Skybound Wealth USA articles address.
This article describes how United States federal tax law and the U.S.-France income tax treaty apply to US persons. It summarises French rules only as published by the Direction générale desFinances publiques (DGFiP), for context, and is not French tax, legal or succession advice - those questions belong with a French-qualified professional.
For US federal tax purposes a US person living in France is a US citizen, or a resident alien who meets the green card test or the substantial presence test. The IRS states that such a person is subject to tax on worldwide income from all sources and must report all taxable income and pay taxes according to the Internal Revenue Code. French residence changes nothing about that obligation; it adds a second one.
Four groups sit in this position. US citizens by birth or naturalisation, wherever they now live. Green-cardholders, who the IRS says are US residents for federal tax purposes if they hold that status at any time during the calendar year, even while living in France. Dual US-French nationals, who are US citizens for US purposes and French residents for French purposes at once. And accidental Americans - people who hold US citizenship through birth or a parent and have spent little or no adult life in the United States - whom the Internal Revenue Code treats exactly like any other citizen. A separate article in this series addresses that last group.
The United States taxes its citizens and resident aliens on worldwide income wherever they live. France taxes anyone fiscally domiciled there under Article 4 B of the Code général des impôts (CGI)- a person with their foyer or principal place of stay in France, a principal professional activity there, or the centre of their economic interests there - on worldwide income as well, under Article 4 A. Both claims are made in full.
The bridge is the Convention between the United States and France for the Avoidance of Double Taxation with respect to Taxes on Income and Capital, signed on 31 August 1994 and amended by the Protocols of 8 December 2004 and 13 January 2009 (the U.S.-France Income Tax Treaty). Article 4 decides which country is the treaty residence when both domestic laws claim the person: permanent home, then centre of vital interests, habitual abode, nationality, and finally agreement between the competent authorities. Article 4(2)(a) adds a rule specific to Americans: France treats a US citizen or green-card holder as a US resident for treaty purposes only if that person has a substantial presence in the United States or would be a US resident, and not a resident of a third State, under the permanent-home, centre-of-vital-interests and habitual-abode tests.
Then comes the saving clause. Article 29(2)lets the United States tax its citizens and residents as if the Convention had not come into effect - which is why a US citizen in France still files a fullForm 1040. But Article 29(3)(a) lists what the saving clause cannot override - among others: paragraph 1 of Article 18 (pensions and social security), Article24 (relief from double taxation), Article 25 (non-discrimination) and Article26 (mutual agreement). Knowing which side of that line an item of income fallson is most of the work of cross-border planning.
Relief runs both ways. Under Article 24(1),France takes US-source income that the treaty makes taxable only in the UnitedStates into account when computing French tax, then grants a credit equal tothe French tax attributable to it - the crédit d'impôt égal à l'impôt françaisof the French return. Under Article 24(2)(b), the United States treats certainincome of a US citizen resident in France as French-source so that French taxcan be credited on Form 1116.
{{INSET-CTA-1}}
A US person resident in France typically files a Form 1040 reporting worldwide income; a FinCEN Form 114 (FBAR) if foreign accounts exceeded $10,000 in aggregate at any point in the year; a Form8938 if specified foreign financial assets exceeded the higher thresholds for taxpayers living abroad; a Form 8621 for each passive foreign investment company held; and a Form 8833 for any treaty position not on the IRS waiver list. The table gives the 2026 figures.
Two of these deserve a word. The ForeignEarned Income Exclusion (FEIE) under Section 911 applies only to earned income,and only where the bona fide residence or physical presence test is met; itdoes nothing for pensions, dividends or capital gains. The Foreign Tax Credit(FTC) on Form 1116 is computed in separate categories - passive, general, andcertain income re-sourced by treaty among them - and is capped at the US taxattributable to foreign-source income, with unused credits carried back one yearand forward ten. Which route suits a French salary is a question for a US taxprofessional with expatriate experience.
Under Article 18(1) of the treaty as amended by the 2009 Protocol, pension distributions arising in the United States in consideration of past employment and paid to a resident of France are taxable only in the United States, periodic or lump sum - and a payment arises there only if paid by a retirement arrangement established there. France includes the distribution in its return and grants a credit equal to the French tax on it under Article 24(1).
Because Article 29(3)(a) shields Article18(1) from the saving clause, the same rule runs the other way for a French pension paid to a US citizen. The mechanics - which accounts the treaty names, how the French return reports the income, what the treaty leaves unsaid about Roth accounts and Roth conversions, and how required minimum distributions and early withdrawals flow through both returns - are the subject of the companion article on how France taxes a 401(k), IRA and Roth.
A US citizen can continue to receive Social Security benefits while living in France: the Social Security Administration(SSA) states that US citizens may continue to receive payments outside the United States, the only exceptions being residents of Cuba and North Korea. Under Article 18(1) of the treaty, US social security payments to a resident of France are taxable only in the United States, under the usual US rules.
Those rules make up to 50% of benefits taxable above $25,000 of combined income for a single filer or $32,000 on a joint return, and up to 85% above $34,000 or $44,000 - thresholds that are not indexed.
The Agreement on Social Security between the United States and the French Republic, in force since 1 July 1988, does two things and is often assumed to do a third. It prevents dual coverage: an employee sent by a US employer to France for five years or less stays under US Social Security and is exempt from French contributions on that work, and viceversa. And it lets each country count credits earned in the other to meet minimum eligibility - the United States requires at least six US credits before it will count French ones, then pays a benefit reduced to reflect that French credits helped make it payable. What it does not do is move money: in the SSA's words, your credits do not actually transfer from one country to the other. Nor does it address income taxation of benefits, which the tax treaty governs.
One change in US law matters to anyone who also has a French pension. The Social Security Fairness Act, Public Law118-273, signed on 5 January 2025, repealed the Windfall Elimination Provision and the Government Pension Offset for benefits payable for months after December 2023. The SSA's older totalization pamphlet still refers to a possible reduction; that reference predates the repeal.
A US person who buys a French or other non-US fund - a SICAV, an FCP, a UCITS exchange-traded fund - will usually beholding a passive foreign investment company (PFIC) under Section 1297 of the Internal Revenue Code, which applies where 75% or more of a foreign corporation's gross income is passive or at least 50% of its assets produce passive income. Each PFIC generally requires its own Form 8621 every year.
The default regime under Section 1291 taxes excess distributions and gains as ordinary income spread over the holding period with an interest charge. Two elections exist - the qualified electing fund (QEF) election under Section 1295 and mark-to-market under Section 1296 - but each depends on information or a market listing the fund may not provide. That is why many Americans in France keep a US brokerage account rather than investing through a French one; the custodian problems that come with a foreign address are covered in the article on US brokerages closing expat accounts, and the fund-level analysis in the article on PFIC and UCITS funds.
On the French side, US-source dividends received by a French resident attract a credit equal to the US tax, within the treaty's 15% limit (Articles 10 and 24(1)(a)(iii)); interest is generally taxable only in France under Article 11(1). For a US citizen resident in France, Article 24(1)(b) instead grants a credit equal to the French tax on certain US-source dividends and interest, subject to the conditions in that paragraph and to showing that US tax obligations have been met. Investment income declared in France is otherwise taxed at the prélèvement forfaitaire unique of 12.8% plus prélèvements sociaux - 17.2% on 2025 income, rising to18.6% on most investment income received from 1 January 2026 - unless the progressive-scale option is taken.
Two US features complete the picture. The Net Investment Income Tax of 3.8% applies above $200,000 of modified adjusted gross income for a single filer or $250,000 on a joint return, and the IRS states that foreign tax credits may not be used to reduce it. And on the French social charges themselves, the IRS confirms that in 2019 the United States and France memorialised, through diplomatic communications, an understanding that the Contribution sociale généralisée (CSG) and the Contribution au remboursementde la dette sociale (CRDS) are not social taxes covered by the totalization agreement, and that the IRS will not challenge foreign tax credits for CSG and CRDS on that basis. Whether those credits are usable in a given year depends on the Form 1116 category and limitation.
An assurance vie is a French life-insurance-wrapped savings contract, and the DGFiP taxes only the gain element of a withdrawal. For premiums paid since 27 September 2017 the rate is12.8% on a contract under eight years old; after eight years it is 7.5% on gains attributable to premiums up to €150,000 across all of a person's contracts and 12.8% above, with an annual allowance of €4,600 for a single person or €9,200 for a couple.
Gains also bear prélèvements sociaux of 17.2%, a rate the 2026 social security financing law left unchanged for assurance vie even as it raised the general rate on investment income to 18.6%.On death the contract passes outside the ordinary succession rules: for premiums paid before age 70, Article 990 I of the CGI gives each beneficiary an allowance of €152,500, then a levy of 20% up to €700,000 and 31.25% above; for premiums paid after age 70, Article 757 B brings the premiums above €30,500into succession duties. Those features explain why the product is so widely held in France.
The US side begins with an absence: the IRS has issued no guidance that names assurance vie. What is settled is the reporting. The Form 8938 instructions treat any cash value life insurance or annuity contract maintained by an insurance company or other foreign financial institution as a financial account, and the IRS's FBAR reference guide lists insurance or annuity policies with a cash value among reportable accounts. A contract of any meaningful size therefore appears on both filings every year.
What is not settled is characterisation, and it is analysis rather than doctrine. Section 7702 defines a life insurance contract for US tax purposes by reference to a cash value accumulation test, ora guideline premium test combined with a cash value corridor; a contract that is life insurance under French law but fails those tests has its income on the contract treated as ordinary income each year under Section 7702(g).Separately, a multi support contract invested in unités de compte holds non-US funds, and a US tax professional will consider whether the Section 1297 PFIC tests reach those holdings and what Form 8621 reporting follows - a question on which the IRS has not spoken. Easier is Section 4371, a 1% excise tax on premiums paid to a foreign insurer for life insurance or annuity contracts, which Article 2(1)(a) of the treaty lists among the taxes the Convention covers. None of this makes an assurance vie right or wrong for a household; it makes the decision one to take with a US tax professional before the contract is signed.
The plan d'épargne en actions (PEA) is open only to persons fiscally domiciled in France, takes up to €150,000 of contributions, and after five years its gains are exempt from French income tax though still subject to prélèvements sociaux. The Livret A, with a ceiling of€22,950 and a rate of 1.7% from 1 August 2026, is exempt from French income tax and social levies altogether. The plan d'épargne retraite (PER), which replaced the PERP and Madel in contracts from 1 October 2020, allows voluntary contributions to be deducted within a ceiling of 10% of professional income, capped at€37,680 for 2025 income, and pays out as capital or annuity. None of those French exemptions exists in US law: IRS Publication 54 states that a US citizen's worldwide income is generally subject to US income tax regardless of where they live, and no IRS publication names any of these products. Livret A interest is US-taxable interest; PEA holdings are typically non-US funds with the PFIC consequences above; and whether a PER is a pension arrangement established in France for Article 18 purposes is a point the treaty texts do not address. All three are candidates for FBAR and Form 8938 reporting.
A household in France spends in euros, is taxed by France in euros, and reports to the IRS in dollars. Every French salary, pension and asset value on the US return is a translation; every US retirement distribution spent in France is an exchange. That double exposure is treated fully in the article on currency for Americans in Switzerland, the UK and the eurozone; a plan for Americans in France has a currency line in it from the start.
{{INSET-CTA-2}}
A US citizen is subject to US estate tax on worldwide assets wherever domiciled, against a basic exclusion amount of $15,000,000 for 2026 under Section 2010(c)(3) of the Internal Revenue Code as amended by Public Law 119-21, and with the marital deduction unavailable for property passing to a non-citizen spouse unless it passes to a qualified domestic trust. France applies its own succession law and its own inheritance tax at the same time.
Article 913 of the French Civil Code reserves a fixed share of an estate for the children - one half with one child, two thirds with two, three quarters with three or more - and, since a 2021 amendment, allows a compensatory levy on French assets where the foreign law governing the succession offers children no protective mechanism. The 1978U.S.–France Estate and Gift Tax Treaty, as amended by the 2004 Protocol, sits between the two systems. The companion article on estate planning for American families in France works through all of it, including what a choice of law under the EU Succession Regulation can and cannot achieve.
A cross-border household in France usually needs four kinds of professional, and none replaces the others: a US tax professional - a CPA or Enrolled Agent with expatriate experience - for the Form 1040 and the reporting stack; a French expert-comptable or avocatfiscaliste for the déclaration des revenus, the treaty credits on Forms 2047and 2042, and French social charges; a French notaire for succession, matrimonial regime and property; and a US estate attorney for the US will.
A cross-border financial adviser's role isto hold the household plan that all of those documents serve - which accountsto draw on, in which currency, in which order — and to make sure the French andUS professionals are working from the same facts.
Liam Fraboulet is a Private Wealth Adviser specialising in cross-border wealth management for Americans living abroad. He works with U.S. citizens, internationally mobile professionals, and families whose financial lives span more than one country, helping them build, protect, and transfer wealth across borders.
Whether clients are advancing their careers overseas, raising a family abroad, preparing for retirement, or planning for future generations, Liam helps them create joined-up financial strategies that reflect their personal goals and the international lives they have built.
This article is provided for general educational and informational purposes only. It does not constitute personalized investment, financial, tax, accounting, legal, or succession advice, and it should not be relied upon as a substitute for advice from a qualified professional familiar with your individual circumstances.
The information presented reflects the author's understanding of U.S. federal tax law, French tax rules, the U.S.–France income tax treaty, applicable social-security agreements, and related regulations and administrative guidance as of the publication or last-updated date. Tax laws, regulations, treaty interpretations, thresholds, rates, and administrative guidance may change, sometimes with retroactive effect. The application of these rules depends on individual facts and circumstances.
French tax, succession, matrimonial-property, and civil-law matters should be reviewed with an appropriately qualified professional in France, such as a notaire, expert-comptable, or avocat. U.S. tax matters should be reviewed with a qualified U.S. tax professional, such as a CPA or Enrolled Agent with relevant international tax experience.
Nothing in this article should be interpreted as a recommendation to purchase, hold, or sell any particular investment, insurance product, pension arrangement, financial account, or other product or service. References to financial products or structures are provided solely to explain potential tax, reporting, or planning considerations.
Where this article discusses potential tax treatment or reporting requirements for French financial products, including assurance vie, PEA, Livret A, and PER, the treatment under U.S. law may depend on the specific contractual terms, underlying investments, ownership structure, and applicable IRS guidance. Where U.S. tax treatment is uncertain or not specifically addressed by published IRS guidance, that uncertainty should be reviewed with a qualified U.S. tax professional before taking action.
Examples are hypothetical and provided solely for educational purposes. They do not represent actual clients, accounts, transactions, or guaranteed outcomes. Individual tax liabilities, investment results, and planning outcomes will vary.
Skybound Wealth Management USA, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training and does not constitute an endorsement by the Commission. Advisory services are provided only in jurisdictions where the firm is appropriately registered, notice-filed, or otherwise exempt from registration.
Skybound Wealth Management USA, LLC does not provide French tax, legal, succession, or civil-law advice. Readers should consult appropriate U.S. and French professionals before acting on information contained in this article.
Ordered list
Unordered list
Ordered list
Unordered list
Copyright © 2021. Skybound Wealth Management USA, LLC. All rights reserved. Skybound Wealth Management USA, LLC is registered with the SEC: CRD 313358. SEC No. 801-121157.
Check the background of this firm on the Investment Adviser Public Disclosure page.
