France specific
Kirsten Simmons avatar
Written by Kirsten Simmons
Updated over a week ago

TFX specializes in top-tier U.S. tax services for individuals, partnerships, corporations, trusts, and estates worldwide. If you need assistance with your French tax return, we have got you covered. We maintain strong partnerships with trusted local tax experts in 193 countries. These professionals are well-equipped to handle your non-U.S. tax needs. Reach out to us via phone, chat, or email, and we will connect you with an experienced local firm. Your global tax compliance just got simpler with TFX.

Table of contents:

French businesses and investments

Opening a local business in France as a U.S. citizen

Before opening a business in France, you must have a residence permit. Also, you will need to set up your tax declaration with the French tax authorities. All businesses must be registered through the appropriate Centre de Formalités des Entreprises (CFE).

Types of local business structures in France and the U.S. filing requirement

  • Entreprise Individuelle (EI)/Sole Trader

    As a Sole Trader, you are self-employed. You must report your self-employment to the IRS via form Schedule C (included in our PREMIUM package).


    The following business structures are reported to the IRS via Form 5471:

    • Société à responsabilité limitée (SARL)/Entreprise Unipersonnelle à Responsabilité Limitée (EURL).

    • Société par Actions Simplifiées Unipersonnelle (SASU).

    • Société Anonyme (SA).


    The following partnership structures are reported to the IRS via Form 8865:

    • Société en Participation (SEP).

    • Société en Nom Collectif (SNC).

    • Société en Commandite Simple (SCS).

    • Société en Commandite par Actions (SCA).

Investments in French SCPI

An investment in one SCPI is equivalent to an investment in a U.S. REIT. An investment in a U.S. REIT is not an investment in a mutual fund. Therefore, an investment in an SCPI is not an investment in a mutual fund and is not an investment in a PFIC. Examples of U.S. REITs: are Simon Property Group (NYSE: SPG) and Vornado (NYSE: VNO). These are investments in a single stock or company. 

However, it may be invested in a mutual fund that owns a collection of SCPI or REITS, which might be a PFIC. The U.S. example is VNQ, which is Vanguard's ETF for REITs. It does not hold just one REIT. Instead, it holds several hundred REITs. If you have invested in a fund that holds a collection of SCPI, then this may be a PFIC. For more information on PFIC, refer to Passive Foreign Investment Companies (PFIC): Form 8621.

Government-regulated savings accounts in France

The French banking system provides a wide range of government-regulated savings accounts, such as Livret A, Livret Bleu, LDD, LEP, and Livret Jeune. These accounts come with limits on the deposit amount, but they offer attractive interest rates and are exempt from French income tax and social charges. However, they may trigger reporting requirements for FBAR/FATCA.

To ensure compliance, please complete the Non-US Financial Accounts section of the Tax Questionnaire:

  1. Open your Tax Questionnaire and click the Configure Life & Income button on the left side.

  2. Click Yes next to I have financial accounts outside the U.S.

  3. Click Next Step and Submit.

  4. Navigate to the Non-US Financial Accounts tab and provide answers to the questions.

For more information on financial accounts that are required to be reported, refer to French financial accounts reporting.

In addition, please report any interest income on these accounts:

  1. Navigate to Income > Passive Income and select Yes under the statement I earn interest.

  2. Click on the Interest tab at the top and click Yes under the question Did you receive non-U.S. interest income?

  3. Fill in the table.

Social Security and pensions

The French Social Security system (La Sécu, short for La Sécurité Sociale), consists of three pillars and five levels:

  • Pillar I:

    • Level 1 - Non-contributory minimum pension: This minimum state pension (Allocation de Solidarite aux Personnes Agees or Minimum Vieillesse) was introduced in 1956. It is administered by Caisse des Depots, a sovereign wealth fund, and is designed for individuals between 60 and 65 years old who have not been in paid employment due to health reasons or caregiving responsibilities. It is available to both French and legally residing foreign citizens.

    • Level 2 - Mandatory state pension provision: This unfunded contributory pension operates on a redistributive model, with contributions from workers to retirees. Employees contribute to this fund.

  • Pillar II - Mandatory occupational pension provision: This supplementary pension (Retraite Complementaire) is a defined contribution scheme that combines elements of redistribution and investment. It is mandatory for all employees subject to statutory old-age insurance. Both employees and employers contribute a fixed percentage.

  • Pillar III:

    • Level 1 - Voluntary private collective pension provision: Introduced in 2006, these collective retirement savings plans (Plan d'Épargne pour la Retraite Collectif) are company-sponsored plans that offer tax credits to employees contributing to these funds.

    • Level 2 - Voluntary private individual pension provision: Created in 2004, these popular retirement savings plans (Plan d'Épargne Retraite Populaire) allow individuals to save for retirement in private pension funds. Up to 10% of annual income may be invested tax-free in these private individual pension funds.


  • Contributions made to the Social Security fund are neither tax-deductible nor tax-creditable.

  • AGIRC-ARRCO may also be treated as a Social Security-type pension, as it consists of voluntary contribution points converted into a life annuity upon retirement.

U.S. - France Social Security Totalization Agreement

An agreement between the United States and France improves Social Security protection for people who work or have worked in both countries. It helps people who, without the agreement, would not be eligible for retirement, disability, or survivor benefits under the Social Security system of one or both countries. It also helps many people who would otherwise have to pay Social Security taxes to both countries on the same earnings.

The agreement's provisions eliminate double Social Security taxation and permit dual residents to use their work in both countries to qualify for benefits.

  • If you are self-employed, contributions to the Sécurité Sociale system make you exempt from contributions to the U.S. Social Security system that otherwise would be required in the U.S. on self-employment income.

  • If you have Social Security credits in both the United States and France, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country. If you do not have enough work credits under the U.S. system to qualify for standard benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and French credits. To be eligible to have your French credits counted, you must have earned at least six credits under the U.S. system.

    Note: although the agreement allows the Social Security Administration to qualify for US retirement, disability, or survivor benefits, the agreement doesn't cover Medicare benefits.

Taxation of Social Security benefits

  • U.S. Social Security benefits received by U.S. citizens and Green Card holders residing in France are taxable in the United States. France also has the right to tax that income if the recipient is a permanent French resident.

  • French Social Security benefits and other similar payments made under the social security legislation of France to a resident of France who is a citizen of the United States shall be taxable only in France and exempt from taxation in the US.

  • Contributions to the French employer occupational pension scheme are in the Salaire Brut (gross salary) amount and taxable in the U.S.

  • For U.S. tax purposes, Contribution Sociale Généralisée (CSG) and the Contribution pour le Remboursement de la Dette Sociale (CRDS) are tax-creditable or tax-deductible under the Internal Revenue Code or the U.S. - French Income Tax Treaty.

Tie-breaker rule to apply for treaty benefits

U.S. Green Card holders residing in France may elect to apply what is known as the tie-breaker rule of the U.S. - France Tax Treaty and be deemed a resident only of the State (i.e., country) with which their personal and economic relations are closer (France).

Under such an election, the individual would file Form 1040NR and report only income derived from U.S. sources. The requirement to provide full disclosure of foreign bank accounts remains, and tax on income from U.S. sources will be higher than a tax on the same income when applied to U.S. residents filing Form 1040.

French income reporting

Choix du nom de famille - Choice of the last name

Choosing your name after marriage: Regardless of the family name used on French documents, you must provide your family name in the Personal Details > The Basics section of our Tax Questionnaire as shown on your U.S. Social Security card until you officially change your name with the U.S. Social Security Administration.

Salaire brut - Gross salary

Report your gross salary as it appears on your Bulletin de salaire or your French Income Tax Return (Form 2042). The Bulletin de salaire is a salary statement commonly used throughout France to provide details about income and expenses, making it the primary document required for the preparation of U.S. tax returns for expatriates employed in France.

  • If your pay per period did not change throughout the year, simply multiply the salaire brut amount by the number of pay periods, which is typically 24.

  • If the pay amount varies per period, add up all salaire brut amounts to calculate your annual gross salary.

To report the total amount of the annual gross salary:

  1. Open your Tax Questionnaire and click the Configure Life & Income button on the left side.

  2. Click Yes next to I receive payments from an employer.

  3. Click Next Step and Submit.

  4. Navigate to Income > Wages and click Yes to the question Did you receive payments during the tax year from a non-U.S. Employer?

  5. Enter the gross salary amount to the question Gross wages/salary earned with this employer during the tax year? Use the income calculator to convert to a calendar year.

Indemnité de licenciement - Severance or redundancy pay

If you received severance or redundancy pay, add the gross amount to the annual gross salary.

Report other types of income such as workplace pension, state pension on Income > Passive Income > Pension and dividends, alimony, royalties, and unemployment on the respective lines of Income > Other Income.

Revenu de l'entreprise individuelle (EI) or l'auto-entrepreneur - Income from self-employment

You are considered self-employed in the U.S. if your tax status in France is a sole trader (entreprise individuelle (EI)) or a sole proprietorship (auto-entrepreneur). A sole proprietorship is a business run by a single person with no legal personality, although recorded in the trade directory or register of commerce and companies. 

❗ Important note: if your business structure is a real estate company (la société civile immobilière (SCI)), you must also report this as self-employment. 

Your gross income from self-employment is a turnover of your unincorporated business. To report it, navigate to Income > Self-employment and enter the amount under the question Gross Income from the Self-employment.

Note: income is reported as the gross amount before any deductions; those are reported separately.

Impôt sur le revenue - Income tax

The amount of foreign income tax paid or withheld can be utilized as a foreign tax credit to offset U.S. tax liability. Similarly to income, the tax must be reported separately for each type of income on which tax was paid. Income tax withheld from wages is shown as Net imposable (or Tax salaire brut) of your Bulletin de salaire.

To report tax imposed on the particular income type:

  1. Open your Tax Questionnaire and navigate to Taxes And Deductions > Taxes Paid.

  2. Click Yes under the question Did you pay any tax to any non-U.S. country on any of your income this year?

  3. Enter the amounts and set the tax types.

The payor may withhold taxes on unearned income, e.g., a bank withheld income tax from dividends, or you may owe tax upon completing the tax assessment form. Report each type of tax paid during the filing year in the respective section of our Questionnaire, even if it applies to income received in prior years.

Impôt sur la fortune - Wealth tax

Wealth tax is not an income tax. It can be deducted on your U.S. tax return as a part of itemized deductions.

To report this tax:

  1. Open your Tax Questionnaire and click the Configure Life & Income button on the left side.

  2. Click Yes next to I want to maximize deductions.

  3. Click Next Step and Submit.

  4. Navigate to Taxes And Deductions > Deductions and click Yes under the question Do you want to list various expenses that might improve your tax position?

  5. Click Yes under the question Did you pay a Wealth Tax (ie tax on assets and not income)?

  6. Provide details and the amount.

Impôt de solidarité sur la fortune - Wealth tax on the net worth

The wealth tax on the net worth of French residents with assets exceeding €1,300,000 cannot be claimed as a foreign tax credit but can be deducted as a part of itemized deductions on U.S. tax returns. Please report it in the Taxes And Deductions > Deductions tab of our Tax Questionnaire.

Taxe foncier - Property tax

Property tax, sometimes known as land or real estate tax, is a government tax on land and buildings. Please report the property tax in the Taxes And Deductions > Deductions section of the Tax Questionnaire, questions Did you own residential real estate during the tax year? > Did you pay property taxes on the residence?

❗ Important note: property tax on foreign residence deduction was suspended through 2025.

To report the rental income and tax:

  1. Navigate to Income > Passive Income and select Yes under the statement I rent out property.

  2. Click on the Rental Income tab on top and scroll down to the Rental Income section.

  3. Provide total amounts (pre-expenses) under the question Amount of gross rent received during the tax year.

  4. Click Yes under the question Did you pay non-U.S. tax on rental income?

  5. Provide the details.

Taxe d'habitation - Residence tax

The annual residence tax is imposed on individuals who were residents of a property on January 1st of each year. If you are a tenant of a rental property, you should include this residence tax in your housing expenses.

To do it, navigate to Personal Details > Where I Live > Housing Arrangements, and select Rent under the question Did you rent or own your primary foreign (i.e. non-U.S.) residence during the tax year?

Plus-values immobiliers - Tax on gains from the selling of property

Tax on gains from the selling of property. In the U.S., tax on profits from the sale of the property may be treated as long-term or short-term gains and, in certain cases, tax-exempt.

To report capital gains and losses in the Tax Questionnaire:

  1. Click the Configure Life & Income button on the left side.

  2. Click Next Step and click Yes next to I sold a home.

  3. Click Submit.

  4. Navigate to Income > Home Sale and provide answers to all questions related to the home sale.

To report foreign tax paid on capital gains from the property sale, navigate to Taxes And Deductions > Taxes Paid, click Yes under the question Did you pay any tax to a non-U.S. country on the sale of any capital assets (stock, mutual funds, cryptocurrency, real property, etc.)?, fill in the table and select Property Sale as a tax type.

Assurance vie - Life insurance

Life insurance (Assurance vie) is an investment product and does not qualify for tax deferral in the United States. The dividends and interest are taxable in the U.S.

To report any interest income in the Tax Questionnaire:

  1. Navigate to Income > Passive Income and select Yes under the statement I earn interest.

  2. Click on the Interest tab at the top and click Yes under the question Did you receive non-U.S. interest income?

  3. Fill in the table.

To report your dividend income in the Tax Questionnaire:

  1. Navigate to Income > Passive Income and select Yes under the statement I earn dividends.

  2. Click on the Dividends tab at the top and click Yes under the question Did you receive non-U.S. dividends?

  3. Fill in the table.

Income or deductions from a pass-through company (S Corporation, Partnership, or Income Trust)

If you participate as a sole or partial owner of another type of a small business company of other types (SARL, SA, SAS), then please indicate that you own more than 10% of a foreign corporation as you start the Tax Questionnaire. Income/loss from any entity should be reported on Income > Corporation & Trust > Entity List.

Q: How do I break down taxes assessed jointly on myself and my non-U.S. spouse on the jointly filed French tax declaration if I file separately in the U.S.?

A: For example, a U.S. citizen files a joint tax return in France with their nonresident spouse. In the U.S., the U.S. citizen files a claim that married filing separately and files Form 1116.

On the French Income tax return, the U.S. citizen's net salary is €100,000, and the non-resident spouse's net salary is €50,000. They report foreign income taxes paid of €33,000. It is necessary to allocate the French income taxes paid to arrive at the proper amount relative to the U.S. citizen's income: (U.S. citizen's income / Total income) x French income tax = Income tax allocated to U.S. citizen: (€100,000 / €150,000) x €33,000 = €22,000. The U.S. citizen would convert the Euros to U.S. dollars using the average exchange rate for the year. This amount can be claimed as foreign taxes used for credit.

France - U.S. FATCA Treaty overview

The Foreign Account Tax Compliance Act (FATCA) is a piece of legislation introduced by the United States government in 2010 to avoid double taxation and prevent fiscal evasion concerning taxes, allowing the exchange of tax-related information. 

There are two FATCA model types.

  • Model 1, chosen by most European countries, is based on the principle of automatic exchange of information. Financial institutions provide details of all capital subject to US tax to their local authorities, who pass these details on to the IRS.

  • Model 2, according to which Washington is supplied with information directly by the financial institutions – but this only concerns capital held by American customers who consent to their details being released.

In 2013, the United States of America and France signed the Intergovernmental Automatic Exchange of Information (the "France IGA" - the Model 1A reciprocal version of the IGA). It means that French financial institutions, generally including funds and their managers, will report information about their U.S. customers' accounts to the French government, which, in turn, will exchange that information with the IRS. The reciprocity means that the IRS will be required to send France similar information about French customers' accounts in U.S. financial institutions. France became the 10th country to join the global FATCA network that took effect on July 1, 2014.

To comply with U.S. FATCA regulations, French financial institutions search their data for indications (indicia) that an account holder may be a U.S. person (U.S. Specified Persons or foreign entities in which U.S. taxpayers hold a substantial ownership interest). These indications include:

  • U.S. citizenship (evidenced by a U.S. passport or Green Card).

  • U.S. residential address.

  • Place of birth in the U.S.

  • U.S. telephone number.

  • Standing instructions to transfer funds to a U.S. bank account.

  • Power of attorney (PoA) or third-party authority in favor of a person with a U.S. address.

  • Use of a c/o or hold mail address.

French financial accounts reporting

Which types of French financial accounts must the U.S. individual report on FBAR / FATCA?

  • Individual bank accounts such as savings accounts, checking accounts, and time deposits.

  • Brokerage accounts, commodity futures, or options accounts.

  • Insurance policies and annuity contracts with a cash value.

  • Business accounts where a U.S. person has a greater than 50 percent interest in the entity.

  • Mutual funds held in retirement accounts, such as France Plan d'Epargne d'Entreprise and Livret A.

Which French financial accounts are not required to be reported on FBAR / FATCA?

Retirement funds (Caisses de retraites) and similar financial entities (Caisses de congés payés) are exempt or deemed FATCA compliant because they are considered to present a low risk of being used by U.S. persons to evade U.S. taxes.

Even though specific retirement plans are exempt from direct FATCA reporting, the FATCA rules applying to individuals were not relaxed. Form 8938 requires reporting by U.S. taxpayers participating in foreign pension plans.

French financial assets exempt from FBAR/FATCA reporting are limited to Social Security, Real Estate Holding, precious metals held directly, and collectibles.

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