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.

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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.

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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.

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US Taxes for Americans Living in France

Posted by Guest Writer

Note from the editor: One of our most asked questions here at TAIP is: how do I file my taxes as an American expat in France? Do you have any accountant recommendations? As such, I’ve made it a goal to come into contact with some reputable CPAs. Universal Tax Professionals specializes in US taxes for Americans living abroad. Josh Katz, CPA and Founder of UTP shared this very helpful overview of everything you need to know about filing as an expat in France, as well as ways UTP may be able to help. — MS

For Americans living in France, the issue of taxes can seem complex, as they need to address both French and US tax obligations. While living abroad provides many opportunities, it does not absolve US citizens from filing and paying US taxes. The US operates on a citizenship-based taxation system, meaning Americans must file a tax return annually, no matter where they live.

Who Needs to File US Taxes?

All US citizens and Green Card holders living abroad must file a US tax return if they meet the below income thresholds:

$13,850 for single filers
$27,700 for married filing jointly
$5 for married filing separately
$20,800 for head of household
$400 for self-employed

This means if your worldwide income, including earnings from French sources, exceeds these amounts, you must file a US tax return, regardless of where you live.

Foreign Earned Income Exclusion (FEIE)

To reduce the burden of double taxation, the Foreign Earned Income Exclusion (FEIE) allows Americans living abroad to exclude a certain amount of their foreign-earned income from US taxation. For the 2023 tax year, this amount is $120,000. To qualify for this exclusion, you must pass either the Bona Fide Residence Test or the Physical Presence Test.

Bona Fide Residence Test: You must reside in a foreign country for an uninterrupted period that includes a full tax year
Physical Presence Test: You need to be physically present in a foreign country for at least 330 full days in any consecutive 12-month period

Foreign Tax Credit (FTC)

In addition to FEIE, US expats in France can also claim the Foreign Tax Credit (FTC). This credit allows you to offset taxes paid to the French government against your US tax liability. If you pay taxes in France, you may be able to avoid double taxation on the same income by claiming the FTC.

For instance, if you’re employed in France and pay French income taxes, the amount of tax you pay to the French government can be credited against the US taxes you owe. This credit applies to income, dividend, and interest taxes but not to social security contributions.

Reporting Foreign Bank Accounts: FBAR

If you have a foreign bank account, including accounts held at French banks, you may need to report this to the US government. The Foreign Bank Account Report (FBAR) is required if the total value of all your foreign financial accounts exceeds $10,000 at any point during the year. The FBAR must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 15 each year, though an automatic extension to October 15 is available.

FATCA Reporting

The Foreign Account Tax Compliance Act (FATCA) requires US expats to report their foreign assets if they exceed certain thresholds. For US taxpayers living abroad, the threshold is $200,000 for single filers and $400,000 for joint filers at the end of the year. This includes bank accounts, investment accounts, and other financial assets held in France.

FATCA reporting is done through Form 8938, which must be included with your US tax return.

Self-Employment Taxes

If you’re self-employed in France, you must pay US self-employment taxes, which cover Social Security and Medicare. The US self-employment tax rate is 15.3% of your net income. However, if you’re covered by the French social security system, the US-France Totalization Agreement can help you avoid paying social security taxes in both countries.

Under this agreement, if you contribute to the French social security system, you won’t be required to pay US self-employment taxes. However, you’ll still need to file your US tax return and report your income.

Double Taxation and the US-France Tax Treaty

The US-France Tax Treaty helps avoid double taxation by providing rules for which country has the right to tax specific types of income. For example, the treaty outlines how pensions, investment income, and wages should be taxed to prevent them from being taxed by both the US and France.

Understanding how the treaty applies to your situation is crucial, as it can affect your tax liability in both countries.

Deadlines and Extensions

For Americans living abroad, the US tax filing deadline is June 15 — an automatic two-month extension beyond the standard April 15 deadline. However, if you owe any taxes, interest will still accrue from the April deadline. If you need more time, you can request an extension until October 15, but you must submit Form 4868 to do so.

Streamlined Filing Compliance Procedures

If you’ve fallen behind on your US tax filings while living in France, you may be able to catch up without facing penalties through the Streamlined Filing Compliance Procedures. This program is designed for expats who have not filed their tax returns due to non-willful neglect. To use the program, you must file three years of back taxes and six years of FBARs, along with a statement explaining your non-compliance.

How a Tax Professional Can Help with Your US Taxes

Handling US taxes while living in France can be challenging, especially with the complexity of filing requirements, credits, and exclusions available to expats. Working with a tax professional means you won’t have to worry about missing deadlines, filling out complicated forms, or determining whether you qualify for certain credits. They can help simplify the process and reduce the risk of penalties or overpayment.

Universal Tax Professionals has been offering tailored tax services to American expats in France for over ten years. Our experienced team specializes in US expat tax preparation, ensuring that you comply with US tax laws and maximize the credits and exclusions available to you. Whether you need help filing back taxes, claiming the right deductions, or understanding complex reporting requirements, UTP provides personalized support. Reach out to schedule a consultation today and let our team take the stress out of your US tax filing while living in France.

Photo by The Now Time on Unsplash

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.

Bank Accounts, Taxes, and New Legislation: a Quick Guide for the American Expat in France

Posted by Guest Writer

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

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.

French Tax Season Concludes

Posted by Stephen Heiner

It’s that time of year when French accountants have closed their offices, put do-not-disturb autoresponders in their email inboxes, and have fled town to relax. Tax season is over. I never expected to write so much about taxes on this site, but enough people ask me about them that I have to pretty consistently write about the topic, as I did in 2015, 2016, 2018, 2020 (twice) and this article adds 2021 to the list.

Yesterday was the last day this year that personal income taxes could be filed in France. The Fifth Republic gives paper filers the least amount of time. This year that date was May 20th. After that only online filing was possible. May 26th was the deadline for departments 01-19 and non-residents of France (if you have real estate or a business that earns income in France you have to file even if you don’t live here). June 1st was the date for departments 20-54, and yesterday, June 8th, was the deadline for all the rest of the departments, from 55 to 976 (Mayotte), including those of us here in Paris (75).

I’ve not filed my own taxes in any country since my early 20s, before I started to own businesses and learned how favorable the US tax code was to them. Even then, I always took cues from paid accountants who spent their entire working lives learning about the tax code and were always up on the latest regulations. I carried that same attitude over when I moved to France. I hired my French personal accountant in 2014 and she’s taken care of me every year since and works in concert with my US firm that handles my business and personal US returns and specializes in location-independent businesses. My French accountant sends her engagement letters out to her existing clients early each year and that guarantees you a spot for the year’s filings. If you’re not a pre-existing client, you’re going to pay much more to file a return if you reach out to her or her colleagues even in mid-season. You’ll pay progressively more each week closer to filing time, and double or triple what I pay if you contacted her last week, if she was even willing to pick up the phone then.

Hence, when I get panicked emails from Americans in April and May asking if I know anyone who can help them, I often say, “I don’t know.” There are a very limited number of firms that work with Americans filing taxes here in France and because of that, the rates are significantly higher. Then the immediate retort to the price I quote, which is usually from someone on visitor status is, “But I don’t even PAY taxes here.” But the problem with that statement is its lack of anchorage in reality: you don’t pay your accountant based on how much tax you pay. The accountants don’t work for the French government. You pay based on how complicated your return is. While Americans who are tax residents in France don’t have to file particularly complicated returns, no one would classify those returns as simple. They get additionally complex when you add in French income from rentals and/or businesses (as I have had to over the years).

Americans forget that there isn’t some equivalent of H&R Block here offering tax returns at cut-price rates done by people who went to a clinic for eight weeks. Hence they have unreasonable expectations.

One way to adjust your expectations appropriately is to educate yourself. I recently came across a book written by someone I met in Bangkok at the end of 2019. He runs an international accounting firm and the book is called US Taxes for Americans Abroad. It’s not an exciting page-turner (no financial book is) but it’s very helpful for understanding just how complicated life for a US citizen abroad is. I suspect the estimated nine million of us who live outside the US have no idea how complicated it is, even if, like me, they have been filing in their country of residence for years.

Just a few helpful concepts Vincenzo (himself a non-resident American) includes in his book:

how renting a home abroad can lower your US tax burden
the ins and outs of the Foreign Earned Income Exclusion (FEIE)
how to avoid paying state taxes if you are no longer resident stateside
the tax implications of marrying a non-US citizen
retirement and investment challenges

And the topic du jour among Americans abroad in recent years: renouncing US citizenship, and all the costs that come with it.

The moral of the story, as always: living outside the United States comes with some amazing opportunities and benefits. It also comes with at least double the paperwork of a regular life in the US. Stop your complaining and get to work. At least one benefit for those of us filing in France this year? No need to report any of the aid we received for our businesses due to Covid. One more thing to be grateful for as the weather turns warmer, ever so slightly, day by day.

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.

Coronavirus Financial Aid for Small Businesses Arrives

Posted by Stephen Heiner

This is the time of year when I often have to remind non-EU nationals who live in France most of the year that they need to file taxes. With all that has been going on I was particularly glad that not only had my US personal and corporate returns been filed, but that my American business accountant had quickly filed for the small business aid package offered by the US government and two of my US corporations had gotten the initial grant ahead of possible additional loan consideration. Additionally the much-trumpeted $1200 American bailout check has arrived at a US address and will be deposited this week. My French business has also received aid for the month of March. At a time of year when I’m used to having to calculate what I owe to two different countries, it’s an odd feeling, to say the least, to be receiving funds from two different governments, but hey, when you pay taxes in two different countries, it’s not an unreasonable (nor undeserved) outcome.

French Small Business Aid

I’m a member of the National Union of Journalists (a UK-based organization) and the Paris chapter was incredibly helpful in getting information out to members early on and throughout the shutdown here in France. The aid which came through from the French government last week was the result of a fairly straightforward form available at the French tax site. You log into your account (which you have if you’ve ever filed a return here in France) and then navigate to your secure inbox and select a dropdown specifically designed for Covid-19 aid for your small business.

You are then taken to a one-page digital form in which you attest that:

Your business was open before 1 February 2020
It was not in liquidation before 1 March 2020
Its workforce was less than or equal to ten employees
Your turnover last year was less than 1,000,000 €
As a managing partner of the company, you did not take more than 60,000 € in dividend income last year
You do not hold either a CDI (employment contract) or a pension which results in your receiving more than 800 €/month
If you own multiple companies, you are still subject to the above attestations (meaning that if you had more than ten employees among your multiple businesses, or if their combined turnover was more than $1M, etc. you are disqualified)

You then fill in your name, address, email, phone number, and SIRET (tax ID number for your business) and then state whether your business was closed or suffered a loss of turnover of at least 50% from a comparable time last year.

Now interestingly enough the lockdown occurred in the middle of March and while it did interrupt the onboarding of a new writing client I had in Paris, my March 2020 wasn’t a particularly bad month, but March 2019 had happened to be a very good month for the business, and as such, I was able to apply for aid. The money was directly deposited into my bank account last month, and I just repeated the same process for the month of April. The French government has said that this program will be in place until the end of May, so that’s been a big help to small business owners like myself.

This program served as a gatekeeper for a second funding program, which offered assistance to anyone who didn’t qualify under the first program. Since I had qualified for the first program I was ineligible to apply for the second program, but the application was simple and straightforward as well. It was one page and was to be submitted through the URSSAF system. The questions were more probing, however, as they wanted 2018 business income as well as certification that this was your only stream of income and that losing it jeopardized your ability to cover your basic needs.

Outside of small business owners, millions of French are on 75-85% of their regular pay (or more) due to government programs so while others have marveled at how “calm” the French have been during lockdown, I can guarantee that such calmness would not have been on display if these programs were not in place and being efficiently executed, which begs the question, if the French can have such efficient bureaucracy in a crisis, what’s the problem during “normal” times? 🙂

Photo by Matthew Waring on Unsplash

This article originally appeared as part of a series for Dispatches Europe.

Auto-Entrepreneur: A Tax Classification, Not a Visa Status

Posted by Stephen Heiner

On more than one occasion I’ve gotten emails from people who use “auto-entrepreneur” and “profession libérale” interchangeably. They aren’t interchangeable, and more importantly for readers of this blog, auto-entrepreneur is not a visa status. It’s a tax classification, and not necessarily a desirable one at that.

How Did It Start?

In 2009 President Sarkozy created “auto-entrepreneur” as a simple way for French people (and foreign nationals) to start small businesses. With a ceiling of 32,900 €/year of topline revenue, it was seen as a liberalizing measure, without committing to full Anglo-Saxon soul destruction. You would pay your social charges “as you go” which meant if you had no sales, there were no charges, and if you went two years without earning anything, you would simply automatically lose the classification with no penalty. This allowed holders of the status to try starting a small business “risk-free” in tax terms, and potentially add on an additional stream of revenue without onerous accounting burdens.

The regime is actually now called “micro-entrepreneur” and you are said to be running a “micro-entreprise” if you use this tax classification. In American terms this is a sole proprietorship, meaning you have unlimited legal liability should problems result.

Confusion

There’s a lot of bad advice on the internet and so on more than one occasion people have registered for auto-entrepreneur while on Visitor visas, thinking that they had found a legal way to work in France, not realizing that the regime that allows you to register and get a SIRET (what Americans know as an EIN — employer identification number) isn’t connected with OFII so they aren’t equipped to validate whether you’re eligible to register. You just have to supply some basic info and then you can get a number. But this has led to tears on more than one occasion when someone showed up to renew their visitor visa with auto-entrepreneur earnings on their bank statements and a SIRET they shouldn’t have had. Visa renewal denied, eligibility to live in France ended, and the process of living in France had to begin all over again, back in their home countries.

Furthermore, President Macron raised the limit that micro-enterprises could earn to 70,000 €, but most people don’t know that the minute you go over 33,100 € you are subject to VAT (as I outlined here), no matter what your tax classification is. Goodbye simple accounting, hello nightmare exchanges with URSSAF and the Department of Finance.

So…

So, if you want to have a business in France, make sure you have the correct visa for it, or that your CDI allows for it. For some foreigners here on a salarié work visa, their contract specifically prohibits their starting a business under the micro-entrepreneur classification. If you’re here as a Visitor, you are ineligible to apply for this classification. I know that there’s nothing on the internet that seems to say this, but it’s just a simple fact: if you don’t have a visa allowing you to work, going to a website and clicking a few buttons isn’t a magical fix. This relates back to something I’ve said before: no one from French immigration ever tells you that as a visitor you have to file taxes in France even though you aren’t paying taxes in France. Remember, in immigration in general and in France in particular, if it seems too good to be true, it is. Always double and triple-check before you make a major decision regarding these issues.

If you want to start a small business in France, profession libérale remains the simplest route, with many options to change if your business becomes really successful, and zero requirement to register as a micro-entrepreneur at any stage whatsoever.

Photo by slon_dot_pics from Pexels

French and US Taxes

Posted by Stephen Heiner

This was the year I finally found my rhythm filing in two countries. I did my US business taxes in March, my US personal taxes in April (though I needed some French income estimates to complete them), my French business taxes in May, and my French personal taxes right before June. Yes, Americans, from the country ostensibly founded on a tax revolt, always get to file taxes, no matter where they live in the world.

Everyone has different strategies and situations and how much you actually pay in taxes is down to how well-constructed those strategies are. What I have been reminding people in previous articles over the years (here and here) is that the moment you pass 183 days in a calendar year of living in France, you transform from being a regular resident to a fiscal resident, and as such, are required to file taxes, even if you are here on a visitor visa and have earned no French income. As I often say, the French love documentation and paperwork, and the Ministry of Finance doesn’t share records with OFII in this regard and even if they did, they wouldn’t care. They want their own proof of your fiscal liabilities (or lack thereof) during your stay here.

If you aren’t an accountant who speaks French and also knows French accounting law, I would strongly advise against self-filing. If you need the recommendation of someone reliable, my accountant has been filing for me since my first fiscal year in Paris and now handles my file which includes French income and tax liability.

I’ve also found new French business accountants, who have been a dream to work with and delivered the kind of customer service that I had hoped for when I signed up with the last firm I used (who I have severed ties with).

I often hear from people who mention in their emails that “no one ever told me about this” and while I fully understand that sentiment, as I had to be told about this issue myself, you can’t have that attitude when emigrating to a new country, or even staying there just a few years. Do not wait “to be told” about anything. You are not a customer in a store. You are a visitor and/or future possible citizen. Read everything you can and continuously educate yourself.

Further, be assured that as cryptocurrency begins making greater inroads and banks continue to become more rigorous in their compliance, taxes will follow you, wherever you might be domiciled. You won’t get to skate out of a tax system simply because you aren’t living in your country of nationality and/or because you’re a legal resident of a country in which you’re a foreigner. Be proactive. It will go a long way to preventing unpleasant messages in long white envelopes from either the IRS or the Ministry of Finance.

The Airbnb Wars Continue in Paris

Posted by Stephen Heiner

I wrote some time back rather passionately about forces conspiring to stifle Airbnb and Uber in Paris. The City of Paris recently upped the ante by publishing a website that shows all the properties that are “properly registered” as an Airbnb in the city. Unsurprisingly, the French, operating from a cultural sensitivity to “denouncements” of neighbors during WWII, reacted strongly to this and labeled it a “rat on your neighbors” policy. If anything, it will cause a backlash among even those neutral to slightly negative on Airbnb.

To catch up those who aren’t familiar with the intricacies of Parisian housing policy, anyone is allowed to rent space within their own personal home, for example a spare room or a couch in a living room, provided that they either own the space or have permission from the landlord. In one recent landmark case, an owner sued a tenant and won for letting out an apartment without permission. The law additionally allows you to rent a space you don’t occupy for up to 120 days a year, which would cover a long absence from Paris (or several) for whatever reason.

The argument goes that these short-term rentals are changing the makeup of the city and of particular neighborhoods, and to an extent, this is true. And yet, all these short-term rentals represent opportunities for pure revenue for Paris — everyone coming to the city is going to spend money and hotels and hostels alone don’t meet demand. Indeed, Airbnb has moved the goalposts on what a travel stay consists of now — no longer prisoner to the social desert of a hotel or the social overload of a hostel, people can choose a third way, in which they sometimes have an unofficial guide to the city, whether that be as simple as answering a few questions before arrival or as far as leading them on a cool walk about town. Airbnb is now saying, “don’t just visit there, live there, if only for one night.”

Paris is unlikely to get Berlinian about Airbnb, but given that there are fewer than 200 properties on the “official” register out of over 40,000 listings makes it clear that there is still a gap in reality and expectation between a city being brutally lobbied by the hotel industry (and a république that is insistent on taxing everything it can touch, and even what it can’t) and a Parisian populace only too glad to get some help paying the bills by renting out some personal space. In a way, it’s time for the residents of Paris to benefit from Paris’ reputation as well — given that they have to put up with (without compensation) a neverending flow of tourists throughout the year.

For now, it seems clear that anyone who is renting out wholly unoccupied spaces on a short-term basis 100% of the year better watch out. I suggest divesting yourself or pivoting into long-term rentals. Otherwise, be warned that the city is coming for you, and it will cost you tens of thousands of euros if you get caught.

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