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Discussion Starter · #1 ·
I was at a dinner last night with a group of expat and french couples. During the course of conversation the issue of expat tax filing obligation came up. For most cases the answer to "to file or not to file" seemed straight forward.

But, there was one case that generated a lot of discussion and no consensus. A retired person/couple spending more than 183 days a year in France on a title-de-sejour/visiteur, with a permanent residence in the US (I.e. registered to vote, pay taxes, etc.) The US was used in the example since there is a specific tax treaty and there were Americans at the dinner. All earnings are in the US and come from investments, retirement and/or social security. (I.e. no earned income anywhere). For the sake of discussion we assumed they own a home in France, but it probably doesn't matter. There was unanimity that there would be no tax due in France, but disagreement on the need to file.

So, the question is: Is this person/couple required to file French tax forms? What do you think?
 

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As I understand it anyone who is resident more than 183 days has to complete a tax return in France. Where their taxes are paid is then down to the tax treaty between the two countries involved.
 

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Actually, the 183 day thing is just a "guideline" in France. It's "assumed" that you are resident in France if you are physically present here for 183 days or more in a calendar year. But the criteria is where you have your main residence or centers of interest. And you can be considered "tax resident" even with less that 183 of presence. Note also that the IRS says you can also be "tax resident" in more than one country, too. Each country has their own rules on this - and they are anything but coordinated.

And being registered to vote and owning a residence in the US does not make you tax resident there. US citizens living overseas vote from their last address in the US.

According to the US-France tax treaty, US Social Security is taxable only in the US if the taxpayer is resident in France (though it must be declared in France if tax resident - but then is credited at French tax rates). Investments get complicated - but generally speaking, if investment income is coming from the US, the US gets first crack at it.

It sounds as if your hypothetical couple would very much have to file both US and French income taxes. (And don't forget that the avis d'imposition comes in very handy for many administrative functions, even when it shows 0 tax due.)
Cheers,
Bev
 

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Bev, this hypothetical is of particular interest to me as it closely mirrors my situation. I was with you (and in agreement)) up to your conclusion that the hypothetical couple had to file. Assume that investment income and Social Security income (and all other income) is paid into US accounts, consistent with having one’s tax residency there. What factor(s) lead you to conclude it’s necessary to file in France?

David


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Just out of idle curiosity - are Americans liable to social charges on their overseas income?
No, we're not, due to a provision in the U.S.-French tax treaty.

I know this because I had some investment income from U.S. sources, was assessed the CSG/CRDS, and raised a big fuss. My argument was that, under the US-French tax treaty, France may not "tax" American citizens on US-source income, and under French law, the CSG/CRDS constitutes a "tax" (despite the fact that it isn't considered a tax under either US or EU law). The tax conciliator agreed with me and ordered the authorities to refund the CSG/CRDS I had paid. This is from the tax conciliator's letter:

Conformément à la jurisprudence du conseil constitutionnel, la contribution sociale généralisé (CSG) revêt le caractère d'un impôt de toute nature au sens de l'article 34 de la constitution. Ainsi, pour l'application des conventions fiscales conclues par la France en matière d'impôt sur le revenu, celle-ci considère généralement la CSG et la contribution pour le remboursement de la dette sociale (CRDS) comme des impôts sur le revenus dans le champ d'application des conventions. Dès lors, les dispositions de la convention franco-américaine du 31 août 2014 en matière d'élimination des doubles impositions trouvent à s'appliquer.
 

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Bev, this hypothetical is of particular interest to me as it closely mirrors my situation. I was with you (and in agreement)) up to your conclusion that the hypothetical couple had to file. Assume that investment income and Social Security income (and all other income) is paid into US accounts, consistent with having one’s tax residency there. What factor(s) lead you to conclude it’s necessary to file in France?

David


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It does not matter where your income is being paid into or out of. There are only 3 criteria in France for determining "tax residence" and if you meet any one of them, you are and should be declaring in France.

You have your primary residence in France (this is where the 183 day guideline comes in - presumed if you are living in France for 183 days in a calendar year).

You have your main financial centers of interests in France.

or

You work or operate a business in France.

France is not like the US and some other countries, where you don't have to file if your income (or reportable/taxable income) is less than some threshold amount. If you are resident here, then you file and declare your worldwide income for the entire year. In your situation, you probably won't owe any taxes (except perhaps CSG/CRDS on investment income), though depending on the level and nature of your investments, there may be some income tax to pay on them.

This is the latest version of the Fisc's guide in English to French taxation https://www.impots.gouv.fr/portail/files/media/1_metier/5_international/french_tax_system.pdf

Skip Chapter I - it's all corporate taxation. Chapter II is for individuals.
Cheers,
Bev
 

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No, we're not, due to a provision in the U.S.-French tax treaty.

I know this because I had some investment income from U.S. sources, was assessed the CSG/CRDS, and raised a big fuss. My argument was that, under the US-French tax treaty, France may not "tax" American citizens on US-source income, and under French law, the CSG/CRDS constitutes a "tax" (despite the fact that it isn't considered a tax under either US or EU law). The tax conciliator agreed with me and ordered the authorities to refund the CSG/CRDS I had paid. This is from the tax conciliator's letter:

Conformément à la jurisprudence du conseil constitutionnel, la contribution sociale généralisé (CSG) revêt le caractère d'un impôt de toute nature au sens de l'article 34 de la constitution. Ainsi, pour l'application des conventions fiscales conclues par la France en matière d'impôt sur le revenu, celle-ci considère généralement la CSG et la contribution pour le remboursement de la dette sociale (CRDS) comme des impôts sur le revenus dans le champ d'application des conventions. Dès lors, les dispositions de la convention franco-américaine du 31 août 2014 en matière d'élimination des doubles impositions trouvent à s'appliquer.
Was that a recent decision? Only as I understand it, a lot of Brits have been billed for social charges this year and when they appeal they're being told the rules changed from this year and it is no longer qualified as a tax, therefore not covered by the treaty and they now have to pay it. (It doesn't affect me personally but it may one day in the not too distant future, hence why I'm trying to keep an eye on it.)
 

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It has been a moving target for a few years now. Haven't had a chance to review the "new" Fisc explanation of French taxes in English (the one I cited above), but it's possible there may be some explanation in there.

For a while AARO (a US expat group here in France) was distributing a letter to send to your local tax office for those who had been assessed "social charges" on their US pensions. At the time (and for a few years) they seemed to continue to hit non-pension foreign income, like US investments, with the charges. That changed a couple years ago. But given the changes now to eligibility for the French health care system, that could change again.
Cheers,
Bev
 

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According to my local tax office, everyone who is resident in France needs to file even if they declare zero income in France.

Discovered this with much surprise after living here two years as a student without filing anything, and had to do catch-up filings to get myself administratively back in order!
 

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According to my local tax office, everyone who is resident in France needs to file even if they declare zero income in France.
Over the years, we've had any number of queries about what the "filing threshold" was for France. It has taken me a while to figure it out, but basically what your tax office says is how it works here. There is no filing threshold. And, you will find that Avis d'Imposition comes in enormously handy, even if there is no income declared and no tax assessed. It's a document that kind of asserts that you are here legally and legitimately. (Also, that "revenu de référence" number - however it's calculated - is vital for any number of official filings and applications, including anything related to benefits you may be entitled to.)
Cheers,
Bev
 

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Was that a recent decision? Only as I understand it, a lot of Brits have been billed for social charges this year and when they appeal they're being told the rules changed from this year and it is no longer qualified as a tax, therefore not covered by the treaty and they now have to pay it. (It doesn't affect me personally but it may one day in the not too distant future, hence why I'm trying to keep an eye on it.)
The rules that changed this year involve a different situation -- persons who are not French tax residents but who earn income from property located in France. Previously, France had imposed the CSG/CRDS on such persons, but in 2015 the European Court of Justice ruled that this was impermissible. The reason was that, under EU law, the CSG/CSRD were considered social charges, not taxes, and were therefore not imposable on residents of other EU member states.

In response, France passed a new law effective in 2016, under which the funds generated from the CSG/CSRD go directly into the French Exchequer, as opposed to the social security budget. The purpose was to ensure that the CSG/CSRD would be treated as taxes under EU law (as they have long been treated under French domestic law) -- thus enabling France to impose them on non-residents' income from property located in France.

You can read more about this here.

These developments have nothing to do with the whether France can impose the CSG/CRDS on foreign-source income of foreigners who are French tax residents. Under the US-French tax treaty, they cannot. Whether that's also true for British citizens depends on the language of the UK-British tax treaty. The treaties are not all identical, so it's possible that the rules for British and American citizens are different.
 

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Discussion Starter · #13 ·
It does not matter where your income is being paid into or out of. There are only 3 criteria in France for determining "tax residence" and if you meet any one of them, you are and should be declaring in France.

You have your primary residence in France (this is where the 183 day guideline comes in - presumed if you are living in France for 183 days in a calendar year).

You have your main financial centers of interests in France.
or
You work or operate a business in France.
... ...
This is the latest version of the Fisc's guide in English to French taxation https://www.impots.gouv.fr/portail/files/media/1_metier/5_international/french_tax_system.pdf
First, thanks to all who have replied. Based on the comments and responses I can see why this is a tricky topic.

I have two observations and I'll tag them to Bev's comments its, though they apply equally to others who raised the same points.

Regarding Tax residency for US citizens and permanent residents of the US, the tax treaty states:
  1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation, or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State, or of capital situated therein.
  2. (a) France shall consider a U.S. citizen or an alien admitted to the United States for permanent residence (a "green card" holder) to be a resident of the United States for the purposes of paragraph 1 only if such individual has a substantial presence in the United States or would be a resident of the United States and not of a third State...
So, If one has a substantial presence in the US they are not liable for taxation on any US income in France. If their income is solely from the US, they have no tax liability in France.

So much for the question of liability. What still seems somewhat opaque, at least to me, is the question of the obligation to file income tax forms in France. Bev notes some advantages of filing, and I see no argument with those reasons. But, while several posters have said filing is required for anyone deemed a resident of France (per the criteria noted by Bev) and while some anecdotal evidence based on statements from a few prefectures are noted, no one has actually identified a source document that explicitly supports that conclusion, or, I missed it somewhere. In my own experience, the local prefecture employees have never mentioned taxes in any form at all. Nor are they mentioned on the departmental web site.

So, if persons in France on a Titre-de-Séjour/Visiteur are required to file income tax forms, could someone provide a reference to that requirement.
 

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It appears that there are 2 factors that would require you to submit a French tax declaration (albeit there may some advantages to doing so anyway);

Vous avez l'obligation de déclarer vos revenus si vous êtes imposable à l'impôt sur le revenu.
si vous avez votre domicile fiscal à l'étranger, vous devez également déclarer vos revenus si vos disposez de revenus de source française.
Note in particular:
vous avez votre domicile fiscal à l'étranger, vous devez également déclarer vos revenus si vos disposez de revenus de source française.
However, it appears there is also a requirement if someone in your taxable household in France is required to declare (although perhaps that person would submit a declaration - I find it a bit vague:

Vous devez souscrire une seule déclaration de revenus par foyer fiscal. Les revenus et charges de tous les membres de votre foyer fiscal sont donc pris en compte pour établir une imposition unique à votre nom.
Perhaps a real issue though is taking the responsibility yourself for determining where you are "imposable à l'impôt sur le revenu" (so, in a real world situation it would probably be best to check with your local tax office in France).

As for property taxes, these are a totally different matter to income tax and there are processes in place that mean that these would be automatically assessed (which is interesting, given that taxe d'hab doesn't apply or is reduced according to taxable income - that is in practice taxable income in France according to your French tax declaration).
 

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Be careful with this. US law picks nits and lice and gets down to the specific words used. French law lays out rather broad principles and won't always have a specific regulation for each and every requirement.

If your main residence is in France, you should be filing French tax declarations, no matter where your income is coming from. (And no matter where it is ultimately taxed.) As a US citizen, you are ALWAYS considered "tax resident" in the US - there is simply no getting away from that, unless and until you formally renounce your US citizenship. (Oh, and that will be $2350, please!)

In France, if you simply don't file because none of your income comes from France, no one is going to show up at your door to drag you off to jail. But there may come a day when you are doing something - applying for French citizenship, or maybe just a 10 year carte de resident or some other status or document that requires you to prove your resources or the validity of your residence here - and that's when you'll be asked to produce 3 or 5 or 10 years worth of Avis d'Imposition to support your claim.

Providing copies of your US tax returns may or may not suffice - because the French are well aware that Americans fill out their own returns and "self-assess" - and seeing a copy of what you said you filed a couple years back may or may not "prove" that you actually filed that form and/or paid the taxes you calculated on it.

The French seem (to me, anyway) to "motivate" folks to follow these sorts of rules more than they actual "enforce" them.
Cheers,
Bev
 

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But there may come a day when you are doing something - applying for French citizenship, or maybe just a 10 year carte de resident or some other status or document that requires you to prove your resources or the validity of your residence here - and that's when you'll be asked to produce 3 or 5 or 10 years worth of Avis d'Imposition to support your claim.
This is exactly what happened to me. The first few years I was here on a carte de séjour visiteur, and the people in the préfecture told me multiple times that I did not need to file a French tax declaration. Based on their advice, I didn't start filing a declaration until I changed my status to vie privée et familiale and began earning French-source income as an auto entrepreneur.

After I had been in France for more than five years, I applied for a ten year carte de resident, but I was told that I would not be eligible until I could show five years of French tax declarations. Even though my carte de séjour indicated that I had arrived in France more than five years earlier, the years I was present without filing a tax declaration did not count in the five-year residency requirement.

Eventually, I was able to get my ten-year card, but only after I could show that I had lived in France AND submitted tax declarations for five continuous years.

I would advise the OP to just go a head and file the French declaration. There's no downside to filing -- it's a very simple process, and for U.S. citizens whose income is entirely from U.S. sources, no French taxes will be owed -- and it could potentially be useful later on.
 

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So, if persons in France on a Titre-de-Séjour/Visiteur are required to file income tax forms, could someone provide a reference to that requirement.
Going back to your hypothetical couple, they would in all probability fall in one of the two categories in bold below

Vous devez remplir une déclaration de revenus quel que soit le montant de vos revenus, vous disposez des éléments de train de vie suivants :

  • vous possédez un avion de tourisme, une voiture de tourisme destinée exclusivement au transport des personnes, un yacht, un bateau de plaisance, un ou plusieurs chevaux de course,
  • vous employez un employé de maison,
  • vous disposez d'une ou plusieurs résidences secondaires permanentes ou temporaires en France ou à l'étranger,
  • votre résidence principale présentait en 2016 une valeur locative ayant dépassé 150 € à Paris et dans les communes situées dans un rayon de 30 km autour de Paris et 114 € dans les autres localités.
If they split time between France and the United States there is certainly going to be "residence secondaire" somewhere in the world.

And having a rental value which surpasses 150 euros / 114 euros is clearly going to be the case as well!

Source: https://www.service-public.fr/particuliers/vosdroits/F358 click on "vous n'êtes pas imposable"
 

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Discussion Starter · #18 ·
We have a winner...

  • Vous devez remplir une déclaration de revenus quel que soit le montant de vos revenus, vous disposez des éléments de train de vie suivants :
    ... ...
  • vous disposez d'une ou plusieurs résidences secondaires permanentes ou temporaires en France ou à l'étranger,
  • votre résidence principale présentait en 2016 une valeur locative ayant dépassé 150 € à Paris et dans les communes situées dans un rayon de 30 km autour de Paris et 114 € dans les autres localités.
I agree, for the hypothetical example, owning a secondary residence in France, this would require filing of income taxes.

It's is not as clear about the applicability of the last bullet point. It would, air first, seem to apply to practically anything habitable in France. However, the phrase "residence principal" would seem to exclude someone with only a maison secondaire in France. In any case, the preceding bullet would tend to make this point moot.

However, for someone who only rents a home in France (and maintains a primary residence elsewhere) it would appear that the filing of income tax forms is not required.

So, in summary, I conclude that tax filing is required for an american/american couple who
  • spend more than 183 days in France
  • have no earnings in France
  • have their primary (for tax purposes) residence in the US
  • own one or more homes in France
The key item being the last bullet point.,

Thanks for all the input
 

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I know several British couples who spend far more time in their maisons secondaire in France than they do in their homes in the UK who do not complete a French tax return. They know exactly what they are doing. They know that nobody counts the days and filing a tax teturn would be the tip of the iceberg; after that they would have register and insure their cars here and enter the French health system. They play the rules as far as they can. They also know that there are advantages in driving a U.K. reg car in France and not having to risk their British driving licences if they do get stopped for speeding. I used to think that these people were worried about entering the paper chase involved when you settle in France but I now realise they know exactly what they are doing. Arrogance at its best.
I’m sure that thes Britons are not the only ones to believe that they are above the law.
 
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