Living in France as a Retiree: Part 3: Taxes and Succession

Don’t miss Part 1 and Part 2 of this series on Living in France as a Retiree

France has rather rigid laws, especially when it comes to taxation and succession. They are also quite unclear. Disclaimer: I am not an attorney, nor an accountant. However, I can inform any prospective retirees on issues to look out for. I used some of my own experience, but also that of other immigrants from the US to France with different financial and family situations.

Note of caution: French attorneys and tax accountants who deal with Americans tend to ask for a lot of money, and their advice is not always crystal clear. I don’t want to make a sweeping assumption, but this has been our experience.

Another note of caution: Laws change.

No Double Taxation

Who is a French tax resident? The French government uses several factors to determine whether or not you are a resident for tax purposes. A rough rule of thumb is that if you intend to spend more than 6 months of the year in France, you will probably be considered resident for tax purposes.

The good news is that there is a treaty between the US and France, and retirement income, at the very least, is not double-taxed.

Trusts

Many Americans have trusts. France does not recognize US revocable trusts as “transparent” for tax purposes, so every time you change or take a distribution of funds held in a trust, you will have to declare it to the tax authorities within 30 days. The penalties for not doing so are steep.

The current default position is that distributions are automatically treated as income and hence taxable. The onus is on you to prove that distributions are not income and thus not taxable, which means you will need a full accounting trail of the funds. If you have a revocable trust, you should consider removing any financial assets from the trust prior to moving to France.

Joint Ownership of Property

If you are buying property jointly (e.g., you and your spouse or partner), there are three ownership options:

1. En Indivision (Standard Joint Ownership)

This is the default and most common method. Each person owns a specific share (e.g., 50/50 or 60/40) based on their financial contribution.

Pros: Simple and flexible; reflects actual financial input.
Cons: If one (legal) partner dies, their share is subject to French inheritance laws. This means children (including those from previous relationships) automatically inherit a portion of that share, potentially making the surviving partner a co-owner with their children or stepchildren.
Best for couples with no children, or those who are comfortable with their children becoming immediate co-owners when one of the partners passes.

2. En Tontine (Survivorship Clause)

A specific clause is added to the sale deed stating that the survivor is deemed to have owned the entire property from the start. This needs to happen when the property purchase occurs.

Pros: The surviving partner becomes the sole owner automatically, bypassing “forced heirship” for that specific property. The children cannot claim their share until both partners have passed away.
Cons: It can be difficult to undo if the couple splits up, as both must agree to cancel it. There may also be higher tax implications if the property value is high and the couple is not married or in a PACS (official civil partnership)
Recommended for unmarried couples or those with children from previous marriages who want to ensure the survivor stays in the immediate family

3. SCI (Société Civile Immobilière) (Limited Liability Company)

You set up a French LLC to buy the property. The couple (and their children) then owns shares in the company rather than the real estate itself.

Pros: Offers the most flexibility for succession planning. Shares can be transferred more easily than real estate, and they can help non-residents manage French inheritance taxes.
Cons: Higher setup costs and ongoing administrative requirements (annual accounts). The shares must also be declared to the IRS every year.
Recommended for high-value properties or complex family situations where you want to avoid certain French succession rules.

Comparison of Couple Status & Protections

Status: Married

Inheritance Tax: Exempt (0%)
Automatic Rights: Strongest; can use a Communauté Universelle contract to protect the survivor

Status: PACS (Civil Union)

Inheritance Tax: Exempt (0%)
Automatic Rights: No automatic inheritance. You must write a French will, or the partner gets nothing

Status: Cohabiting

Inheritance Tax: 60% (yes, you read that correctly!)
Automatic Rights: None; the surviving partner is treated as a “stranger” for tax purposes

Inheritance Tax on Worldwide Income

When a French tax resident dies, their entire worldwide assets will be taxed by the French authorities. French inheritance tax rates and allowances depend entirely on the familial relationship between the deceased and the beneficiary.

Spouse/Civil partner: Fully exempt from inheritance taxes
Children/parents: biological, adopted: €100,000 tax-free allowance; above that threshold, a sliding scale: 5% to 45% (progressive)
Siblings: €15,932 tax-free allowance; above that threshold, a sliding scale: 35% to 45%
Nephews/Nieces: €7,967 tax-free allowance; above that threshold, 55%
Unrelated/Friends: €1,594 tax-free allowance; above that threshold, 60%. This category includes unofficial life partners, as well as stepchildren you may have raised, but are not officially your children

More notes of caution:

It is important to verify that adopted children will indeed inherit just like biological children; it isn’t always the case, especially if they were adopted as adults.
If you have a joint bank account, the wording in the title can determine what happens upon the death of one account holder. It is best to verify this when you open an account.
In France you cannot “disinherit” your children. If a couple jointly owns a property and one partner dies, the children of the deceased partner have automatic ownership rights on a portion of the assets and property of the deceased. This cannot be overridden by a legal contract.

The above is not a comprehensive account of all the details. However, at least this article can help retirees avoid some pitfalls and be prepared.

Photo of a building in Nice

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French Tax Office Rules Against Remote Work

Posted by Stephen Heiner

In the United States, when there is ambiguity about a tax law, if enough accountants and people ask about, the IRS will give guidance which then means people will have to, at least from that time forward, act accordingly. For example, when crypto came into its own some years ago, the IRS gave guidance for how to deal with it. That guidance is publicly listed on an official government website so everyone knows.

Just a few days ago, Emma Pearson of The Local wrote a very helpful article sharing new guidance on remote working in France. While I am unclear as to why the French Tax office would choose to “exclusively clarify to The Local” a rather important tax rule, instead of publishing and publicizing it themselves on a government website, we are grateful for Emma’s work regardless, as the guidance is clear.

This is the key quote:

“The French tax authorities (DGFiP) consider that work is carried out in France when it is physically performed from French territory, regardless of the employer or location of the clients. So if you’re an employee or freelancer working for a company based abroad, but physically carrying out your tasks from France, this constitutes work carried out in France for tax purposes.”

Our position at TAIP for many years has been that since we have guided many people through successful visa applications in which a letter from employers stating that the applicant was remote working, that as far as immigration authorities are concerned, remote work in France is legal. That is still our position. The ruling of the tax authorities cannot overrule another equivalent (or possibly higher) department of the government: immigration. A ruling or clarification would still need to come from there.

However, this clarification from the tax authorities makes such visa applications now impractical, as once you get here, the tax authorities play an oversized role in your ability to stay in France. Various attestations, including the P-237 which I had to submit for my French citizenship application, all need to come from them and you want to be in their good graces. You couldn’t be in their good graces in the face of this new clarification.

Practical Effects

What does this mean for you? Here are some scenarios we have considered as of today, when we are officially amending our advice on visitor visa applications:

Current Visitor Working Remotely

Our advice is for you to transition to a Profession Libérale visa, freelancing in the field you already work in. This may be straightforward in some fields. For example, if you are a bookkeeper, you could simply set up a French bookkeeping practice with this visa, and your now-employer could then transition to using a foreign contractor. On the American side, this will be relatively painless, as they don’t have to enter the French labor market. They are simply hiring a foreign freelancer. The tax implications are on the freelancer. You can start working on the paperwork now (we have courses and consultations to assist), and then when renewal comes, you can simply apply for a “change of status” and present your application then.

Hopeful Visitor Who Wanted to Work Remotely

As we noted above, this door is now officially barred so you’ll have to consider Passeport Talent or Profession Libérale as alternatives, and our website is full of advice on both.

Person Who Decides to “Risk It For the Biscuit”

Okay, so you’ve done your own French taxes for years, and you’ve correctly reported your foreign-sourced income. There’s no real way for the tax authorities to know you work remotely, as we’ve always noted (there are no tax authority digital police roaming around, no matter what the Karens say…or believe!). But your long-term future in France doesn’t offer solid possibilities. To get a ten-year card you will need to prove financial anchorage in France, which you can’t do with mostly (or entirely) foreign-sourced income (N.B.: we have seen exceptions to this principle made for retirees). The bar is even higher for citizenship. So, you can potentially get away with this indefinitely, but you’ll be stuck with only ever getting one-year cards forever. Not a pleasant prospect.

Reflections

Other nations like Croatia and Spain have created much more progressive visas in which immigration and the tax authorities work together, so there could never have been any ambiguity about visas because one department considered remote working legal and the other illegal. That’s neither good nor bad, as every country has a right to run itself as it sees fit, but it’s unfortunate for those who would like to live in France but don’t wish to start a business, get into a relationship with a French person, or have the particular set of skills that would lead a French company to pay a one-time bounty + a percentage of every paycheck indefinitely just to hire you when they could hire a European. This ruling from the tax authorities excludes many people from France who would otherwise have come to the country, paid into the economy, possibly learned French, and made friends (and maybe found a spouse).

In a time of global uncertainty, such a stance cannot be considered welcoming from a country that prides itself on hospitality and showcasing its treasures. And why the tax authorities have chosen to effectively speak for French immigration, I’ll never know. However, it’s not our duty to like official rulings, but to comply with them and advise our clients to do so, as we always have here on TAIP.

Photo courtesy of Wikimedia Commons.

Did you enjoy this article? TAIP is 100% reader-supported through tipping. If you want to leave us a tip of any amount it would be highly appreciated. These tips help support our efforts to keep TAIP an ad-free environment. Just as at a cafe, the tips are split evenly among the team.

URSSAF’s Summer Robbery (and Autumn Reimbursement)

Posted by Stephen Heiner

Back in 2016 I wrote my very first article about French taxes. I noted that I had to send two written corrections to the Ministry of Finance by registered mail, asserting (with my French accountant gently nudging me forward) that I, in fact, did not owe taxes to the French on my foreign income. It was only after the second letter (they had tried to get away with simply a reduction in the first reply) that they removed all liability.

Reflecting on that incident now, I remember being surprised that it could have happened. I had only been living in France for about three years at that point. I had the idea that tax returns go into a machine, and that the machine double-checks your own calculations, and then voila, you get your September attestation. This situation turned me on to the idea that sometimes, the machines can screw up, even with something so banal as number-crunching.

Summer 2024 marked a new milestone for me. As is the case for most of my summers in France since 2015, I was away from Paris for the majority of the time. That also meant if “administrative issues” occurred, I probably wouldn’t be able to deal with it until after the rentrée, for various reasons. In this particular case, URSSAF suddenly started pulling out seven times my normal monthly social contribution out of my business bank account.

I say “suddenly” but the truth is that URSSAF sends a “regularization” notice for your social contributions (just as the Ministry of Finance sends one for your personal taxes). The latter normally comes in September but with the new integration of URSSAF with your tax filings, the former came as part of a regular email notice that I ignored. Revenue for my French business had been more or less the same in relation to the previous year so I thought my contributions would remain the same.

Wrong.

For whatever reason, URSSAF had taken my foreign earnings amount, which I have to declare on my French personal return, and decided that all of it was taxable French business income. I only learned that because I sent an email to my personal and business accountants (in September, when I knew everyone would be back) asking what could have happened, and did I miss some new major tax that had been levied on small businesses?

The same accountant who all those years ago helped me stand up to the Ministry of Finance wrote back:

The XXX€ amount represents US source earnings for which you paid social charges in the US. URSSAF should not be using this amount in their calculation.

This happened to one other client and after correspondence with URSSAF by the client’s French accountant, he was able to correct his calculation.

The explanation should be that this is US source income and per the social security tax agreement (Totalization agreement) it is taxed in the US thus exempt from French social charges.

She helpfully enclosed the link for me to share with URSSAF in correspondence.

I duly forwarded my objection to URSSAF and a couple of weeks later I got a new regularization and a large portion of the overcharge refunded to my bank account for the 2023 number. Now that I’ve gotten clarity on what happened, I’m going to restate estimated numbers for 2024 to URSSAF (quite easy since it’s almost the end of 2024), and once they process that, I will probably get the remaining amount of the overcharge refunded.

Two key takeaways:

As doli recently noted in her dogged pursuit of the French to pay her back for the locks they broke, it’s about persistence. Most people, even the French, often cave on personal administrative injustices, as confrontation with the authorities is emotionally draining, and life is hard enough. Stay dogged.
The French bureaucracy is going to make mistakes, even nonsensical ones sometimes. Stay patient and make sure you have good help.

Speaking of good help, for years we have been dogged by the question, “Do you know any good accountants?” My accountant (the one referred to in this story) stopped taking new clients in 2018 so I’ve not been very helpful in recent years other than to send links to some accountants we had found online but had not gotten to know. But thankfully, we now have a resource. You’ll see short interviews done with these firms in the weeks ahead to give you a bit more context. When you reach out to them, let them know The American in Paris sent you. It’s one more way you can support our work. 🙂

If you’d like a laugh from a fellow immigrant, Tatty Macleod, who understands the pain of URSSAF, click here.

Photo by George Becker.

Did you enjoy this article? TAIP is 100% reader-supported through tipping. If you want to leave us a tip of any amount it would be highly appreciated. These tips help support our efforts to keep TAIP an ad-free environment. Just as at a cafe, the tips are split evenly among the team.

This story also appeared on Medium.