The US–France Tax Treaty: Who Taxes What

The treaty divides taxing rights; it does not end your US filing

The US–France income tax treaty is the 1994 Convention for the Avoidance of Double Taxation, amended by protocols signed on December 8, 2004 and January 13, 2009. It decides which country may tax each kind of income and gives relief, mainly a foreign tax credit, where both could otherwise tax the same income.

The treaty does not take an American out of the US system. Its saving clause (Article 29) lets the United States keep taxing its citizens on worldwide income as if the treaty did not exist, so moving to France does not exempt you from US filing. Where the treaty would give a type of income to France, the US may still tax it, subject to the special foreign tax credit rules in Article 24. A few items are carved out of the saving clause, most importantly the pension and Social Security rule in Article 18, described below.

The treaty covers income tax only. A separate US–France Estate and Gift Tax Treaty, signed on November 24, 1978 and amended by a protocol in 2004, governs what happens to assets at death.

Residence is settled first, by a tie-breaker

Every rule on this page assumes you know which country is your residence for treaty purposes. A US citizen is always a US tax resident by citizenship, and France applies its own residence tests, so an American living in France is routinely resident in both countries under their domestic laws before the treaty applies. The French tests are set out in our guide to French tax residency.

Article 4 of the treaty breaks that tie by working through these questions strictly in order, stopping at the first one that gives an answer.

1. 1Where do you have a permanent home available to you?
2. 2Where is your center of vital interests?
3. 3Where is your habitual abode?
4. 4Of which country are you a national?
5. 5If none of these settles it, the two tax authorities decide by mutual agreement

US pensions, IRAs and 401(k)s are taxed only by the US

Article 18(1), as rewritten by the 2004 protocol, covers both social-security-type payments and pension or retirement-plan distributions arising from past employment in one country and paid to a resident of the other. Both are taxable only in the source country, the one where the pension arises, whether paid periodically or as a lump sum. An IRS information letter applying the amended treaty concludes that such a distribution from the United States to a French resident is taxable only in the US and exempt from French tax.

This rule sits among the saving-clause exceptions that apply to individuals generally, so a US citizen living in France gets the same source-only treatment as a French national. The US taxes the distribution as usual; France does not tax it. Descriptions of private pensions as taxed by the country of residence appear to reflect the treaty as it stood before 2004.

• US Social Security is taxable only by the US under Article 18(1), and not by France
• A 401(k), traditional IRA or private-employer pension established in the US arises in the US, so the US alone taxes its distributions
• Article 18(2) is a separate rule about contributions: under specific conditions, someone working in France who still pays into a US plan can deduct those contributions from French taxable income

Government and military pensions follow the same rule

Since the 2004 protocol, pensions paid for government service, whether federal civil service, state, local or military, are governed by Article 18, not Article 19. The protocol deleted the pension paragraph of Article 19, and the US Treasury’s Technical Explanation and the Senate’s report on the protocol both state that Article 18 now governs these pensions.

The result is that a US government or military pension paid to a French resident is taxable only by the United States, exactly like a private pension. The old French-nationality exception for government pensions was deleted with that paragraph and does not apply to pensions under the current treaty, including for dual US–French nationals.

A nationality exception does survive in Article 19, but only for current government salaries. If someone actively works for the US government in France, is resident and a national of France, and is not also a US national, that salary is taxable only by France. It does not carry over to a retiree’s pension.

Which country taxes your other income

For other income, the treaty assigns taxing rights item by item, as below. Because of the saving clause, the US still taxes its citizens on the same income, and the double tax is relieved by a US credit for the French tax paid.

Salary

Taxable where the work is physically done, so France for work done in France; reported on both returns, with a US credit for the French tax

Self-employment

Taxable in France if you have a fixed base or permanent establishment there; still reported in the US, with a credit for the French tax

Dividends

Taxable by both: the US as the source country may withhold at a treaty-reduced rate, and France taxes as your residence country with a credit for the US withholding

Interest

Generally given to France as the residence country, though the saving clause still reaches US citizens, with credit relief

Capital gains

Gains on real property are taxed where the property is; gains on shares and securities go to the residence country, subject to the saving clause for citizens

Rental income

Taxed where the property is, so France for French property; also reported in the US with a credit

How treaty-exempt income appears on the French return

France taxes its residents on worldwide income, so income the treaty leaves to the US must still be declared. US Social Security and US pension distributions are reported first on form 2047 (« Revenus de source étrangère ») and then carried to the main return, form 2042. They count toward the taux effectif, the rate applied to your other French-taxable income, even though no net French tax is owed on them.

The impots.gouv.fr pensions page separates foreign pensions that carry a tax credit equal to the French tax (lines 1AL–1DL) from those that do not (lines 1AM–1DM). Which of these lines applies to US Social Security and US pension distributions was not found stated in a single official text, so confirm the exact line with your own preparer.

French social charges and the US foreign tax credit

CSG and CRDS are French social levies, separate from income tax. They apply at 17.2% on investment and rental income. On pensions, French or foreign, they are owed only by someone who is both tax-resident in France and covered by a French compulsory health-insurance scheme (Code de la sécurité sociale, article L136-1): a resident outside the French health system does not owe them on US Social Security or US pensions. For someone covered by the French system, whether the treaty removes them on US pension income is not settled; confirm your own position with a cross-border tax advisor.

On the US side, CSG and CRDS paid can be claimed as a foreign tax credit. The IRS Foreign Tax Credit page records that the US and France confirmed through diplomatic communications that CSG and CRDS are not social taxes covered by the Totalization Agreement, and that the IRS will not challenge credits for them. They are claimed on Form 1116 alongside French income tax.

• Credits not claimed in earlier years can be claimed on amended returns: foreign tax credit refund claims have a 10-year window under IRC §6511(d)(3)(A), rather than the usual 3 years
• The foreign tax credit offsets US federal income tax only, not US self-employment tax, so a self-employed American whose US bill was mostly self-employment tax may gain little from amending
• This is an IRS administrative position, in place since 2019, not a change to the treaty or the Internal Revenue Code

Social security contributions sit under a separate agreement

Which country’s payroll social security system you pay into while working is not decided by the tax treaty. A separate US–France Totalization Agreement prevents paying social security contributions to both countries on the same earnings. A worker covered by one system can ask that country for a certificate of coverage: the Social Security Administration issues the US certificate, and the French authority issues the French one.

The treaty and its rules are technical, and several points above remain open. Use a cross-border tax advisor familiar with both systems, and confirm dollar and euro figures on irs.gov and impots.gouv.fr before you file.