Filing American Expat Taxes While Living in France


How Living in France Impacts US Expat Taxes

The delicious food and stunning coastal landscapes of France attract a large number of Americans. The beautiful countryside and romantic atmosphere have made it a popular destination for tourists, expatriates, and retirees alike.

For those looking for more than just a vacation, however, you’ll want to be sure you know the tax laws for France and the US. If you have decided to live in France, it is important to understand the implications such a move has on your American expat taxes. Americans who live in France are going to be subject to the French taxation system, as well as having obligations to file American expat taxes. Fortunately, we’ve outlined the 7 things you need to know as an expat living in France.

1. French Tax Rates

Individuals who are considered residents of France for tax purposes are taxed at a rate that ranges from 0 to 41 percent while non-residents are taxed a minimum rate that starts at 20 percent.

2. Who is a French Resident for Tax Purposes?

France defines tax residency based on an individual’s ability to meet one of three criteria. The first is that the primary residence or primary family home is in a French territory. This essentially means more than 183 days per year are spent in France. Second, an individual’s primary employment or professional activity is derived from France. And third, France is the center of your economic activity.

3. Tax Deadlines in France

Although France’s tax year is the same as the US, running from January 1st to December 31st, the due dates for tax returns are a bit more sporadic. For residents filing a paper return, the tax returns are due May 30th. Residents filing electronically must submit tax forms June 9th, 16th, or 23rd, depending on address.

Lastly, non-residents must file by June 30th.

4. Social Security Taxes in France

The US-France Totalization Agreement outlines whether Social Security should be paid to the US or to France. For example, US employers sent to work in France for less than five years will pay into US Social Security.

5. Other Taxes in France

Similar to a Value Added Tax, France has a TVA tax of 19.6% on consumer goods and a 5.5% tax on other items such as food.

Capital gains are also taxed in France but vary according to the item.

6. Financial Reporting Requirements for US Citizens

If you are a US citizen or resident, you will still be required to file US taxes each year. If you have assets in foreign bank accounts, you may be required to report those as well. Specifically, anyone with 10,000 dollars or more in a foreign bank or financial institution during a calendar year will be required to file the FBAR.

7. Tax Breaks for Americans in France

Fortunately, there are a few ways you can lower or eliminate your US tax obligations. The first is the Foreign Earned Income Exclusion, which allows you to exclude a certain amount from your foreign earned income on your US expat taxes.

The second is the foreign tax credit, which allows you to offset the taxes you paid in your host country with your US expat taxes dollar for dollar.

And third is the Foreign Housing Exclusion, which allows an additional exclusion from income on US expat taxes for certain amounts paid for household expenses that occur as a consequence of living abroad.

More Questions About Your American Expat Taxes?

Have a look at our in-depth blog post about filing US expat taxes in France. If you have any questions about filing your US expat taxes or about our expat tax services, please contact us.

 

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