Do you know the tax and financial responsibilities for Americans living in France? Whether the move to France is the accomplishment of a lifelong dream, or just a happy coincidence that brought you there, it’s important to know what you need to do fiscally and financially before you settle into your new French life.
Taxes
- Filing US taxes: It’s important to remember that as a US person (a US citizen or green card holder for example), you are required to file your taxes every year with the IRS no matter where you live in the world. Yes, there will be some extra forms to fill out, but thankfully, the US has tax agreements with many foreign countries – such as France – in order to avoid double taxation and limit the amount you have to pay to the IRS.
- Foreign bank accounts: If this will be your first time with a foreign bank account, don´t forget that you will need to file an FBAR and FATCA forms with the IRS. It’s not incredibly complicated, but can be a bit time consuming.
- French taxes: Once settled into your new life in France, you will now need to file French taxes as it is your new country of residency. And yes, as mentioned above you will have to file both French and US taxes each year. Thankfully, your local French “centres des impôts” (French tax center offices) will often help if you have any questions. Remember, you might need to calculate some rather complex details if you are receiving foreign income or funds from the United-States.
Opening bank accounts with a French bank
- Opening an account: Be prepared to jump through some hoops when opening an account with a local French bank. Don’t be surprised if they ask you for some surprising documents for your file, such as your electricity bill, or a letter from your employer. In addition, different branches of the same bank can have different approaches to international clients. But fortunately, more and more are opening up to expat clients, even if it means they have to use their old high school English!
- A practical solution: A local French bank account is very practical for everyday operations and an easy way to have accounts in local currency. We recommend you negotiate ways to keep the fees low, such as a direct deposit of your salary or retirement to avoid exchange fees. But don´t forget, as previously mentioned, you will need to declare these new non-US accounts in the FBAR and the FATCA with the IRS.
- Services offered: Don’t expect your French bank to offer the same financial products as their U.S. counterparts. European banks must follow strict European MIFID2 regulations, and consequently cannot offer certain products to individual clients such as insurance products (annuities, term insurance, etc.) or even certain securities (mutual funds, ETFs). We recommend working with a cross-border advisor at Harrison Brook who has special access to a wider range of investment options and can build a portfolio perfectly tailored to your goals and needs.
What to do with your U.S. bank, finance, and retirement accounts
- Address on file: An important first step is to verify that you can conserve all your American bank, investment, and retirement accounts with your new foreign address. This is by and large the biggest reason for the financial headaches for US expats. If they refuse, you will need to work with a cross-border financial advisor at Harrison Brook to find the alternatives that will work for you. Some will suggest keeping a US address just to avoid these headaches, but that decision can lead to other problems, not to mention penalties with the authorities.
- Retirement accounts: The good news is that the funds you withdraw from your US retirement accounts are only taxed in the US and not in France, thus avoiding not only double taxation, but also France´s more imposing income tax brackets. However, you will need to declare this income on your French tax declaration, and if your income is €23,184, you will need to pay a 6.5% PUMa tax which helps fund French social security.
Harrison Brook can help with tax and financial responsibilities for Americans living in France
It’s important to prepare for many different facets of moving to France, whether it’s housing and immigration, or healthcare and estate planning. But nothing is as vital as getting your finances in order as the penalties can be quite steep.
If peace of mind is what you are looking for, the best solution is to work with the cross-border advisors at Harrison Brook. We have done the legwork to find the partners that comply with the complex web of regulations facing U.S. expats in France in order to build a top-notch team with the leading international estate, immigration and tax advisors. The financial advisors at Harrison Brook can guide you in your financial decisions to find the best value products for your portfolio and to attain your financial and personal goals. Harrison Brook is here to assist you in managing your financial assets, so don’t hesitate to book a meeting with us.