2026 France Tax Planning Guide
When am I tax resident in France?
Tax residency in France is based primarily on a few defining criteria, namely, if:
Your household or main abode is based in France
Your primary professional activity is based in France
The directors of companies whose registered office is located in France and which generate a turnover in excess of €250 million are presumed to be carrying on their primary professional activity in France (NB: the turnover of controlled companies is taken into account in calculating the above threshold)
The center of your economic interests is based in France
If any one of these criteria is met, then you can be considered French tax resident. In the event of a tax residence dispute between the U.S. and France, the following tie-breaker rules included in the Double Taxation Agreement signed by both countries must be applied successively:
1. You will be considered tax resident in the country in which you have a permanent home.
2. If you have a permanent home in both countries, the center of vital interests is considered.
3. Where the center of vital interests cannot be determined, or if you do not have a permanent home in any countries, you will be deemed to be resident for tax purposes in the country in which you have a habitual abode.
4. If you habitually reside in both countries, or if you do not habitually reside in either country, you will be considered a resident of the country of which you are a national.
5. If you are a national of both countries, or if you are not a national of one of them, the competent authorities of the countries decide the matter by mutual agreement.
Since the 2025 Finance Act, individuals meeting the above domestic criteria can no longer be considered tax domiciled in France for income tax purposes if they qualify as a U.S. resident under the treaty tie-breaker rules.
Will France tax me on my U.S. income?
If you are tax resident in France, you will be liable to pay tax on your worldwide income, including any income generated in the U.S. However, the exact nature of the taxation will be determined by the Double Taxation Agreement between the U.S. and France and French tax law. Some types of income may be taxable in the U.S. rather than in France, e.g., U.S.-source income that remains taxable in the U.S. under the treaty is included in the French tax base, but France may grant a tax credit equal to the French tax on that income, fully offsetting it.
Will I pay taxes twice – to France and the U.S.?
Typically, no. There is a Double Taxation Agreement between the U.S. and France that intends to eliminate double taxation on the same income. However, there can be some circumstances where the same income can be taxed twice, or you may not get a full tax credit. It is best to speak with a tax professional to determine how you will be taxed upon your move to France.
Is my Social Security benefit taxed in France?
No, according to the Double Taxation Agreement, your pensions of U.S. source, including Social Security, are taxable in the U.S. Article 18§1 of the double tax treaty discusses pensions in full detail. France takes into account these pensions for tax calculation purposes and a tax credit equal to the French income tax is granted pursuant to Article 24§1-a)-i) of the tax treaty. However, France will use the income from the Social Security benefit as part of your overall taxable income for tax calculation purposes. You will receive a tax credit equal to the French income tax to offset any French liability on Social Security income, the French tax is then canceled due to the tax treaty.
How will my 401(k) or IRA distributions be taxed in France?
According to the Double Taxation Agreement, the U.S. has the right to tax any distributions from retirement accounts or pension benefits that were accrued within the U.S. Likewise, France has the right to tax any benefits built up within the French retirement system (regardless of whether you live in the U.S. or France). Similar to the situation with Social Security income, you will receive a tax credit equal to the French income tax to offset any French liability on distributions from your retirement accounts or schemes.
Is my Roth IRA or Roth 401(k) still considered tax-free in France?
Yes, this is one of the benefits of the Double Taxation Agreement between the U.S. and France.
Should I move my investment accounts to France when I move?
We typically advise clients not to transfer their U.S. investment accounts to France when they move. U.S. tax-advantaged accounts such as IRAs and Roth IRAs cannot be rolled over into French accounts, and any distribution to fund a European account is considered a taxable event in the U.S.
While France has its own retirement savings vehicle, the Plan d'Épargne Retraite (PER), it is not recognized by the IRS as a qualified retirement plan. As a result, PER contributions are not tax-deferred under U.S. law, and growth inside a PER may be taxable annually to U.S. taxpayers. Additionally, most PERs include French mutual funds or insurance-based products, which are classified as PFICs (Passive Foreign Investment Companies) and subject to punitive U.S. tax treatment and complex reporting.
For these reasons, Americans in France typically maintain U.S.-based brokerage and retirement accounts, which offer:
Greater tax efficiency under U.S. law
Easier compliance
A wider selection of low-cost, transparent investments
That said, recent changes to the French PER regime — including the extension of the deduction carryover period from three to five years — may make it a useful tool for reducing French taxable income, especially for individuals with volatile earnings. This can be attractive for U.S. taxpayers who do not owe U.S. tax due to foreign tax credits or exclusions. However, this requires careful coordination to avoid triggering unnecessary U.S. tax and reporting complications.
Bottom line: It's essential to evaluate the cross-border implications before investing in French products like the PER. We recommend working with a qualified cross-border tax advisor to determine what’s appropriate for your situation.
As a reminder: All foreign (non-French) bank accounts, capitalization contracts, retirement products, and crypto asset accounts must be reported to the French tax authorities annually, regardless of activity.
Is there a wealth tax in France?
Yes, on property: Impôt sur la Fortune Immobilière (IFI). It currently applies only to property* (worldwide if you are French tax resident) and only on the French real estate assets during the first five years of residency in France if you have not been French tax resident during the preceding five years. If your net worth in property (the value of your property holdings less any outstanding mortgages) exceeds €1.3m, then you may be liable to French wealth tax.
*all real estate assets and real estate rights as well as to the shares in companies or other organizations for the fraction of the assets that represent real estate or real estate rights held directly or indirectly.
New – Tax on sumptuary assets in holding companies
The 2026 Finance Act introduces a new 20% tax on specific “sumptuary” assets held within “patrimonial holding companies” (holdings patrimoniales). This tax applies to French-headquartered companies subject to IS and to foreign companies with at least one “Controlling Person” who is a French tax resident, when:
(i) total asset fair value ≥ €5M;
(ii) at least one individual holds ≥ 50% of voting or financial rights (directly or indirectly, alone or with family group); and
(iii) passive income exceeds 50% of combined gross operating and financial income.
The 20% tax applies to the following asset categories:
hunting and fishing property,
non-professional vehicles, tourism vehicles, yachts, pleasure boats, and aircraft,
jewelry and precious metals,
racehorses or competition horses,
wines and alcohols, and
housing reserved for the Controlling Person’s enjoyment (occupied free or below-market rent, or fictitiously rented).
A professional asset exclusion applies. An IFI double-taxation avoidance mechanism is provided: assets taxed under this new tax for a fiscal year are exempt from IFI for the following January 1. For foreign holding companies, French tax-resident Controlling Persons are liable based on their participation share, with a capping mechanism modeled on IFI. The tax may not be due if the French Controlling Person demonstrates that the choice of foreign headquarters was not primarily to circumvent French tax legislation.
Effective: fiscal years closed from December 31, 2026.
Can I invest in an Assurance Vie as a U.S. Citizen?
No, we generally advise against investing in an Assurance Vie as a U.S. citizen or green card holder. While these long-term savings and investment products are extremely popular and tax-efficient in France, they are not treated favorably by the IRS.
In most cases, an Assurance Vie includes French mutual funds or insurance-wrapped investments, which are classified by the IRS as Passive Foreign Investment Companies (PFICs). PFICs are subject to punitive tax treatment in the U.S. if not handled carefully — including potential taxation of unrealized gains and high-interest charges on distributions.
What’s a PFIC?
A PFIC is a foreign company that earns most of its income passively (like interest or dividends) or holds mostly passive assets — such as a mutual fund. For U.S. taxpayers, investing in foreign mutual funds (like those inside an Assurance Vie) triggers special reporting requirements and a complex tax regime that can result in significant tax and administrative burden.
Don’t panic: There is a reporting threshold
PFICs must typically be reported on IRS Form 8621, but not in all cases. For example, if your total PFIC holdings are under $25,000 for individuals (or $50,000 for joint filers) and you do not receive any distributions, Form 8621 may not be required. However, this threshold only applies to non-QEF, non-mark-to-market PFICs under indirect ownership, and professional advice is strongly recommended to assess your filing obligations.
Because of the reporting complexity, U.S. tax inefficiency, and limited upside compared to U.S.-based options, we generally recommend avoiding Assurance Vie contracts as a savings vehicle unless part of a carefully considered cross-border strategy. [Text Wrapping Break][Text Wrapping Break]Am I subject to the minimum tax on high earners (CDHR)?
The CDHR (Contribution Différentielle sur les Hauts Revenus) ensures a minimum 20% effective income tax rate for the highest earners. It was introduced in 2025 and extended by the 2026 Finance Act until France’s budget deficit falls below 3% of GDP.
It applies if your household’s adjusted reference income exceeds €250,000 (single) or €500,000 (couple) and your effective tax rate is below 20%.
For most Americans in France, the France-U.S. treaty credit mechanism means the CDHR should have limited impact: when your U.S.-source income is taxed at the French progressive rate, the treaty credit is factored into the 20% minimum rate calculation — meaning you may already meet the threshold without owing any CDHR. For U.S.-source income taxed at the 12.8% flat rate, the treaty credit reduces the CDHR proportionally, and may eliminate it entirely if all your income is from U.S. sources. In many cases, the CDHR is effectively neutralized. We recommend consulting a tax advisor to assess your specific situation.
Will I owe the PUMA healthcare contribution?
The “PUMA tax” is a social contribution on passive income in particular, dividends, interest, capital gains, rental income) for individuals residing in France with little or no earned income. It funds access to the French universal healthcare system.
You may be liable if you reside in France, have professional income below approximately €9,600 (this threshold is updated annually), and do not receive a French retirement pension. Only passive income exceeding approximately €24,000 (also updated annually) is subject to the contribution. Individuals receiving only U.S.-source pensions may fall within scope.
The 2026 Social Security Act also enacted a mandatory minimum contribution for non-EU visitor visa holders accessing French healthcare. The amount will be set by future decree.
Note: The 2026 Finance Act is pending Constitutional Council validation (seized 02/04/2026). Some provisions may be struck down.
Further reading on taxes in France for Americans
Retiring in France as an American - Financial Considerations
Why France Works for American Retirees: A Planning Perspective
Why Americans Moving to France Face Custodial and Banking Surprises
High-Net-Worth Tax Planning Strategies for Americans in Europe
How to Move Abroad Permanently: Building Your Relocation Team
Disclaimer
This material is purely intended to be general and educational in nature, and should not be construed as specifically-tailored investment, financial planning, tax, legal, or other professional advice. Information and data contained herein is as-of the date of publication, and may be subject to change in the future without notice. Any investment performance referenced is purely past performance, which is no guarantee of any future performance. Nothing contained herein should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or other financial product or investment strategy. All investment, tax, and financial planning strategies involve risk that you should be prepared to bear. You are highly encouraged to consult with professionals of your choosing before taking any action based on this material.