Last updated April 8, 2023.
From the world-renowned food and wine to the relaxed pace of life to the more affordable cost of living, there are many reasons that moving to France is appealing to Americans.
Many Americans choose to move to France to study, work, join a loved one, retire, or for some other reason. The French joie de vivre, passion for discussion and debate, and commitment to a work-life balance appeal to many seeking to escape the often frenzied feeling of the US.
While a move to France can be life-changing and exciting, though, it can complicate your taxes a bit. As expat tax experts, we’re here to walk you through it.
Snapshot of taxes in France
- Primary tax forms: Form 2042
- Tax deadline: May 22 (physical mail deadline); May 25 (online deadline for départements 1-19); June 1 (online deadline for départements 20-54); June 8 (online deadline for départements 50-101, people living in Overseas France)
- Reporting website: Impots.gouv.fr
- Administrative language(s): French
- Tax treaty: Yes
- Totalization agreement: Yes
How do French taxes work for Americans?
Many Americans considering a move to France wonder, “Do expats pay taxes in France?” If they qualify as tax residents, they do indeed.
Who qualifies as a tax resident in France?
If your household, primary professional activity, or principal economic interests are located in France, you are considered a tax resident. This includes most US expats living in France on a long-term stay visa, which include:
This visa is for those that plan to create a business or work as an independent contractor in France.
Created for salaried employees who are hired by an employer in France, sent to work on an assignment in France, or transferred to a French office within their company.
Applies to those who are highly qualified in a specialized field (often tech), hired as a researcher, plan to create or take over a business in France, make a significant economic investment, etc.
For those pursuing higher education or professional training in France.
To qualify, you must be moving to be with a family member of French nationality.
What’s the tax-governing authority in France?
The tax-governing authority in France is called the Direction Générale des Finances Publiques, (DGFiP).
Direction Générale des Finances Publiques
According to their website, the DGFiP is responsible for “taxation, tax legislation, and public accountancy.”
Does France tax worldwide income?
Yes, any tax resident in France is subject to taxation on their worldwide income.
Tax rates in France
Are taxes high in France? It’s a common question from US expats thinking about moving there. The tax percentage in France is often higher when compared to the US. These are the individual income rates for the 2022 tax year:
|Revenue Band (EUR)||Revenue Band (USD)||Income Tax Rate|
|Up to €10,777||Up to ~$11,800||0|
|€10,778 – €27,478||~$11,801 – ~$30,100||11%|
|€27,479 – €78,570||~$30,101 – ~$86,000||30%|
|€78,571 – €168,994||~$86,001 – ~$185,000||41%|
The French government offers an online calculator that can help you determine your tax bill.
Property taxes in France
There are several property taxes in France. The tax on property owners is called the taxe foncière, with rates varying by location. There’s also a tax on those residing in a property, regardless of whether they rent or own it, called the taxe d’Habitation. However, it’s on track to be abolished in 2023.
Furthermore, properties valued over €1,300,000 are subject to a “property wealth tax” called the impôt sur la fortune immobilière (IFI) of .5% to 1.5%.
Inheritance taxes in France
Inheritance taxes in France range from 0% to 60%, depending on the relation of the heir to the deceased (for example, children are typically taxed less than nieces/nephews) and the value of the property.
Capital gains tax in France
France’s capital gains tax, called the impôt sur les plus values, is levied on profits realized from the sale of real estate (excluding primary homes and gains less than €15,000), shares, and certain personal property. The basic capital gains tax rate in France is 36.2%, but for those who are not affiliated with France’s social security system, that rate goes down to 26.5%.
Payroll tax in France
Employees automatically have their income taxes withheld from their paychecks by their employers. If you’re self-employed, however, you’ll have to make these payments independently, typically quarterly.
VAT in France
The VAT (or sales tax) in France is referred to as the taxe sur la valeur ajoutée (TVA). The standard rate is 20%, although there are discounted rates on certain goods and services:
- 10%: Certain kinds of medicines and transportation
- 5.5%: Certain kinds of food, books, gas/electric bills (in some circumstances), etc.
- 2.1%: Certain medicines, newspapers/magazines, etc.
What are the tax filing deadlines in France?
The deadline to physically mail your tax return in for a given year is May 22 of the following year. However, the deadline for online returns depends on which of the 101 départements you live in:
- May 25: Online deadline for départements 1-19
- June 1: Online deadline for départements 20-54
- June 8: Online deadline for départements 50-101 and Overseas France
Social Security in France for US expats
The US has a totalization agreement with France that prevents Americans from having to pay social security taxes to both countries (which one they pay depends on how long they intend to live there).
For those who do have to pay French social security taxes, the exact rate and means of payment depend on their employment status.
- Employees have social security taxes immediately withheld from their paychecks by their employers, typically at a rate between 20% and 23%
- Self-employed individuals must make proactive social security payments every month or quarter. Those who participate in the micro-entrepreneur scheme typically pay between 6% and 22%, while others can pay up to 42%
Do US expats living in France also have to file US taxes?
Yes. The US has a unique taxation system in which all citizens and permanent residents must file a US tax return (as long as they meet the minimum income reporting thresholds), even if they’re living in another country.
How to file French taxes as a US expat
We are proud to have both US and French tax expertise at Bright!Tax. We are pleased to have partnered with an exceptional French tax provider to streamline your US and foreign filing obligations. Together, we will ensure that your global tax strategy is as efficient as possible for you.
Common tax breaks available to expats in France
Foreign Tax Credit (FTC)
The FTC provides Americans with dollar-for-dollar tax credits on any taxes they’ve paid to a foreign government, so long as they are legal, based on income, made out in their name, and paid. Taxes in France vs. the US are often higher, so the FTC can frequently eliminate your tax bill entirely or give you surplus credits for future years.
Foreign Earned Income Exclusion (FEIE)
The FEIE allows Americans abroad to exclude up to $112,000 (2022) of their income from taxation (, ($120,000 for tax year 2023). Along with the FEIE, you may also be able to exclude qualifying housing expenses via the Foreign Housing Exclusion.
To qualify for the FEIE, you must meet one of two tests:
Physical Presence Test
Those who stay out of the US for 330 days in a 365-day period meet the Physical Presence Test.
Bona Fide Residence Test
Those who are officially residents of another country for more than one calendar year and can prove it through documents like residency cards, rental contracts, utility bills, etc. meet the Bona Fide Residence test.
Child Tax Credit
The Child Tax Credit offers all US taxpayers a partially-refundable tax credit of up to $2,000 per qualifying child, provided that they meet the basic criteria. However, when filing for the 2022 tax year in 2023, most expat parents can expect to receive a partial refund of up to $1,500 per qualifying child due to common international tax filing circumstances.
Understanding how to qualify for (and even retroactively claim) the CTC can be complicated, especially when bearing in mind the brief changes that accompanied the American Rescue Plan Legislation in 2021. We’ve got all of this covered and more in our complete guide to the Child Tax Credit.
Special note: How to claim the Contribution Sociale Généralisée (CSG) & the Contribution pour le Remboursement de la Dette Sociale (CRDS) as income taxes
Up until 2019, two taxes on French residents’ income (the Contribution Sociale Généralisée (CSG) and the Contribution pour le Remboursement de la Dette Sociale (CRDS), which together can reach up to a 10% tax rate) were classified by the IRS as social levies rather than income taxes. This classification made these taxes ineligible to be written off through the FTC.
Recently, however, the IRS re-classified these as income taxes, allowing US expats living in France to claim US tax credits against these taxes through the FTC. What’s more, Americans living in France are eligible to file amended returns to claim credits for tax returns as far back as 2009.
And given that the IRS estimates that the average amended claim will result in $10,000-$15,000 of tax credits per year, US expats who have been living in France for a while are expecting a significant overall payout.
Read More: US Expats in France in Line for IRS Tax Windfall
Tax implications of renting out your US residence while in France
Those who own US property often choose to rent it out upon moving abroad. If you do this, know that you’ll have to report income and expenses associated with it on Schedule E.
Rental income while living in France: Frequently asked questions
If I own a rental property in the US or outside of France, do I have to report it to France?
Yes. Tax residents of France must report their worldwide income, which would include rental income from properties in other countries.
Which country do I pay taxes to on my rental property income?
US expats living in France are subject to taxation by both countries, but by taking advantage of one of the tax breaks mentioned above, they can often eliminate the risk of double taxation. Note, however, that this income cannot be excluded via the FEIE since it is considered passive vs. active.
US expats living in France may need to file an FBAR
If you have foreign accounts (checkings, savings, investment, pensions, etc.) totaling over $10,000, you’ll have to complete a Foreign Bank Account Report (FBAR) by filing FinCEN Report 114. And if you have foreign assets exceeding $200,000 by the last day of the tax year — or $300,000 at any point in the year — you’ll also need to file Form 8938.
Getting caught up on your US taxes with the Streamlined Procedure
If you failed to file tax returns in previous years because you weren’t aware of your obligations, you may be able to benefit from an IRS amnesty program called the Streamlined Procedure. As part of this procedure, you’ll file your last three tax returns, last six FBARs, pay any outstanding taxes, and certify that your previous non-compliance was non-willful. The good news is that this procedure is penalty-free.
File US taxes & taxes in France with ease and confidence when you partner with Bright!Tax
As you can tell, moving abroad can make taxes pretty complicated. But don’t let that stop you from realizing your dreams of living in another country — the experience is well worth it. With Bright!Tax’s years of experience helping US expats all over the world with their taxes, we’re well-qualified to help with both your US and French tax returns.
Reach out today to schedule your free consultation!
Taxes in France – FAQ
Does France have a tax treaty with the US?
Yes, France does have a tax treaty with the US that, in theory, prevents US expats living in France from double taxation. However, a tricky clause permits the US to act as if the treaty didn’t exist, so it’s often a safer bet to go with one of the tax breaks mentioned below.
US-France Totalization Agreement
While the US-France tax treaty doesn’t cover social security taxation, a separate agreement called a Totalization Agreement helps US expats in France not to pay social security taxes to both the US and French governments. Expats’ contributions made while in France can be credited to either system. Which country they pay depends on how long they will be living in France.
I’m a US expat who’s lived in France for years. Do I owe past US tax returns?
Yes. No matter whether they’re aware of it or not, all US citizens and permanent residents who meet the minimum income reporting thresholds must file a tax return. Anyone who falls behind must get caught up as soon as possible.
Is there support for accidental Americans in France?
Yes! The Association of Accidental Americans was founded in France.
Sometimes, people can be US citizens or permanent residents without even realizing it. Such individuals are referred to as Accidental Americans. While they still must file US tax returns, a group called the Association of Accidental Americans (founded in France) and other organizations are lobbying to change that.