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TOURISM

How American tourists have rediscovered their love for France

It's the first summer without travel and health restrictions since the start of the pandemic and the Americans are heading back to France in droves.

How American tourists have rediscovered their love for France
Tourists pose in front of the Eiffel Tower, in Paris in 2021. (Photo by Sameer Al-DOUMY / AFP)

If you’ve been walking down the streets of Paris or perhaps even some quaint villages in Provence then you might have heard a notable uptick in the number of American accents you hear..

It’s the first summer since the start of the Covid-19 pandemic without strict health or travel restrictions and American travellers are heading across the pond to take advantage of their ability to eat croissants and enjoy the Eiffel Tower once again. 

While tourism in general has been exploding across Europe, in France specifically, the industry is hitting and even exceeding pre-pandemic levels. Revenue per room for French hotels is higher than it was in 2019, and the Eiffel Tower is once again seeing 24,000 people per day, which is the same level of visitor numbers the Iron Lady saw before the Covid-19 epidemic.

And American visitors in particular are returning to France in their thousands.

As of late May, travel from the US to Europe saw a 1003 percent increase compared to April 2021, which has certainly been reflected in France, which is second favourite destination in Europe for Americans after Italy.

In fact, American tourists represent the largest group of tourists to make their way back to France, making up around 12.7 percent of foreign tourists in 2022 – over double that of British tourists who make up just 5.8 percent.

In preparation of a summer filled with Americans, Air France even increased its capacity for flights to and from the United States. This summer, it the airline is operating close to 200 weekly flights to 14 destinations across the U.S. which represents 20 percent more than it did in 2019 before the start of the pandemic.

And Americans are not visiting France’s capital city Paris. A new survey shows they are heading much further afield in France.

Coastal destinations such as Nice, Marseille, and Bordeaux have risen in popularity among American visitors. In comparison to 2019, Nice has seen a 182 percent increase in ticket reservations, with Marseille also seeing a strong increase of 128 percent.  

Besides Paris and the coasts, Americans are also reportedly making their way to the cities of Avignon, Lyon, Aix-en-Provence and Reims, as well as Giverny near Paris.

Train-setting across France

For the American visitors in France this year, they have chosen trains as their preferred method of transport. Across Europe, train lines have seen an average of 50 percent more American tourists than in previous years. 

READ MORE: Everything you need to know about taking the train in France

According to Trainline, France’s national rail service SNCF, has seen ticket purchases by American tourists shoot up by 93 percent from pre-pandemic levels, and the rail industry is welcoming the rise in ticket purchases: “these numbers are great news for the rail industry in France and Europe,” said Christopher Michau, the Director of European Partner Relations at Trainline to BFMTV.

“All tourist destinations across the country should prepare for an influx of American visitors this summer, as bookings are 14 times higher in France than they were a year ago at the same time,” warned Michau.

Why take the train? Michau judges it is likely to due a better understanding of Covid-19-related travel restrictions, but more importantly, a “desire to travel more sustainably.”

While Americans are not known for taking long vacations, this summer American tourist is spending around 10 days in France on average. And while they are here, they are big spenders.

In a survey of tourists visiting France from abroad, Americans came in first place for their daily spending budget while on holiday. The average American allocates about €400 per day in France, racking up an average total bill of €7,650 (which includes the cost of flying to and from the United States).

It is safe to say that this spending is important to France’s tourism sector, which prior to the pandemic (in 2019) made up 7.4 percent of the country’s GDP and represented 9.5 percent of total jobs.

American tourists are of particular importance, as they represent France’s leading “long-haul” outbound market, and Air France considers the U.S. to be its leading long-flight destination.

However, though France in pre-pandemic times received large flows of foreign tourists, the country has always had a steady supply of domestic tourists.

In the first half of 2022, foreign tourists, represented 79.9 percent of the flow of travellers but 21.1 percent were French tourists.

READ MORE: IN NUMBERS: How important are American tourists to France?

Not all sunshine and rainbows

Even though Americans are flocking back to France, the journeys are not without hiccups and headaches for some.

Prior to the start of the summer holiday season, airlines and airports were already reporting serious staff shortages after nearly two years of pandemic cutbacks. On top of staff shortages, both air and rail travel have been impacted by strikes, as workers seek wage increases.

Waiting time in airports has significantly increased, and flight cancellations are more frequent, making this summer complicated for travel. Air France cancelled over 10 percent of its short and medium haul flights at Charles de Gaulle the first weekend of July just in preparation for strike action, and the Paris airport group has been urging passports to arrive “three hours (before scheduled take-off) for an international flight, two hours for a domestic or European flight.” Meanwhile, the high season for travel has not started yet, it typically begins once schools in France break-up for the summer holidays, which is July 7th this year.

READ MORE: Covid-19: European summer holidays threatened by rise of subvariants

In addition to travel complications, the Covid-19 pandemic has unfortunately not ended yet. Cases are on the rise again across Europe, and in France, new variants already make up over 75 percent of cases. The country is seeing an average of 100,000 new Covid-19 cases per day, with the peak of the seventh wave not expected until late July. 

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AMERICANS IN FRANCE

Americans in France: Will my tax situation change if I get French citizenship?

If you're thinking of applying for French citizenship, then you might be curious whether there will be any tax ramifications to becoming a dual national.

Americans in France: Will my tax situation change if I get French citizenship?

Gaining French citizenship can have plenty of benefits for Americans living in France, from the right to vote in French elections to freedom of movement in the EU – as well as a more intangible sense of belonging in the country you now call home. 

However, Americans living abroad always have to contend with the United States’ system of citizenship-based taxation, which requires US nationals to report their global income to the IRS yearly, however long they have been out of the country.

This may result in making two tax declarations every year if they move to a country – like France – which requires yearly declarations from all residents.

As a result, Americans have to think about possible tax consequences before making decisions to move, invest, or perhaps take on a second nationality.

To help answer the question of whether there are special tax ramifications for French-American dual nationals living in France, The Local spoke with tax expert Jonathan Hadida from HadTax.

Hadida said: “There is really no impact. You still have yearly reporting requirements to both countries, and from the French side you will still continue to give you the benefits of the tax treaty”.

Key items, such as your US-based pension, would continue to be taxed in the US and not France regardless of whether or not you take on French nationality too.

READ MORE: Ask the expert: What Americans in France need to know about 401(k) and other pensions

Unfortunately, many of the limitations Americans in France experience would also remain in place. French investment options, such as the Assurance Vie, would still unwise for dual nationals, as the IRS sees them as PFICs (Passive Foreign Investment Company).

While the Assurance Vie is a great tool for being tax efficient for non-Americans, and can offer alternatives to the regimented, traditional French inheritance process, for Americans living in France (including those with dual nationality) it can lead to lengthy and complicated dealings with the IRS. 

“To the US tax authorities, you are still American first, second, third and fourth place. They don’t really care that you are also French,” Hadida said.

“The only real change to your tax situation would be giving up your American citizenship, but keeping your US citizenship in addition to French citizenship does not really change anything.”

What happens tax-wise if I renounce my American citizenship?

Renouncing US citizenship is not as simple as scheduling an appointment at a US embassy or consulate, paying the applicable fee, and declaring that one does not want to be American.

There are several factors to consider, and depending on your situation, in the long-run it might be more advantageous to hold onto your US citizenship to continue benefiting from certain parts of the US-France dual taxation treaty (PDF).

For others, keeping US citizenship might be onerous with its yearly reporting requirements, as well as the difficulty it can pose with putting money into French investment vehicles due to citizenship-based taxation and FATCA (US legislation that passed in 2010 to track money laundering). 

While renouncing your American citizenship undoubtedly pushes you further out of the reach of the IRS, you should consider that you might owe an exit tax, if you are deemed a ‘covered expatriate’. Usually, this is only required of high-net worth individuals (worth more than $2 million).

According to the US expat tax site 1040 Abroad, this also includes people who failed to comply with tax obligations in the five years preceding their renouncement, as well as people who had “an average annual net income tax liability exceeding a specified threshold” (as of 2022, this number was set to $178,000).

People renouncing US citizenship can also be subject to a special inheritance tax on gifts made to US citizens or residents, following their renunciation. 

READ MORE: How to renounce American citizenship in France – and why you might want to

You should also think about your US-based investments.

“You would no longer benefit from the tax treaty in the same way if you give up your US citizenship. For example, Article 24 of the treaty covers investment income, making it taxable in the US and giving you a deemed credit in France.

You would lose this benefit if you renounce, and this could make a big difference if the taxation level is lower in the US, as it often is with dividends or capital gains.

“Your IRA and pension plans will continue to be taxed in the US because this is based on where the pension is earned, not nationality, but you might have to start filing a non-resident tax return to the US after renouncing citizenship,” Hadida said.

The tax expert said that renouncing citizenship should be decided on a case by case basis.

“Every situation is different, and for some people it might not make sense to give up certain benefits from the US-France tax treaty. You should speak with a financial advisor before deciding”, he said.

READ MORE: Divorce, stress and fines: How citizenship-based taxation affects Americans in France

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