Dual Citizen Tax Questions

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Dual Citizen Tax Questions


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Old 11th July 2019, 11:58 AM
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Default Dual Citizen Tax Questions

Hi all!

I am a dual US-Italian citizen working for an American company in NYC. I plan on moving full time to France and continuing to work for my company remotely next year.

I have a few options in terms of employment and taxes because of my situation. I’d love to hear some advice on what might be the best path to take.

As an EU citizen, I am able to move to France and take up residency with my Italian passport. If I stay employed by my US based company, what kind of tax implications should I expect? Is it as simple as filing and paying all US taxes as a non-resident and then filing a French tax return claiming that my taxes have already been paid to the US?

We also have a small French branch of the company with one other employee. Theoretically I could be transferred or rehired at the French branch, though with the higher taxes for French workers I do not think this would be ideal for my company nor for me.

Looking forward to hearing if anyone has had this experience!

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Old 11th July 2019, 01:45 PM
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Can you move to France with your Italian passport? Yes no problem
The next two questions are interlinked-If you do any work in France even sitting at a computer working remotely then you are regarded as working in France and are required to pay French taxes health charges etc as is your employer.If you are working for just one company then you cannot set up as an auto entrepreneur There are "portage de salarie" schemes or you could work for the french branch You also need to consider how you will pay for your health care and in your situation being employed is a good option

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Old 11th July 2019, 01:48 PM
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Originally Posted by Alorsvraiment View Post

As an EU citizen, I am able to move to France and take up residency with my Italian passport. If I stay employed by my US based company, what kind of tax implications should I expect? Is it as simple as filing and paying all US taxes as a non-resident and then filing a French tax return claiming that my taxes have already been paid to the US?
No, no. That's not how it works.

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We also have a small French branch of the company with one other employee. Theoretically I could be transferred or rehired at the French branch, though with the higher taxes for French workers I do not think this would be ideal for my company nor for me.
Not ideal, perhaps, but how it will have to work.

Only the US taxes based on citizenship. The principle is called CBT - for Citizenship Based Taxation. You will always have to file US taxes no matter where you live and work - and NOT as a "non-resident." As a citizen, you are considered to be "tax resident" in the US until and unless you renounce your US citizenship (which is a whole 'nuther thing that costs you $2350 to start with).

As a US citizen living and working in France, you are considered to be "tax resident" in France due to your working in and residing in France. This means that you will be expected to pay into the French "cotisation" system - for health insurance, retirement and various other "social insurances." Then, you'll be subject to French income (and other) taxes as a resident of France.

There is sometimes an option for your employer to retain you on your home country benefit system - but only if your transfer to France is "temporary" meaning that you'll be returning to the US in 5 years or less. However, there is rampant abuse of this provision and unless your employer is a large, multinational that has done this before, it's not an easy thing for them to set up.

There is a US-France tax treaty that spells out which bits of your income are subject to tax in which jurisdiction and how to claim the tax credits and exclusions available to you. As far as your French taxes are concerned, you declare your worldwide income to the Fisc (French version of the IRS, but considerably easier to work with). Basically, you'll pay your primary income taxes to the French government.

On the US side of things, you can exclude up to a little over $105K of "earned income" (i.e. salary) using form 2555 for the Foreign Earned Income Exclusion (FEIE). You also report your worldwide income on your US returns - and then you can "exclude" (i.e. subtract) your foreign salary, and after that, you can take a credit for income taxes paid to the French Fisc. It's also possible to skip the FEIE and just use the Foreign Tax Credit for everything if you prefer - but read the instructions for that form (1116) carefully because you have to split your income into specific categories to take the FTC.

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Old 11th July 2019, 02:28 PM
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Alorsvraiment -- Crabtree and Bevdeflorges are spot on. Your simplest solution would be to be hired under the French Branch of your company that you mentioned. You'll pay your taxes to France and also file a U.S. tax return, where within limits, your earned income will either be excluded or you'll take credits for French taxes paid. (Consider calculating both ways before submission.) Cheers, 255

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Old 11th July 2019, 03:54 PM
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Thank you to Crabtree, Bevdeforges, and 255 for the info! Since I’ve got my EU passport I am trying to avoid getting a visa / special work permit through my US citizenship.

It looks like the easiest path (tax-wise) is the be transferred to the French company under my Italian passport...which is a harder sell to the US company but not insurmountable.

I have another curveball question that I am wonder about. If I am paid my salary in France, fully through the SARL registered there, but will occasionally make bonuses and commission on sales in the US (in dollars) - what kind of process should I expect in the event I make income in 2 countries/two currencies?

Greatly appreciated!

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Old 11th July 2019, 05:03 PM
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Neither where you are paid, nor what currency you are paid in has any bearing on your tax status. Bonuses or commissions are "salary" just the same, no matter where the customers are or where the money is coming from.

And you're likely to find that there is no option to get a work visa based on your US passport. If you have an EU nationality, chances are the French consulate will not process a visa for you in any event. (Seriously, why make "extra" work for them if you don't have to? <g>)

The way things often (usually?) work in multi-national companies is that all payments to you are made through the local (i.e. French) entity and their payroll system. The US company then reimburses the French entity for your "costs" to them via intercompany transfer or credits.

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Old 11th July 2019, 09:22 PM
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Alorsvraiment -- Both the U.S. and France require reporting of world-wide income. You'll be required to report to both country's tax authorities. Just so you know, bonuses and commissions are both considered "earned income" in the U.S., so it may be to your advantage to have them paid in France to have them "excluded" from your income. Additionally, if they were paid and received in the U.S., you may have some FICA taxes to pay. Cheers, 255

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Old 12th July 2019, 06:01 AM
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Originally Posted by 255 View Post
Alorsvraiment -- Both the U.S. and France require reporting of world-wide income. You'll be required to report to both country's tax authorities. Just so you know, bonuses and commissions are both considered "earned income" in the U.S., so it may be to your advantage to have them paid in France to have them "excluded" from your income. Additionally, if they were paid and received in the U.S., you may have some FICA taxes to pay. Cheers, 255
"Where" something is paid has no bearing on its tax status. The one thing that "might" have some bearing is if you are being paid bonuses and commissions that are based on performance while working in the US vs. working in France. But you're considered to be working in whatever country you are physically located in while performing the work.

Then, there is the matter of being a "cash basis" taxpayer. Means that you can push compensation into a later time period by delaying payment (like at the end of the year). That again argues that the income is attributable to the period in which it is paid out - however whether you are paid in the US or in France (or in dollars or euros) has no effect. It's all declarable in the year in which it was paid.

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