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Discussion Starter · #1 ·
Hello to the Forum!

There may already be pertinant posts on this subject, but things do change...

I am looking for a recommendation on who to contact to get informed on investment taxation considerations as a dual national. I'm thinking of investing (real estate, stock market, etc.) in France and/or the US, and need to know more the fiscal adavantages and disadavantages of where I invest and in what support.

Does anybody have a good, reliable recommendation on who to talk with (or who not to talk with!) ? I'm in Avignon area, so if face-to-face is best, a contact in this area ( Avignon, Marseille, Aix en P., Lyon) would be ideal.

Any other leads are also welcome!
 

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It's my opinion, so take it as you will, but other than perhaps one of the English speaking dual qualified tax attorneys in Paris (and that's a pricey option) I would say you kind of have to figure this stuff out for yourself based on your tolerance for risk (financial, legal, emotional, etc.). Perhaps someone at one of the major international accounting firms might be able to advise you (simply because they have access to colleagues familiar with the various sides of the issues).

The US is kind of unique in their insistence on maintaining their taxing authority over citizens, no matter where they live. And some of the "traditional" investment vehicles here in France and elsewhere in the world have gotten wise about the constraints and restrictions placed on Americans overseas, so many dead normal types of investments have closed or are closing to US citizens.

The US Consulate in Paris publishes a list of English speaking attorneys (including some outside the Paris area) that you might want to consult for starters: https://fr.usembassy.gov/u-s-citize...ns-in-france/local-resources-of-u-s-citizens/ Click on the drop down for Attorneys.

Normally, this type of financial advice would be the province of the banks here - though you would need to find a bank that specializes in "expats" or foreigners. The general level of knowledge of US tax issues at the usual banks tends to be minimal.

And, you can always scan the Expat Tax section here. There are those who contend that your best move could be to renounce the US citizenship if you don't have binding ties back to the US.

Not really trying to be a voice of gloom and doom, but serious investing as a dual national is a tricky area.
Cheers,
Bev
 

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A good question...but I suspect there are several questions wrapped up in your post.

1. Do you want to invest while you are in France, or do you want to invest in the French economy / real estate? This raises questions of will you live (and die) in France?....and of course your investment strategies, goals, inheritance planning, risk profile.....and more. Moving investment money. from country to another ..and back again can be expensive and you are at risk of fx rates.

2. From a stock market point of view you, these days you can invest anywhere in the world from anywhere in the world. I'm resident in France and I'm buying into various parts of the world....emerging and frontier markets...but carefully!

3. As Bev says you can try your local French bank for info on the standard French offerings to French people. The PEA and assurance can be interesting from a French tax point of view....but there are time constraints and watch for fees. I've not been impressed by the quality of investment advice from banks that I've talked to.

4. As a Brit I make no comment on US taxes. If you are resident in France you will pay French tax on world wide revenues. Tax treaties????? others here know more than me.

5. As a business scbool prof I've met several US people who were international lawyers /tax advisors etc. It was my opinion that really there were in the rapid electronic funds transfer business.....from their clients' accounts into their own accounts...or perhaps I am cynical?

Good luck....DejW
 

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Discussion Starter · #4 ·
...Food for thought

Thanks for the two replies. I'm not rich enough or lazy enough to want to just fill the pockets of international tax lawyers, so maybe I'll just have to knuckle down and start reading the fine print of French / US tax treaty and each countries respective tax laws on foreign investment. If I get it right, maybe I could offer my advice in the future!

In the meantime, I'll hope that somebody with hands-on experience replies to this thread.

And finally, no, I'm not ready to renounce my US citizenship, at least not for tax purposes....there may be other reasons....
 

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As far as I know it STARTS simple.

You pay taxes in France on your world wide revenue. Uncle Sam does the same?....and there's a tax treaty which says you don't pay tax twice. I'm sure it gets much more complicated though.

As a Brit with the benefit (ha!) of EU rules I had a complicated year when I got married in 2010 in France. Due to a rather special set of circumstances the Fr tax authorities thought that the amount of tax I'd paid in the UK was too high by French calculations....so they gave me a refund! Don't draw any general conclusions from a very special set of circumstances!

There's a saying in the investment world that you investing should NOT be primarily driven by tax....that's an important secondary consideration.

Happy reading....DejW

Thanks for the two replies. I'm not rich enough or lazy enough to want to just fill the pockets of international tax lawyers, so maybe I'll just have to knuckle down and start reading the fine print of French / US tax treaty and each countries respective tax laws on foreign investment. If I get it right, maybe I could offer my advice in the future!

In the meantime, I'll hope that somebody with hands-on experience replies to this thread.

And finally, no, I'm not ready to renounce my US citizenship, at least not for tax purposes....there may be other reasons....
 

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The key thing to remember when it comes to "international" investments for US citizens is FATCA. That's the real bugbear here - mostly it requires all sorts of additional reporting when you get into investments that involve "foreign trusts" (of which "assurance vie" is usually considered one, as are most sorts of foreign mutual funds) and ownership of "certain foreign corporations" to the tune of 10% or more.

Start by taking a look at IRS Publication 54 for overseas taxpayers. That should point you in a few of the right directions for some of the more complicated items. (And yes, each item has its own IRS publication, too.)

This page from the IRS may help: https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad
Cheers,
Bev
 

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Discussion Starter · #7 ·
Thanks for the info and warnings! After a quick look at FATCA I get the impression that the real trick is understanding the definitions! Once I get myself "defined" as to reporting requirements and categories, it looks like reporting in subsequent years will be mostly just modifying the dollar amounts. Okay, I haven't yet followed up on the trust aspect of "assurance vie" or foreign mutual funds, so maybe there are some bad surprises awaiting....!

And, of course, I'll get to do the same thing for French income tax declarations, I suppose!!
 

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I'm not sure that anyone actually "understands" the definitions - and falling back on my accountant training, I can assure you that tax consultants take a whole range of "positions" on just what some of the terms "mean" depending on their clients' situations.

But the good news (pleasant surprise, actually) is that the French tax rules are pretty straight-forward with regard to "foreign investments." You report each year on your tax declaration foreign bank accounts and/or "assurance vie contracts" opened, closed or used within the year. Only the account itself - name, address of the bank or other holding institution, account # and that's it. They don't ask you for any balance information, just the account identification details.

For the income from foreign investments, you just report it on the main tax declaration (2042), then again on the 2047 (for foreign source income. Then for most items, you sort them into those things exempt from taxation in France; those things taxable in France, but subject to a full tax credit at French rates; and those items that are subject to French taxes without tax credit.

I have to say that the instructions for the form 2047 have gotten much clearer in recent years. (Or maybe I've just gotten used to the language of the Fisc when they write these things.) And even if you report it incorrectly, if it "looks funny" the tax office may give you a call and ask a few questions to try to categorize it properly.
Cheers,
Bev
 

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Discussion Starter · #9 ·
Hmmm.....you seem to imply that maybe I should invest in a tax consultant, at least for a first year, to see what "my" FATCA definitions would be (and then copy that for succeeding years).

As to French reporting.....it's nice to live in a civilized country!
 

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If you've looked through the back files, you'll probably notice that I'm not one to recommend hired help for your US tax returns. Over here, it's expensive - and the tax preparers tend to be very conservative about filing all the additional paperwork to save their own butts. (Certainly understandable, but it does run up a rather big bill.)

It depends quite a bit on just what sorts of investment you get into. For instance, if you hold more than 10% of the stock of "certain" foreign corporations, there is a whole sequence of filings you're supposed to make, including submitting full financial statements (in dollars and euros, adjusted for GAAP presentation). Now what they mean by "certain" foreign corporations has never been clear - and in certain instances, I think perhaps there are loopholes a paid adviser is unlikely to recommend to a client.

It also, obviously, depends on the amounts you have invested and your exposure as far as "errors" or whatever are concerned. Many of us on the forum can do a perfectly adequate good faith effort using tax prep software, and others really need the help of a dedicated US tax adviser at some level.
Cheers,
Bev
 
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