US Expat Tax Lawyer, France: the French and Treaty Side of Your US-Person Situation

What a US expat tax lawyer in France actually does

The distinction is not a technicality. It is the reason most Franco-American files go wrong.

An American living in France is exposed to two legal systems that were built on incompatible premises. The United States taxes on nationality: you remain a US taxpayer wherever you live. France taxes on residence: if you live here, France taxes your worldwide income. Neither system was designed with the other in mind, and the treaties that connect them are instruments of allocation, not of exemption. They decide who taxes what, and in what order — they do not make the problem disappear.

The French side, the treaty side, and your US preparer

In practice a complete Franco-American file has three components, and confusion about who owns which is the most common cause of error I see:

• The French side. How French law characterises what you own and what you receive: your assurance vie policy, your plan d’épargne retraite, your SARL or SAS shares, your French real estate, the American trust you are a beneficiary of, and the estate you will one day leave. Also: what you must declare in France, and what happens if you have not.
• The treaty side. Which of the two treaties applies to the question, which State has the right to tax, and how the credit mechanism actually operates on your figures. This is where a French position and a US return either reconcile or contradict each other.
• The US side. Your 1040, your FinCEN 114, your Forms 8938 and 8621. Prepared by a US professional, on the basis of the French characterisation.

What a US expat tax lawyer in France does not do

I do not prepare US tax returns and I do not advise on internal US tax law. That is not a limitation I apologise for; it is how the work is properly divided. A page that promises both halves from one desk is usually delivering neither at the necessary depth. What I add is the half that the American side of the market does not cover — and that determines the American result more often than clients expect.

Professional secrecy: what you can tell a US expat tax lawyer in France

Most people arrive with a version of the same sentence: “There are some things I should probably tell you, but I’m not sure I should put them in writing.” Accounts opened twenty years ago and never reported. A trust nobody mentioned to the French authorities. A policy a bank sold to someone it knew was American. A green card that was never formally surrendered.

In France, the relationship between a client and an avocat is covered by professional secrecy (secret professionnel) — the French equivalent of attorney–client privilege. It is a rule of French law, it binds me, and it is protected by French procedure. What you tell me about a past that is not in order is protected because French law protects it, not because an American rule travels with you across the Atlantic.

I state that distinction plainly rather than let it be assumed. I am not telling you that US attorney–client privilege attaches to our correspondence. Whether, and how, a US authority would recognise a French professional secrecy claim is a separate question that depends on the forum; where a file makes it relevant, I address it in writing rather than in a marketing line.

What this changes in practice: the order of operations

What follows from this is practical and immediate: the order of operations changes. In a file where the past is irregular, the legal analysis comes first, under secrecy, and the filings follow. Reversed, the filings themselves become the disclosure — made before anyone has decided what the right position is.

The two columns are complements, not competitors. The sequencing is what matters: in a clean file, either can start; in a file with history, the French analysis comes first. That is the practical reason to instruct a US expat tax lawyer in France rather than to add a second American adviser.

Are you a US person? Citizenship, green card and substantial presence

You may be reading this because you are certain you are a US person. A significant number of my clients were certain they were not.

Citizenship, including by place of birth alone

US nationality law relies heavily on birth on American soil. A person born in the United States is, subject to narrow exceptions, a US citizen — even if the parents were merely passing through, even if the family left when the child was six months old, even if that person has never held a US passport and has no conscious connection to the country. In France these are the accidental Americans, and there are many of them. They typically discover their status in their forties or fifties, by letter, from their bank.

Citizenship can also pass by descent, subject to conditions relating to the American parent’s prior residence in the United States. I regularly see files in which a child born in France to an American mother is a US person, and no one in the family had ever considered it.

Green card holders

A lawful permanent resident remains a US person until that status is formally abandoned. Leaving the United States, letting the card lapse, and never going back changes nothing on the tax side. Clients arrive convinced they closed this chapter a decade ago, when in fact the obligation has run without interruption throughout.

Substantial presence

Someone who is neither a citizen nor a green card holder can still become a US person through physical presence in the United States, measured over a three-year window with a weighting that gives partial credit to the two preceding years. Executives who commute, consultants on long assignments and families who spend every summer in Florida cross that line without noticing.

Five situations I see most often as a US expat tax lawyer in France

Nobody introduces themselves as “a US person”. The files divide into five profiles, and the French issues in each are quite different.

1. The accidental American

Born in the United States, left as a child, no real connection. Discovers the position through a bank asking for a US taxpayer identification number. The issue is rarely tax itself — French income, taxed at French rates, usually leaves little or no residual US liability — but compliance and banking access. The strategic question is the destination: regularise in order to remain a citizen, or regularise in order to be able to renounce.

2. The American expatriate settled in France

Lives and works here, pays French tax, keeps filing in the United States. The difficulties are about assets: French retirement savings, life insurance, shareholdings, stock options, the family home. Each of these has a French treatment the client knows and a US treatment that surprises them.

3. The Franco-American couple

One American spouse, one French spouse, one French household. Matrimonial property regime, the family home, gifts between spouses and the first death raise questions that neither the notaire alone nor the US preparer alone can resolve, because they sit in the 1978 treaty and in the civil law of both countries.

4. The US-person business owner

Holds a SARL, a SAS or a French holding company. That holding triggers, on the US side, anti-deferral regimes capable of turning an entirely ordinary French company into a source of immediate American taxation on profits that were never distributed. On the French side the questions are structure, dividend flows and treaty withholding.

5. The client considering renunciation

This is where sequencing errors are most expensive. Renouncing before dealing with compliance, with a life insurance policy or with a shareholding produces consequences that cannot be corrected afterwards.

Why people look for a US expat tax lawyer, France-side

When someone searches for a US expat tax lawyer, France is rarely the country they expect to need advice about. They are looking for help with an American obligation. What brings them to a French avocat is almost always one of five moments — and in four of the five, the clock has already started.

• The bank letter. A French institution asks for a US taxpayer identification number, or announces that an account will be closed. There is a deadline on the letter and the answer given to the bank has consequences of its own.
• The purchase that was about to happen. An assurance vie policy, a PEA, an apartment through an SCI. This is the only one of the five where the timing is still favourable — and the only one where clients routinely decide not to call.
• The transaction. Selling a company, raising capital, taking a dividend out of a French holding. The French and US consequences have to be arbitrated together, before signature.
• The death. A Franco-American couple, a notaire asking questions about American assets, and two treaties that nobody has read side by side.
• The decision to leave the system. Renunciation, and the discovery that the order of operations cannot be undone.

There is a sixth, quieter trigger: a client who has been filing US returns correctly for years and realises that nobody has ever checked whether the French position underneath them was right. That file is not urgent. It is usually the one where the most money is at stake.

Two treaties, not one: 1994 for income, 1978 for estates and gifts

Almost everything written for Americans in France refers to “the France–US tax treaty” in the singular. There are two, signed sixteen years apart, covering different taxes and built on different connecting factors. Reasoning from one to answer a question governed by the other is simply wrong, and it happens constantly.

Note the trap: each treaty received a protocol signed on the very same day, 8 December 2004, published by two separate French decrees. And retain the substantive point — domicile under the estate treaty is not residence under the income treaty. The two notions have their own criteria and their own tie-breakers. You can be resident of France for income purposes and domiciled in the United States for estate purposes.

Tax residence under Article 4 of the 1994 treaty

Before any calculation, one question governs everything else: of which State are you a resident for treaty purposes?

Article 4(1) defines a resident as a person who, under the law of a State, is liable to tax there by reason of domicile, residence, place of management or any other criterion of a similar nature. On the French side that refers back to the criteria of Article 4 B of the French tax code: home or principal place of stay, principal professional activity, centre of economic interests.

Dual residence: the tie-breaker tests of Article 4(4)

Where an individual is a resident of both States under paragraph 1, Article 4(4) resolves the conflict by successive tests, applied in a fixed order:

1. Permanent home available; if available in both States, the State with which personal and economic relations are closer — the centre of vital interests;
2. If that centre cannot be determined, or if no permanent home is available in either State, the State of habitual abode;
3. Failing that, if there is habitual abode in both States or in neither, the State of nationality;
4. Finally, if a national of both States or of neither, mutual agreement between the competent authorities.

These are not factors to be weighed together. They apply in sequence, and you move to the next only if the previous one fails to decide. That rigidity is good news for a well-advised taxpayer, because it makes the question provable with documents — leases, utility bills, statements, school enrolment, days of presence — rather than a matter of overall impression. Establishing residence on the evidence, before anyone asks, is the single most valuable thing done early in a file.

Relief from double taxation: how Article 24 actually works

The treaty does not stop the United States taxing its citizens, and it says so. Article 29(2) provides that, notwithstanding its other provisions, the United States may tax its residents and its citizens as if the treaty had not entered into force. This is the saving clause, and it is the root of the Franco-American problem. Paragraph 3 then carves out certain provisions from that override, first among them Article 24 itself, together with non-discrimination and the mutual agreement procedure.

Article 24 supplies the correction. For a resident of France, France takes US-source income into account in computing French tax and then grants a credit whose amount depends on the category of income:

Resident of France and US citizen: the additional credit and re-sourcing

Then comes the provision written for people who are both things at once. Article 24(1)(b) extends the credit equal to French tax to an individual who is both a resident of France and a citizen of the United States, for certain US-source income — dividends, interest and royalties paid by the United States or a US public body, by a listed company, or by a US company in which the French resident holds less than 10% of the voting rights.

Symmetrically, Article 24(2)(b) requires the United States to grant a credit for the French tax paid after the treaty credit and — the decisive and widely misunderstood mechanism — to treat certain income as arising in France to the extent necessary for that credit to have effect. This is the re-sourcing rule. Correctly applied, it is why a well-advised American resident in France frequently has little or no residual US liability. Misapplied, it is why some do.

Your French reporting obligations

Two systems, two sets of filings, two calendars and two penalty regimes. The table separates what I handle from what I do not.

The French half is administered by the Direction générale des Finances publiques — the authority you will actually be dealing with. Its English-language guidance for residents of France states the starting point without ambiguity: a resident of France is taxed on income from both French and foreign sources, subject to international tax treaties. Everything in this section follows from that sentence.

French penalties for undeclared foreign accounts

On the French side, the best-known sanction concerns undeclared foreign accounts: a fixed penalty of €1,500 per account and per undeclared year, raised to €10,000 where the account is held in a State that has not concluded an administrative assistance agreement with France. The United States has concluded one, so the €1,500 figure applies to American accounts — but it multiplies by the number of accounts and by the number of years, with no overall cap. Five accounts over six years is not a €1,500 file.

This is why a Franco-American regularisation is prepared rather than improvised, and why it belongs with tax litigation and disputes work rather than with routine filing: the order in which returns are lodged, and what they reveal, commits everything that follows.

French assurance vie and PFIC: the French side of the problem

This is the single most common reason Americans in France come to see a lawyer, and the point on which French-language material is thinnest. France’s most ordinary savings product — the multi-support assurance vie contract — is, for a US person, among the least suitable instruments available.

Two difficulties compound. First, the wrapper: the French policy is not necessarily recognised as insurance for US tax purposes, so the French advantages that motivated the purchase — tax-free internal compounding, the allowance after eight years, a distinct succession regime — may produce no American benefit at all. Second, and more seriously, the underlying units: the French and Luxembourg collective investment vehicles that make up the unités de compte fall, from the US standpoint, within the passive foreign investment company regime, which is deliberately punitive in both rate and reporting burden.

Characterisation, surrenders and transmission: the French side

What I contribute here is the French analysis: the exact characterisation of the policy under French insurance law and the French tax code, the treatment of partial surrenders and of the beneficiary clause, the interaction with the reporting obligation under Article 1649 AA, and — most usefully — the alternatives French law offers to someone exposed to the US system: a securities account holding direct lines, a capitalisation contract, a change in the composition of the units, a different succession structure. The corresponding US mechanics, Form 8621 included, are handled by your US preparer or attorney, working from that characterisation.

The same analysis applies, with variations, to the plan d’épargne en actions, the plan d’épargne retraite and funds held inside a Luxembourg policy. These are decisions to be taken before signing, not discovered afterwards.

US trusts under French tax law

The revocable living trust is, in the United States, an entirely unremarkable planning tool: millions of households have one, usually drafted to keep an estate out of probate. In France, that same instrument triggers a specific tax regime and a standalone reporting obligation, and ignorance of it is expensive.

Two provisions govern the field:

• Article 792-0 bis of the French tax code defines the trust for French tax purposes and governs the taxation of transfers made through it, depending on whether beneficiaries are identified and on the settlor’s residence.
• Article 1649 AB of the French tax code places a reporting obligation on the trust’s administrator — the trustee — covering the creation, modification and termination of the trust and the value of its assets, where the settlor or a beneficiary is resident in France for tax purposes, or where the trust holds French assets.

My role is to characterise the trust under Article 792-0 bis, establish who owes what and from what date, determine whether the Article 1649 AB obligation has arisen, and prepare the regularisation where it has. The analysis is French throughout: not whether the trust is valid under the law of the US State that created it, but what French law makes of it.

Estates and gifts across the Atlantic: the 1978 treaty

The estate treaty allocates taxing rights by reference to the nature and location of assets — the situs — and to the domicile of the deceased or donor. The architecture is easy to state and difficult to apply.

Article 8 is the pivot, and it is the provision most often missed by material written for Americans in France. It means that a securities portfolio, bank balances and receivables follow the person, not the place where they are held. For a Franco-American couple, the composition of the estate therefore drives the allocation of taxing rights directly — and changing that composition during lifetime has substantial consequences, in either direction.

The domicile of the deceased or donor

Article 4 of this treaty sets out its own tie-breaker for dual domicile — permanent home, centre of vital interests, habitual abode, citizenship, mutual agreement — and adds an important special rule: a person who was a citizen of only one of the two States, and who would have been domiciled in both, is deemed domiciled solely in the State of citizenship, provided they had a clear intention to retain domicile there and were domiciled in the other State for less than five years in the seven years preceding death or gift. Variants apply to people present in the other State by reason of an employment assignment, or as the spouse or dependant of such a person.

Community property, the marital deduction and the tax credit

Two further provisions matter a great deal to couples:

• Article 11 deals with community property and the marital deduction. It treats certain assets acquired for consideration during the marriage by a person domiciled in the United States or a US citizen, and passing to their spouse, as community property for the purposes of French tax, unless the spouses expressly chose another regime. It also opens, on conditions and on an irrevocable election by the executor, a US marital deduction where the surviving spouse is not a US citizen — an alternative route to the qualified domestic trust.
• Article 12 organises relief: where the deceased or donor was domiciled in France, France taxes the whole of the estate and grants, against that tax, a deduction equal to the US tax paid on the assets taxable in the United States, limited to the proportion of the French tax attributable to those assets.

These mechanisms interact with French territoriality rules for gift and inheritance tax and with the civil law of succession. I handle these files alongside the notaire; the US computation — federal estate tax, the applicable exclusion amount, the US forms — falls to a US professional.

Renouncing US citizenship: what changes on the French side

Renunciation is an American administrative and consular procedure, accompanied by a US exit tax regime described by the IRS under the heading expatriation tax. That is not my field and I do not advise on it.

What I do handle is everything that French law requires to be settled before renunciation — because none of it can be settled afterwards.

• Sequence. Regularising French filings, restructuring a life insurance policy, reorganising a shareholding, making a gift, opening or closing accounts: each carries a different cost depending on whether it happens before or after the loss of citizenship.
• Residence. Renouncing does not change French tax residence. You remain a resident of France, taxable on worldwide income, and you will still have to be able to prove it.
• The ten-year rule in Article 29. The 1994 treaty expressly provides that a former citizen or former long-term resident of a Contracting State may, for a period of ten years following the loss of that status, be taxed in accordance with that State’s law on income arising there. It defines a long-term resident as a person who held lawful permanent resident status for at least eight of the preceding fifteen taxable years. Renouncing therefore does not close the file immediately: a residual exposure on US-source income survives and has to be planned for.
• Transmission. Status under the 1978 treaty is affected too, notably for the domicile rules in its Article 4.

FATCA and your French bank accounts

Under the intergovernmental agreement between France and the United States, French financial institutions identify account holders who are US persons and report account information to the French authorities, which transmit it onward. This is how the great majority of accidental Americans discover their position. The IRS describes the framework on its own pages devoted to the Foreign Account Tax Compliance Act.

The practical difficulties are always the same: insistent requests for a US taxpayer identification number the client does not have, refusal to open an account, refusal to sell certain savings products, and sometimes closure of existing accounts. Two registers combine in response. The banking register concerns the right to an account and the rules governing the banking relationship. The tax register concerns regularisation, which is the only route out of the blockage that lasts.

One piece of advice that costs nothing: do not sign a bank declaration whose content you have not verified. A statement to the bank about your status carries its own consequences, separate from anything else in the file.

How I work as a US expat tax lawyer: France first, then coordination

I do not prepare US tax returns and I do not sell an annual compliance package. What I produce is legal work: a written, reasoned, dated opinion, covered by professional secrecy.

Getting started

You set out your situation and send me the relevant documents. We then agree on the form the consultation takes, according to what your file calls for. Either way, what you end up with is an analysis that:

• characterises your position under French law and both treaties, with the references;
• identifies which French reporting obligations have arisen, from what date, and the exposure attached to each;
• addresses your assets individually — policies, securities, trusts, real estate, company;
• sets the order in which steps must be taken;
• states the points to be settled on the US side, drafted so your US adviser can work from them directly.

Coordination with your US adviser

Internal US tax law is handled by a US professional — your US preparer or attorney. Where you already work with one, I deal with them directly. Where you do not, the file is organised so that a US adviser can be brought in on a defined scope, at the right moment.

My part is to supply an established French characterisation — amounts, dates, nature of the income, treaty credits relied on — so that they work from accurate premises, and to check that the treaty reasoning holds from both ends. It is that articulation, rather than two separate opinions stapled together, that produces the result.

Fees

Fees are fixed, agreed in writing before any work begins, and set by reference to the agreed scope. The figure is given in reply to your enquiry, once I have read what you have sent: I do not quote a Franco-American file without knowing its facts.

US expat tax lawyer, France: frequently asked questions