Note from the editor: In this special guest post, Robert Levitt, a French licensed investment advisor at Levitt Capital Management, a tax and investment advisory firm established to work with US citizens in France and throughout Europe, shares news of two pieces of legislation that could have an impact on American expats in France. Follow the link above if you’re interested in working with Robert or his firm – MS
Americans who live in France may already know they are unique in the world of expats — they fall under two different tax regimes: the United States and France, and both tax you on your worldwide income.
You may also know that the US and France have some of the most favorable tax treaties in the world, especially when it comes to investment portfolio strategy. These treaties not only reduce double taxation but also allow you to take full advantage of the best of both countries’ tax rules.
So for most Americans in France, changes in US legislation can often be a huge setback, not an advance. At our investment and tax advisory firm, Levitt Capital Management, we closely follow the legislative activity in Washington that can impact expat Americans. Two proposals on the horizon are worth discussing.
New Legislation in DC Most Likely Won’t Impact Americans in France
A new bill, called the Overseas Americans Financial Access Act, is intended to provide relief for Americans who have trouble opening basic bank accounts in the country of their residence.
I had the opportunity to catch up with Congresswoman Titus, the person who introduced the bill, and I’m impressed with her efforts. However, in my opinion, the bill will not be very helpful for a myriad of reasons.
Its basic premise, sometimes called the “Same Country Exemption,” proposes that Americans who live in a foreign country would not be subject to FATCA on their basic checking accounts open in the country where they live.
Bills that provide relief for Americans abroad are a good thing and, again, I applaud Congresswoman Titus. But I don’t believe this particular bill will be helpful. Legislation in the United States famously doesn’t impact banks in Europe, and nobody involved seems to have asked the banks if it would change their view on Americans.
I decided to do the research myself and have discussed the potential of a bill like this with banks throughout the UK and Europe. The answer? No, a bill of this type wouldn’t have any impact on what they do, because if they tried to determine who lived where it would just add to the bank’s burden.
Most of the people I spoke with also mentioned there are logistical problems with the legislation as well. Each country has signed a specific agreement or treaty with the United States regarding FATCA. Meaning, that even if the bill were passed into law, it would not change the treaty agreement.
It’s also an idea whose time has come and gone. Thankfully, opening a basic bank account is no longer an issue in Europe (particularly in France). Most banks have purchased the software needed to conform with the FATCA regulations. So, if a particular bank refuses an American, there are plenty of alternatives out there.
Better Legislation on the Horizon?
Far more interesting is legislation soon to be introduced called the Americans Abroad Tax Bill. It’s set to:
- Combine tax and foreign bank and financial account reporting (FBAR and FATCA)
- Study and report on the simplification of currency exchange rates
- Increase the threshold for simplified foreign tax credit rules and reporting
- Give a time extension for persons outside the United States to request abatements of math errors
- Reduce the burden for lower-income dual citizens expatriates and more.
Some of these issues are probably non-starters because combining the FBAR with the FATCA filings would be opposed by both the IRS and FinCEN, the financial crimes unit of the U.S. Treasury, so I’m not sure that portion will pass.
It’s complicated, but still, this is a bill that I can support and will advocate for in an upcoming trip to Washington — although it has a far better chance of passing in 2025 than in 2024.
There is far more involved in the bill, and if you’re interested in seeing the text, I’d be happy to discuss it with you. While tax and financial issues can seem overwhelming, more and more providers understand these issues and offer straightforward solutions. We are one of those providers, and would be happy to work with you!
In any case, whether these bills are passed or not, I applaud the efforts of all legislators who are trying to provide relief to Americans who live in France. It is needed and appreciated.
Photo by Sasun Bughdaryan on Unsplash
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