Moving to… France (Part 2)
Moving to France Pt. 2: Taxes
As a tax resident of France you do, absolutely, need to report every centime of income. But you are not likely to pay tax on all of it. In fact, Americans in France get some pretty amazing breaks on their U.S.-sourced income. Some income, like retirement plan withdrawals, social security and even some capital gains will not be taxed in France at all. You will report them to French authorities and receive a full credit for the taxes that would have been owed had it not been for the US.-France tax treaty (note that your U.S.-based income does figure into the calculation of your effective tax rate in France (taux effectif)).
Other forms of U.S. income, like certain dividends from small businesses, will receive a partial credit for the U.S. tax to be paid, considerably lowering the amount of taxes/social charges you will pay in France.
For Reference, here are the income tax brackets in France:
Income Brackets updated for 2025
· Up to €11,498: 0%
· €11,499 to €29,315: 11%
· €29,316 to €83,823: 30%
· €83,824 to €180,293: 41%
· Above €180,294: 45%
Wealth tax
France has implemented a progressive wealth tax on those with property assets totaling more than 1,300,000 EUR. For US citizens who are not also French citizens, the tax does not apply during the first five years of your residence in France. The first 800,000 EUR of property value are taxed at 0% and you receive significant abatements or exemptions for your primary home and many business and agricultural properties. As a result this tax tends to be quite small.
Capital Gains for Expats
Under normal circumstances, countries that have tax treaties agree that capital gains from moveable property – like stock shares—will be taxed by the country where the taxpayer is resident, i.e. France. And that is how the French-American treaty starts out. Article 13 “Capital Gains” describes the taxation of gains on real estate, business and shipping business before ending, somewhat weakly, with “Subject to the provisions of paragraph 5, gains from the alienation of any property other than property referred to in paragraphs 1 through 4 shall be taxable only in the Contracting State of which the alienator is a resident.” And if you are something other than a U.S. citizen in France, that is likely the extent of it. But the U.S. negotiated one more crucial twist on the subject.
Article 24 of the Treaty describes exactly how the two countries will make the credits/exemptions work to prevent double taxation. And in section 1(b)(i) of that article, the U.S. sneaks in a special provision for capital gains and dividends that paid out 1. In the U.S., 2. to a U.S. citizen resident in France, 3. by: a U.S. government branch (i.e. government bond dividends); a U.S. company whose shares are traded on a recognized stock exchange; other U.S.-based companies (provided that less than 10% of their ownership belongs to the taxpayer in question); and “profits or gains derived from transactions on a public United States options or futures market.” There are actually a few more exceptions included in this section. But for our purposes, the result is that the French government is going to give you a full credit for any taxes you would have owed in France on this sort of income.
Inheritance tax
Gift taxes in France depend largely on the relationship between the donor and the donee. Once you report a gift, a graduated tax scale determines the amount of the tax. You can find the scales here on the tax authority’s website. But depending on the circumstances, you still might not owe any tax on a gift you’ve received.
Every 15 years, every donateur (“giver”) is given an “abattement” (allowance) for gifts to family members (children, parents, sisters, etc…). You can give up to that amount, cumulatively, over the 15 years before any tax is due by the recipient. There is a special allowance for recipients who are handicapped.
If you are an American resident in France receiving a gift from any other French resident, you will need to follow the French gift tax rules. But the estate tax treaty between the two countries seems to give American residents in France the right to receive gifts and inheritances from the U.S. tax free up to the U.S. estate tax exemption (currently at $13,990,000).
It is worth noting here that a gift from a non-American French resident to an American (no matter where that American resides) can throw up a completely different problem. So long as the gift is not real estate, the gift itself should not make the American recipient subject to French taxes. But Americans are always subject to the U.S.’s Foreign Gift regulations. Under these requirements, there are strict penalties if you fail to report to the U.S. government a gift or inheritance of more than $100,000 from an individual or more than $16,388 from a foreign corporation or partnership.
Retirement Accounts and Social Security
Under the tax treaty, your US social security benefits are only taxed in the US. In addition, any withdrawals you take from the qualified US retirement accounts or pensions that you contributed to while working (IRA’s, Rollover IRA’s, SEP IRA’s, 401ks, 403bs, Roth IRA’s, Roth 401k’s) will be taxed only in the US.