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Hi All,

I've been trying to research this online but have not gotten any clarity.

Would anyone know if U.S. retirement accounts (401k, IRA, Roth IRA, Pensions, etc.) are subject to the French Wealth Tax (ISF), or are they exempt?

I know that there is a 5 year exemption before you can get taxed on worldwide assets, when you become a resident of France. But I can't figure out whether retirement accounts are exempt from the calculation.

Thank you for your help!

Jennifer
:confused:
 

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The government deferred tax funds (IRA, 401K, etc.) are considered government pensions and thus are not subject to ISF. The US-French tax treaty (for income tax) has a listing (in Article 18) of those US pension programs that are considered to be US government pension plans.
Cheers,
Bev
 

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The government deferred tax funds (IRA, 401K, etc.) are considered government pensions and thus are not subject to ISF. The US-French tax treaty (for income tax) has a listing (in Article 18) of those US pension programs that are considered to be US government pension plans.
Cheers,
Bev
I don't see any such listing either in Article 18 or the IRS technical explanation of that article. Bev, would you please point me in the right direction?

Bear in mind that an IRA or 401K is just a device for deferring US income taxes on a taxpayer's personal savings - no part of the assets in these accounts is contributed or owned by the US government. Nor is access to these funds by the taxpayer restricted (but certinly has tax consequences and penalties for early withdrawals!).
 

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Paragraph 18 2-c (ii):

(ii) in the case of France, it is understood that the social security or similar legislation of the United States, qualified plans under section 401(a) of the Internal Revenue Code, individual retirement plans (including individual retirement plans that are part of a simplified employee pension plan that satisfies section 408(k), individual retirement accounts, individual retirement annuities, and section 408(p) accounts), section 403(a) qualified annuity plans, and section 403(b) plans shall be considered to generally correspond to a pension or other retirement arrangement established, maintained, and recognized for tax purposes in France;
There are also a couple of types of "assurance vie" accounts here in France that are excluded from consideration for ISF purposes due to their retirement aspect, that resemble IRAs and other section 401 types of investments. Plus, at the AARO tax seminars I attended, when the question was asked, the tax attorneys said that they advise their clients not to include their IRAs and similar accounts in their ISF declarations.
Cheers,
Bev
 

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Paragraph 18 2-c (ii):



There are also a couple of types of "assurance vie" accounts here in France that are excluded from consideration for ISF purposes due to their retirement aspect, that resemble IRAs and other section 401 types of investments. Plus, at the AARO tax seminars I attended, when the question was asked, the tax attorneys said that they advise their clients not to include their IRAs and similar accounts in their ISF declarations.
Cheers,
Bev
Bev, thank you. I have the french version of the treaty with this language, but am having trouble finding the english version. Would you please provide the URL to it. Thanks, Lef
 

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Thanks much, I was missing the 2004 protocol. I guess that it is too much to expect that the IRS would come up with a consolidated document!
That's always been my gripe in all this. I initially found the consolidated version on the Fisc website - in French, but better than the multi-document version the IRS provides. Stumbled onto the consulate consolidated version in English, no less, and refer to that one now exclusively. Vive la France!
Cheers,
Bev
 

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Paragraph 18 2-c (ii):



There are also a couple of types of "assurance vie" accounts here in France that are excluded from consideration for ISF purposes due to their retirement aspect, that resemble IRAs and other section 401 types of investments. Plus, at the AARO tax seminars I attended, when the question was asked, the tax attorneys said that they advise their clients not to include their IRAs and similar accounts in their ISF declarations.
Cheers,
Bev
Hi Bev, forgive my ignorance, my retirement is in an IRA, what do you mean by not including IRA's in an ISF declarations, what's an ISF

Thanks,
Mark

Okay, I see it's Wealth Tax. I'm still lost on this. I thought we were required to report all income.
 

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Hi Bev, forgive my ignorance, my retirement is in an IRA, what do you mean by not including IRA's in an ISF declarations, what's an ISF

Thanks,
Mark

Okay, I see it's Wealth Tax. I'm still lost on this. I thought we were required to report all income.
Income tax and ISF are two separate taxes. (I refer to it as "death by a thousand cuts" - or so it seems sometimes.)

For the ISF, you only are affected if your worldwide assets total at least 1.3 million euros at year-end. However, an IRA is considered to be a US "government" pension for French taxation purposes, so the value of the IRA fund is not included in the tally of your asset balance for ISF purposes.

If you are taking withdrawals from your IRA, you do report those as income in the year taken (just like you do on your US taxes), but then on form 2047, you list that income as being from your US pension and part of the income that is credited at French tax rates. (This is explained better in French on the instructions for the forum 2047.)

Normally, on a bank or other investment account the income from the account would be the interest paid into the account and/or any investment gains net of losses. But for an IRA that is considered a pension, the income is only what you withdraw during a particular tax year.
Cheers,
Bev
 

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Income tax and ISF are two separate taxes. (I refer to it as "death by a thousand cuts" - or so it seems sometimes.)

For the ISF, you only are affected if your worldwide assets total at least 1.3 million euros at year-end. However, an IRA is considered to be a US "government" pension for French taxation purposes, so the value of the IRA fund is not included in the tally of your asset balance for ISF purposes.

If you are taking withdrawals from your IRA, you do report those as income in the year taken (just like you do on your US taxes), but then on form 2047, you list that income as being from your US pension and part of the income that is credited at French tax rates. (This is explained better in French on the instructions for the forum 2047.)

Normally, on a bank or other investment account the income from the account would be the interest paid into the account and/or any investment gains net of losses. But for an IRA that is considered a pension, the income is only what you withdraw during a particular tax year.
Cheers,
Bev
I'll only have SS# and and IRA, am I correct in understanding, I won't owe France taxes on it? Perhaps, only interest on my bank accounts?
It's good to know I'm not wealthy.

Thanks,
Mark
 

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I'll only have SS# and and IRA, am I correct in understanding, I won't owe France taxes on it? Perhaps, only interest on my bank accounts?
It's good to know I'm not wealthy.

Thanks,
Mark
As far as my read of the treaty goes, you report your US SS and IRA withdrawals on your French returns and then detail them on form 2047. According to the instructions for form 2047, you characterize them as being eligible for that "taxable but credited at French tax rates" and there should be no tax on them.

Private interest on bank accounts and such may or may not draw any actual tax to pay, but you'll find the assessment document they send you to be very handy for any number of administrative matters - even if it shows taxes due as 0€.
Cheers,
Bev
 

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As far as my read of the treaty goes, you report your US SS and IRA withdrawals on your French returns and then detail them on form 2047. According to the instructions for form 2047, you characterize them as being eligible for that "taxable but credited at French tax rates" and there should be no tax on them.

Private interest on bank accounts and such may or may not draw any actual tax to pay, but you'll find the assessment document they send you to be very handy for any number of administrative matters - even if it shows taxes due as 0€.
Cheers,
Bev
Thanks Bev, again you have given great info and clear answers. Sorry it's taken this long to get back. :)

Thanks,
Mark
 

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Good news for wealthy expats living in France, a fiscal reform is in process. If I am correct it will apply in 2019. People will only be taxed on their real estate assets for stuff over 1,3million. Our new president was a banker, that explains this.....
 

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Good news for wealthy expats living in France, a fiscal reform is in process. If I am correct it will apply in 2019. People will only be taxed on their real estate assets for stuff over 1,3million. Our new president was a banker, that explains this.....
That's the change from ISF (Impot sur la fortune) to ISI (Impot sure la fortune immobiliere) appears it will apply for the 2018 tax year - more information here Impôt sur la fortune immobilière (IFI) - L'ISF Macron

Not sure whether they are still considering a separate tax on yachts etc.
 
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