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AMERICANS IN FRANCE

Americans in France: Visas for second-home owners and customs rules for wine and cheese

From the visa situation for second home owners to tax reminders (for both countries) and whether or not you can take some of that delicious French cheese back to the US with you, here's our latest newsletter for Americans who either lives in France, visit frequently or plan to move here some day.

Published: 2 June 2023 12:36 CEST
Americans in France: Visas for second-home owners and customs rules for wine and cheese
An arrival board is shown at the Roissy-Charles-de-Gaulle airport in Roissy-en-France, a northern suburb of Paris (Photo by Kenzo TRIBOUILLARD / AFP)

Welcome to The Local’s “Americans in France” monthly newsletter for members, featuring all the news and practical information you need as an American resident, visitor or second-home owner in France. You can sign up to receive it directly to your inbox before we publish it online via the link below.

Hello,

We’ve received some questions from readers about whether France will eventually bring in a visa for second-home owners. This curiosity is likely due to the fact that recently French Senator Corinne Imbert, of the centre-right Les Républicains party, submitted an amendment to the new Immigration Law, which would bring in a new visa for second-home owners who live outside the EU. It would be a a five-year visa that would allow visits of up to six months at a time.

Unfortunately, this is far from being a done deal – we will have to wait until at least September for the first reading of the bill, and it is going to be a contentious one, so it is very hard to predict what the law will look like after debates and whether or not lawmakers will scrap this amendment. For now, the best course of action would be to follow the 90-day rule, or consider other visa options, like the short or long-stay visitor visa. Sadly – there are no loopholes.

Americans living in France should remember that the final date for filing US income taxes is June 15th. When you go to file your American taxes, there are two ways to avoid double taxation, via foreign income exclusion or the foreign tax credit. There are some pros and cons to both options, depending on your income level and whether or not you want to show taxable income in the United States.

As for your French taxes, if you live in départements 55-96 then you have a few more days (until June 8th). Everyone else should have already filed their tax declaration online. If you have not already, here is how to do so, and if you are wondering whether you are considered a tax resident of France, here is our guide. 

Onto the fun stuff. Whether you live in France and are planning a trip back to the States this summer, or vice versa, you can start planning which of your favourite wines and cheeses you’ll want to take back to the US with you. Provided you follow a few rules, this is entirely possible. Though, hopefully your preferred fromage is a hard cheese, rather than a soft or liquid one.

The Local has also put together a thorough listing of 27 French festivals and summer events worth checking out in the next few months, if you are looking for fun things to do while in l’Hexagone.

And finally – if you have any subjects you would like The Local to cover in this newsletter, or any questions, concerns, or tips related to Americans in France, don’t hesitate to fill out our survey HERE.

I’ll end on a piece of wisdom from a fellow American in France, Kevin K in Gournay-sur-Marne: “eat more Mexican food (or just spicy in general)”. I concur, and will slip in some advice of my own: I recently discovered that the international section at many Auchan Hypermarché (the giant ones) is a great place to find canned jalapeños and black beans. If you live in the Paris region, there are a few just on the edge of the city. Enjoy your next taco Tuesday.

Note: For those who received this newsletter on June 1st, you might have noticed I wrote “a few more weeks” for the June 8th French tax declaration deadline for depts 55-96. This should have read “a few more days”. Apologies for the mistake.

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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.

Published: 2 May 2024 16:44 CEST
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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