Moving to France from the USA is easier with Roche & Cie at your side
Moving to France from the USA: what are your reporting obligations regarding taxation?
Are you an American citizen wishing to settle in France or are you already established there? Our team is aware of the complexity of the French tax system. Therefore, we will clarify the reporting obligations related to your plans.
First, as a U.S. citizen domiciled in France for tax purposes, you are subject to an unlimited reporting obligation. This means that you will have to report all of your worldwide incomes on various French tax returns, even if you have already reported it in your country of origin. As a reminder, tax residency in France means that you stay there permanently (main place of residence).
Income tax return in France
Obligation to declare worldwide incomes
Income tax in France is determined on a calendar year basis. Thus, you must report income received between January 1 and December 31. The tax return must be filed at the end of May/June of the year following the receipt of your income.
Because of the unlimited reporting obligation, you must report all of your worldwide income. Double taxation of income will be avoided thanks to the provisions of the tax treaty signed between France and the United States.
Income from the United States that is taxable in the United States is taken into account for the calculation of the French tax.
French income tax is calculated by considering the number of people in the tax household. A single person counts as “1 share”, a married or civil union couple as “2 shares”, the first two dependent children each represent “0.5 share”, and each subsequent child represents a full share.
For example: a married couple with one child represents: 2.5 shares / a married couple with 3 children represents: 4 shares.
- The net taxable income is divided by the number of shares in the tax household
- The following progressive scale is applied:
|Fraction of taxable income||Applicable tax rate|
|Up to 10 777€||0%|
|From 10 778€ to 27 478€||11%|
|From 27 479€ to 78 570€||30%|
|From 78 571€ to 168 994€||41%|
|As of de 168 995€||45%|
The result is multiplied by the number of shares in the tax household.
CSG and CRDS
The Contribution Sociale Généralisée (CSG) and the Contribution pour le Remboursement de la Dette Sociale (CRDS) are two taxes levied on income in France. These taxes are intended to finance the Social Security system and repay the social debt.
These two taxes, whose overall rate is 17.2%, are mainly based on income from assets (financial income, rental income, etc.) taxable in France.
Moving to France from the USA : you must declare the bank accounts held outside France
As a resident of France, you are required to declare any bank accounts you hold abroad (i.e., outside of France), under penalty of a fine. Please note that the notion of bank account is broader in France than it is in the United States. Indeed, in France, the General Tax Code indicates that “accounts of any kind” must be declared. In fact, this notion encompasses several types of accounts: current accounts, savings accounts, digital asset accounts, securities accounts, term accounts, and retirement accounts, all of which must be declared.
Given the breadth of the concept and the amount of the fine incurred, it is better to declare any account where a sum is capitalized and which has a reference.
Life insurance owned abroad
As a reminder, life insurance is a financial investment for savings purposes taken out with the aim of transferring it to a beneficiary, linked to an event related to the insured. For instance, in the event of the insured’s death, the capital and interests will be transmitted to the chosen beneficiary(ies). However, if the insured is not deceased, he/she remains the sole beneficiary and has the right to freely dispose of the capital and the interests linked to the contract.
As a French tax resident, you are required to declare the life insurance policies held abroad.
How can we help you ?
The missions we can offer you:
Drafting of a tax study: with simulation of your tax obligations in France ; a key solution to secure your installation in France in order to avoid unfortunate situations, such as delays or errors in your tax returns.
Follow-up of your tax returns in France: income tax, real estate wealth tax, rental income
Moving to France from the USA : what about real estate wealth tax in France ?
In France, wealth tax only applies to real estate. This tax is due as soon as your worldwide net taxable real estate assets exceed the net value of 1 300 000€. Thus, when you are fiscally domiciled in France, the value of your worldwide real estate assets must be declared. The real estate assets that you keep in the United States are therefore likely to be included in the tax base.
There is a temporary exemption from reporting assets located abroad during the first 5 years spent in France. Therefore, during this period, you only must declare real estate assets located in France.
For example: if you own a property in 2023 with a net value of €1,400,000 in Italy, this property will not be declared in France under this temporary exemption until 2028.
Beyond the 5th year
However, once this deadline has passed, from the 6th year onwards, you must declare your real estate assets located in France as well as those located abroad. In short, you must declare all your real estate, regardless of its location.
Moving to France from the USA : Trust return in France
Although trusts do not exist in French law, you must report those you own abroad, if they have a connection with France. In such cases, you are required to file a declaration within one month of its creation, modification or termination (TRUST1 declaration). You must also declare the market value of the trust as of January 1 before June 15 of the tax year (declaration called TRUST2).
Our solution: a tax study to help you settle in France with great serenity
A preliminary tax study before your move to France will allow you to avoid unfortunate situations, such as delays or errors in your tax returns.
As part of this study, we will establish a personalized analysis of your situation regarding the French tax system. We will determine the applicable treatment per category of income, and we will be able to reliably estimate the amount of your future tax liability in France. Finally, we will be able to assist you in the preparation of your future tax returns in France.
Our team of tax experts is at your disposal and offers to carry out these tasks with expertise and rigor, to guarantee you real legal security within your projects.
The Team Roche & Cie
Professionals or individuals, French or international, since 1948, Roche & Cie has been assisting clients from all horizons.
+33 (0) 4 78 27 43 06