US Expat Taxes in France

Who Has to File: Your US Obligations from France

The United States taxes its citizens and green card holders on worldwide income no matter where they live. Moving to France does not end your relationship with the IRS — if your worldwide income exceeds the standard filing threshold (for 2026, $15,750 for single filers, but just $5 of income if you are married filing separately, which is common when your spouse is French with no US status), you must file Form 1040 every year.

Filing rarely means paying. Because French taxes are high by US standards, the large majority of Americans in France owe the IRS nothing after applying the Foreign Tax Credit or the Foreign Earned Income Exclusion. But the return itself, and the information reports that travel with it — FBAR, Form 8938, and often Forms 8621, 3520, or 720 — are mandatory, and the penalties for skipping the information forms are far harsher than anything tied to the tax.

Alongside your US return, French residence makes you subject to French tax on your worldwide income. You will deal with two tax administrations each year: the IRS and the French Direction generale des finances publiques (DGFiP). The rest of this guide walks through how the two systems interact and where Americans most often get hurt — particularly around French savings products that look harmless but carry heavy US reporting.

How French Income Tax Works in 2026

France's income tax (impot sur le revenu) is progressive, with a tax-free band followed by brackets of 11%, 30%, 41%, and a top rate of 45%. On top of the base tax, a contribution exceptionnelle sur les hauts revenus (CEHR) of 3% or 4% applies to very high incomes. France is unusual in taxing the household rather than the individual: the quotient familial system divides income by a number of 'parts' based on marriage, PACS, and children, which softens the effect of the progressive brackets for families.

Since 2019, France operates a pay-as-you-earn system (prelevement a la source), withholding income tax from salaries and pensions during the year, with a reconciliation when the annual declaration des revenus is filed in the spring.

Investment income has its own regime. Most interest, dividends, and capital gains are taxed under the prelevement forfaitaire unique (PFU), a 30% 'flat tax' made up of 12.8% income tax and 17.2% social charges. Taxpayers can instead elect the progressive scale where it produces a lower result.

For US purposes the key distinction is what counts as a creditable income tax on Form 1116. The base impot sur le revenu, the high-income surcharge, and the 12.8% income-tax portion of the PFU are clearly creditable. Thanks to the 2019 US-France memorandum, the CSG and CRDS social charges are now creditable too. But the IFI wealth tax and the excise-type levies are not — the distinction drives your entire US outcome.

CSG, CRDS, and Social Charges: The Creditability Breakthrough

For years the IRS refused to let Americans in France credit CSG (contribution sociale generalisee) and CRDS (contribution au remboursement de la dette sociale) on Form 1116, arguing they were social security taxes covered by the US-France Totalization Agreement and therefore not creditable income taxes. That position produced real double taxation and litigation, including the Eshel case.

That changed in 2019. Under a joint memorandum, the United States and France agreed that CSG and CRDS are not social security contributions within the scope of the Totalization Agreement. The practical result: the IRS now treats CSG and CRDS as creditable foreign income taxes. Americans in France can claim them on Form 1116, and those who had paid US tax because the credits were denied were able to file protective or amended claims for open years.

This matters most on investment income, where social charges reach 17.2% (CSG at 9.2%, CRDS at 0.5%, and a prelevement de solidarite at 7.5%). Combined with the 12.8% income-tax portion of the PFU, a French resident faces the full 30% flat tax on capital income — and now essentially all of it is creditable in the US.

One nuance remains: individuals affiliated with another country's social security system (for example, some cross-border or posted workers) may face reduced or zero social charges under EU rules. And the creditability of social charges attributable to US-source income can interact with the treaty's Article 24 mechanism. Getting the Form 1116 basket allocation right is where professional preparation earns its keep.

French Tax Residency: When France Taxes Your Worldwide Income

France treats you as tax resident (domicilie fiscalement en France) if you meet any one of several tests under Article 4B of the French tax code: your foyer (home and family) is in France; France is your principal place of abode; you carry on your main professional activity in France; or France is the center of your economic interests. Meeting a single test is enough, and there is no simple day-count threshold as in the US substantial presence test — keeping your family and home in France is generally sufficient.

Once resident, you are taxed on worldwide income and must file the annual declaration des revenus, typically due in May or June depending on your department and whether you file online. Non-residents are taxed only on French-source income.

Because you are also a US citizen, both countries can claim you as resident at once. The US taxes you by citizenship; France taxes you by residence. When that happens, the US-France treaty's residency article (Article 4) applies tie-breaker tests — permanent home, center of vital interests, habitual abode, then nationality — to assign treaty residence. For most Americans genuinely settled in France, France is the treaty residence, but the saving clause means that does not switch off US filing.

The move year is the most error-prone return. You will typically be a part-year resident of both countries, and the US physical-presence test for the FEIE can straddle two calendar years. These returns reward planning the elections before you file, not after.

The US-France Tax Treaty and Its Unusual Generosity

The US-France income tax treaty was signed on August 31, 1994 and entered into force on December 30, 1995, with significant protocols in 2004 and 2009. It is one of the more favorable treaties the US has with a high-tax country, and understanding its two standout features can save an American in France real money.

The first is the saving clause in Article 29, which — like every US treaty — lets the United States tax its own citizens as if the treaty did not exist. But its list of exceptions is meaningful. Notably, US Social Security benefits paid to a US citizen resident in France are, under Article 18, taxable only in France. That is a real carve-out: France taxes the benefit, the US does not tax it a second time, and the treaty relief actually reaches the US citizen rather than being clawed back by the saving clause.

The second is Article 24, the relief-from-double-taxation article. For a US citizen resident in France, France first grants a credit for the French tax, then — unusually — allows a further credit equal to the US tax imposed on certain US-source income (such as US dividends, interest, and gains). The effect is that US-source income of an American in France is generally relieved of French double taxation rather than taxed twice. This mechanism is more generous than most treaties and is easy to under-claim.

As always, some treaty positions must be disclosed on Form 8833. The treaty's value for Americans lies less in cutting the US bill outright than in ordering the two systems and unlocking these specific reliefs.

FEIE vs Foreign Tax Credit: Why the FTC Usually Wins in France

Americans abroad have two main tools against double taxation: the Foreign Earned Income Exclusion (FEIE, Form 2555), which excludes up to $132,900 of earned income for 2026, and the Foreign Tax Credit (FTC, Form 1116), which credits foreign income taxes dollar-for-dollar against US tax.

For most Americans in France, the FTC is the better answer. French marginal rates on salary reach 45% before the high-income surcharge, and once you add creditable social charges the effective rate on many taxpayers comfortably exceeds the US rate. French tax paid typically eliminates the entire US liability and generates excess credits that carry forward ten years — a reserve that protects you in a later move to a lower-tax country. The FTC also keeps your income 'in the system' for the refundable Additional Child Tax Credit, worth up to $1,700 per child in 2026 even with zero US tax owed — a refund the FEIE forfeits, because excluded income cannot support the credit.

The CSG/CRDS creditability breakthrough strengthens the case further, since social charges that were once wasted now feed the credit pool.

The FEIE still wins in specific situations: the first partial year abroad, lower incomes where the French effective rate is modest, or self-employment income where combining the FEIE with careful planning helps. Be careful switching — once you claim the FEIE and then revoke it in favor of the FTC, you generally cannot re-elect the FEIE for five years without IRS consent. Run the comparison both ways before your first French return.

Social Security: The Totalization Agreement and French Contributions

The US-France Totalization Agreement, in force since July 1, 1988, prevents you from paying into both countries' social security systems on the same earnings and lets you combine (totalize) credits from both to qualify for benefits.

The core rules: an employee generally contributes where they work, so an American employed in France pays into the French system (assurance vieillesse and the related branches) and is exempt from US Social Security and Medicare tax. An American posted to France by a US employer for five years or less can remain in the US system with a certificate of coverage. A self-employed American resident in France is covered by French law and, with a French certificate of coverage, is exempt from the 15.3% US self-employment tax — usually the single largest saving available to American freelancers in France.

It is important not to confuse these social security contributions with CSG and CRDS. The 2019 memorandum confirmed CSG and CRDS fall outside the Totalization Agreement, which is precisely why they are creditable income taxes rather than exempted social security contributions. Your French employer contributions and mandatory social security cotisations remain outside the Form 1116 credit; the CSG/CRDS social charges are inside it. Keeping these two buckets straight is essential to computing the credit correctly.

French Pensions and US Taxes: Etat, AGIRC-ARRCO, and the PER

French retirement is built in layers, and each has a different US analysis.

• The state pension (regime general, paid via the assurance vieillesse / CNAV) is a social security-type pension. Under the treaty and the Totalization Agreement, contributions are handled on the work-country basis, and benefits are generally dealt with under the pension and social security articles.
• Complementary occupational pensions (AGIRC-ARRCO) are mandatory top-up schemes for private-sector employees. They function as pensions, but the IRS does not automatically treat them as qualified plans, so US timing and reporting can differ from the French treatment.
• The PER (plan d'epargne retraite), which replaced older products like the PERP and Madelin contracts, is a modern individual/collective retirement wrapper. Its French tax deduction on contributions is not recognized by the IRS, growth may be currently taxable for US purposes, and — critically — a PER invested in French funds can carry PFIC exposure and, depending on structure, foreign-trust reporting.

The treaty's Article 18 helps at the payout stage: pensions are generally addressed on a residence basis, and the US Social Security carve-out (taxable only in France for a US citizen resident there) is a genuine benefit. But at the contribution and accumulation stage, French retirement products frequently create current US income and reporting that surprise people. None of this means Americans should avoid French pensions — the employer and tax advantages can still win — but each vehicle needs a US analysis before you commit, and every account belongs on your FBAR and usually Form 8938.

Assurance-Vie: France's Favorite Wrapper, America's Worst Trap

Assurance-vie is the single most popular savings and estate-planning product in France, held by a large share of French households. For a US citizen it is also one of the most dangerous, because its French advantages are invisible to the IRS while its structure triggers several of the harshest US reporting regimes at once.

Why it hurts on the US side

• PFIC exposure: an assurance-vie invested in unites de compte holds French or Luxembourg fund units, and those funds are almost always Passive Foreign Investment Companies. Even the fonds en euros (the guaranteed-return option) can raise PFIC and foreign-investment questions.
• Foreign trust or foreign life insurance: depending on how the contract is structured, the IRS may treat an assurance-vie as a foreign grantor trust — pulling in Forms 3520 and 3520-A with steep penalties for late filing — or as a foreign life-insurance policy.
• Excise tax on premiums: if the contract is treated as foreign life insurance, premiums paid can be subject to the 1% US federal excise tax on foreign insurance, reported on Form 720. And because most assurance-vie contracts do not meet the US definition of life insurance under IRC Section 7702, the inside build-up may be currently taxable rather than deferred.

The practical takeaway

The French deferral and reduced-rate benefits of assurance-vie do not carry over to your US return, and the reporting cost can be severe. Before opening one, get the US analysis; if you already hold one, do not simply ignore it — it must be reported, and the right combination of elections, valuations, and possibly a planned exit is what contains the damage. This is a decision to make before signing, not at filing time.

Investing from France: PEA, Livret A, and the PFIC Problem

The most expensive investing mistake an American in France can make is buying ordinary French or EU funds and ETFs. Nearly every French SICAV, FCP, or EU-domiciled UCITS ETF sold by French banks and online brokers is a Passive Foreign Investment Company under US law. PFIC taxation is punitive — gains and certain distributions are taxed at top ordinary rates plus an interest charge for deferral — and each fund requires its own Form 8621, easily hundreds of dollars per fund per year in compliance cost alone.

France's tax-favored accounts make the trap worse, because their whole appeal is holding exactly these funds:

• PEA (plan d'epargne en actions): tax-free in France after five years, but the US ignores that entirely. The PEA holds French/EU equities and funds that are frequently PFICs, its gains are US-taxable when realized, and the account is FBAR- and often Form 8938-reportable.
• Livret A and similar regulated savings books (LDDS, LEP): interest is tax-free in France but fully taxable in the US, and although balances are modest they still count toward the $10,000 FBAR threshold.

The playbook

Most cross-border advisors recommend the same approach: hold US-domiciled ETFs and mutual funds through a US brokerage that accepts French-resident clients, keep French accounts for cash and daily banking, and never buy an investment product from a French bank branch or insurer without checking the PFIC question first. If you already own French funds or a PEA, timely elections (QEF or mark-to-market, where available) and a planned exit can contain the cost — but the analysis should happen before year-end, not at filing time.

French Property, Plus-Values, and the IFI Wealth Tax

France taxes real-estate gains (plus-values immobilieres) with a system of holding-period allowances (abattements pour duree de detention) that reduce and eventually eliminate the gain for income-tax purposes after 22 years, and for social charges after 30 years. A principal residence is generally exempt in France. The United States does not follow any of this. As a US citizen you owe US capital gains tax on the sale of French property regardless of French allowances, with only the $250,000/$500,000 primary-residence exclusion (if you qualify) to offset it. Where France collects little or nothing because of the allowances, there is no French tax to credit, and the US bill is real money.

Two currency quirks catch sellers. Gain is computed in US dollars, so exchange-rate movement between purchase and sale can create a taxable dollar gain on a flat euro price. And paying off a euro mortgage can itself produce taxable 'phantom' Section 988 gain if the dollar strengthened between borrowing and repayment.

The IFI wealth tax

Since 2018, France levies the impot sur la fortune immobiliere (IFI) on households whose net French (and, for residents, worldwide) real-estate holdings exceed 1.3 million euros, at progressive rates on the value above roughly 800,000 euros. The IFI is a tax on capital, not income — so it is NOT creditable on Form 1116, and there is no US wealth tax to offset it. For Americans with significant property, the IFI is a pure additional cost that has to be planned around structurally (for example, how debt and ownership are arranged), not solved on the US return.

Rental property adds the usual dual reporting: French rental income taxed by France and reported again on US Schedule E with US depreciation rules, with the FTC bridging the two. Keep euro records of every capital improvement from day one.

Self-Employment in France: Micro-Entrepreneur and Profession Liberale

France offers several structures for the self-employed. The micro-entrepreneur (formerly auto-entrepreneur) regime is a simplified system with turnover ceilings, flat-rate social contributions, and a simple income calculation. Above the ceilings, or by choice, an independent works under the regime reel as an entreprise individuelle or through a company, and members of the professions liberales (consultants, developers, designers, doctors, lawyers) have their own affiliation.

On the US side, your French business profit lands on Schedule C in US dollars, and two big levers decide the outcome. First, self-employment tax: without action you owe the IRS 15.3% on net earnings on top of your French cotisations. A French certificate of coverage under the Totalization Agreement eliminates the US SE tax — this should be step one for every American freelancer in France. Second, income tax: French income tax on the profit is creditable, and now so are the CSG/CRDS social charges, so with the FTC most self-employed expats owe the IRS little or nothing.

Watch the entity choices. A French SARL or SAS owned by a US person is a controlled foreign corporation, bringing Form 5471, GILTI, and Subpart F into play — get advice before incorporating, because the US compliance cost can dwarf the French benefit for a one-person company. And US LLCs owned by French residents are frequently mischaracterized by French banks and the tax authorities, creating mismatches that are painful to unwind. Choose the structure with both tax systems in view.

Behind on Filings, Key Deadlines, and How Zenith Helps

A large share of our French clients come to us years behind on US filings — often after a French bank sent a FATCA request for a W-9, or after reading about FBAR penalties online. If that is you, do not panic, and do not quietly file several years of back returns cold ('quiet disclosure' forfeits penalty protection).

The IRS Streamlined Foreign Offshore Procedures exist precisely for non-willful non-filers abroad: three years of returns, six years of FBARs, and a certification of non-willful conduct — with all late-filing, late-payment, and FBAR penalties waived. Most streamlined filers from France owe little or no back tax once the Foreign Tax Credit (including newly creditable CSG/CRDS) is applied, and many collect refunds through the refundable Additional Child Tax Credit on the back-year returns. The program is only available before the IRS contacts you first, and French banks report US-person accounts under the FATCA agreement, so 'they will never know' is not a strategy.

Your two-country calendar

• April 15: US tax payment deadline — interest starts here even though expats get an automatic filing extension.
• June 15: automatic two-month filing extension for Americans abroad.
• October 15: extended US deadline with Form 4868; FBAR is due April 15 but auto-extends to October 15.
• May-June: the French declaration des revenus is due in the spring, with the exact date depending on your department and online filing.

How Zenith helps: our Enrolled Agents prepare US federal and state returns, FBARs, and PFIC, assurance-vie, and pension reporting for Americans across France; capture every creditable euro including CSG and CRDS; apply the treaty's Article 24 relief correctly; and handle streamlined catch-up filings end to end. Book a consultation and we will map your specific situation — salary, social charges, assurance-vie, property, and the IFI.