Taxes in France for US expats: A comprehensive guide

Whether you're contemplating a move to France or have already established residence there, understanding the tax system is a must for US expats. Learning about taxes in France beforehand will save you considerable stress in navigating the complexities and obligations of both French and US tax obligations.

This comprehensive guide covers everything American expats need to know about French taxes, from residency determination to filing requirements, income taxes, and strategies to avoid double taxation.

Quick overview: What US expats need to know about French taxes

Living in France as an American means dealing with two tax systems. French tax rates are progressive, reaching up to 45% for high earners, plus social security contributions. The good news is that you won't pay twice on the same income, thanks to the US-France tax treaty.

If you spend more than 183 days in France or make it your main home, then you're a tax resident there. As a US citizen, you must still file American returns annually, reporting worldwide income tax obligations.

The US-France Totalization Agreement prevents double social security taxation and helps coordinate benefits between the two countries. There are plenty of tools that can help you avoid double taxation on your earnings.

NOTE! US citizens must still file US tax returns annually, but can use tax provisions like the Foreign Earned Income Exclusion to avoid double taxation.

Who needs to file taxes in France?

Your obligations depend entirely on your residency status for tax purposes. You are considered a French tax resident if:

• Your main home (foyer) or habitual residence is in France (this includes where your family lives, even if you spend significant time abroad).
• France is your principal place of stay (you spend at least 183 days in France during the calendar year, or more time in France than in any other country).
• Your primary professional activity is conducted in France (unless it is secondary to your main occupation elsewhere).
• France is the center of your economic interests (where you manage your assets, investments, or derive most of your income).

You only need to meet one of these criteria to be considered a tax resident in France – the 183-day rule is just one possible test, not the only one.

French tax residents must declare and pay taxes on their worldwide income to French authorities. Non-residents only face obligations on income sourced within France, typically at a different rate structure.

If you're uncertain about your status, consulting with a tax professional experienced in both the French and US tax systems is highly recommended.

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Types of taxation in France

There are several other significant taxes that may apply to you:

Income tax

The French income tax system follows a progressive structure, with higher earners paying proportionally more in taxes. Unlike the US system, where married couples typically file jointly, France uses a household system called "quotient familial" that considers the entire family unit. This approach to income tax makes calculating taxes in France unique compared to other international systems.

The French income tax rates for 2025 have been adjusted for inflation, reflecting the government's commitment to maintaining fair taxation levels. These rates are applied to your net income, which is your total income minus certain deductions and allowances. The current brackets are:

It's worth noting that additional social contributions might apply, and the rate can change based on government policies.

Value-Added Tax (VAT)

Value-added tax, known as TVA in French, is a consumption tax applied to most goods and services throughout France. The standard rate is 20%, though reduced rates apply to certain categories, making it one of the most significant components of taxes in France for everyday consumers.

The French tax system applies different VAT rates depending on the type of goods or services. A 10% rate applies to restaurants, transportation, and home renovations. Basic necessities such as food, books, and utilities enjoy a reduced rate of 5.5%. Medications covered by Social Security have the lowest rate at 2.1%. Unlike US sales tax, VAT is typically included in displayed prices, so you won't see it added at checkout.

Businesses collect VAT from their customers and then remit it to the government, minus the VAT they themselves have paid on their purchases. This system makes VAT one of the primary sources of state revenue in France.

Property taxes

Property owners in France face two primary annual property taxes that form an essential part of the French tax landscape. The taxe foncière is paid by all property owners based on the cadastral rental value of the property. Rates vary but typically €10–20 per square meter.

The taxe d'habitation, previously known as Council Tax, was abolished for primary residences as of 2023 but still applies to second homes. This tax was based on the property's rental value and local rates. Additionally, a separate waste collection tax (TEOM) is usually included with your taxe foncière bill.

Reforms have been underway to gradually abolish this tax for many households, with the aim of exempting a large proportion of the French population. However, second homes and luxury properties are likely to remain subject to this taxation.

Capital gains tax

The taxation of capital gains in France depends on the type of asset sold and represents a significant consideration for investors navigating taxes in France.

Capital gains on securities

Securities, such as stocks and bonds, when sold at a profit, result in capital gains subject to French tax regulations. For financial investments like stocks and bonds, a flat 30% applies (12.8% income tax plus 17.2% social charges). However, there are provisions for reduced rates if the securities have been held for a longer duration.

Capital gains on real estate

Real estate sales incur 19% income tax plus 17.2% social charges, with reductions based on how long you've owned the property. Primary residences are generally exempt from capital gains tax altogether. If you've owned the property for more than 22 years, the capital gains tax is exempt, though the social contributions still apply until the property has been held for 30 years.

There are also specific deductions available based on the duration of ownership, making it beneficial for long-term property holders.

Wealth tax on real estate (IFI)

France imposes a wealth tax called Impôt sur la Fortune Immobilière (IFI) on real estate assets exceeding €1.3 million. Introduced in 2018, it replaced the previous wealth tax, narrowing the scope to only real estate assets. This tax represents a unique use of policy to target high-value property owners.

For French residents, this applies to worldwide real estate holdings, while for non-residents, only French property is taxed. The tax is calculated on the net value of the property after certain deductions, such as outstanding loans.

Inheritance and gift taxes

France's inheritance and gift tax system depends on the relationship between the donor and recipient, forming a complex but important part of estate planning within its framework.

Transfers between spouses or civil partners are exempt from inheritance tax (but not gift tax). Direct line relatives (parent/child) face progressive rates from 5% to 45% after allowances. Siblings pay 35% to 45%, other relatives pay 55%, and unrelated persons pay 60%.

Each beneficiary receives a tax-free allowance before these rates apply – for children, this allowance is €100,000 per parent. Gifts given less than 15 years before the death of the donor are added back into the estate for tax purposes. US expats may also face US estate tax obligations, though the US-France Estate Tax Treaty helps mitigate double taxation in this area.

Exit tax

The exit tax is designed for individuals who decide to transfer their tax residence out of France, so those with significant wealth or assets don't move to avoid taxation on potential capital gains. If you're leaving France and own shares or securities exceeding a certain value, you might be subject to this tax on the latent capital gains.

However, there are certain conditions and exemptions, and in some cases, the payment can be deferred until the actual sale of the asset. This provision ensures continuity while providing some flexibility for departing residents.

Types of income in France

Anyone earning money in France must know, their tax law covers a wide range of income sources, each with its own rules, reporting requirements, and tax rates. Here are the main ones:

Employment income

Employment income ("Traitements et Salaires") includes wages, salaries, bonuses, and most benefits like company cars or housing. After deducting social security contributions and allowable work-related expenses, this income is taxed at progressive rates.

For 2025 (on 2024 income), the rates range from 0% up to 45%, depending on income and household composition. The more dependents or parts fiscales you have, the lower your effective taxable income per tax bracket.

Equity compensation

Stock options and restricted stock units (RSUs) are increasingly common forms of compensation. In France, stock options are generally taxed when exercised, with the benefit treated as an additional salary and subject to income tax. RSUs are taxed at vesting, based on the market value at that time. Any gains or losses upon selling the shares later are taxed as capital gains.

Business and self-employment income

Business income, or "Bénéfices Industriels et Commerciaux" (BIC), applies to sole proprietors, partnerships, and self-employed professionals. Taxable business income is calculated by subtracting allowable expenses such as rent, salaries, materials, and operational costs from total revenue.

Self-employed workers are taxed at the same progressive rates as employees. Still, they may benefit from simplified regimes like the micro-entrepreneur scheme, which can reduce administrative burdens and offer favorable deductions.

Investment income

Dividends and interest are both taxable in France. Dividends are added to your total income and can be taxed under two regimes:

• The flat tax (Prélèvement Forfaitaire Unique, PFU) at 30% (12.8% income tax plus 17.2% social contributions)
• The progressive scale has a 40% allowance on gross dividends and potential deductibility of social charges.

Interest income is typically subject to the same flat tax, but you may opt for progressive rates if more advantageous.

Special regimes

The Inbound Assignee Regime (Article 155 B) offers tax incentives for foreign executives or specialists temporarily working in France. Qualifying individuals can benefit from partial exemptions on expatriate compensation and foreign-source income for up to eight years, provided they were not tax residents in France for the previous five years.

Social Security and pension contributions in France

France’s social security system (Sécurité Sociale) continues to provide comprehensive coverage for employees and their families, including health, maternity, disability, pensions, family allowances, unemployment, and work accident insurance.

Social security contributions in France fund both the basic state pension and compulsory supplementary pension schemes, ensuring income in retirement for all employees.

As of 2025, employees typically see 20–23% of their gross salary deducted for social security contributions. Employers contribute an additional 40–45% of gross wages, with exact rates varying by company size, industry, and risk category. These contributions finance France’s robust social protection, ensuring access to essential services regardless of income or employment status.

Most medical expenses are reimbursed, but many residents purchase supplementary mutuelle insurance for full coverage. The system also supports childbirth, child-rearing, and housing, and provides income protection during unemployment, all scaled to previous earnings and employment duration.

The US-France Totalization Agreement prevents double social security taxation. US expats on temporary assignments (typically up to five years) can remain under US Social Security, exempting them from French contributions; longer-term residents generally pay into the French system instead. Credits earned in both countries can be combined to help qualify for retirement or disability benefits in either system.

Tax deductions and credits available for expats

If you’re living and working in France, you can access a variety of tax deductions and credits. This will help reduce your overall tax burden and significantly affect your net tax liability.

Employment-related deductions

Expats employed in France may deduct certain professional expenses from their taxable income. The French system offers an automatic 10% deduction from salaries or pensions to account for work-related costs, capped at €14,426 for salaried income in 2025.

Alternatively, you can opt to deduct actual (frais réels) professional expenses if these exceed the standard deduction. Eligible expenses include commuting (public transport, fuel, parking), work clothing (such as uniforms or protective gear), and job-related training or courses. Detailed records and receipts are essential, as the French tax authorities may request evidence during an audit.

Personal deductions

Several personal deductions, such as court-ordered alimony and child support payments, are fully deductible, but only if they are legally mandated; voluntary payments or gifts do not qualify. Documentation, such as court orders, is required to substantiate these claims.

Certain social contributions, including unreimbursed health insurance or pension scheme payments, may also be deductible. Charitable donations to approved French organizations can be deducted, with the deductible amount varying depending on the organization and the size of the donation.

Personal allowances

France’s personal allowance system ensures a portion of your income remains non-taxable. Allowances are predetermined and depend on factors such as age, marital status, number of dependents, and specific circumstances like disability.

The quotient familial system divides taxable income by the number of household parts, reducing the effective tax rate. These allowances are updated annually, so it’s important to check the current rates before filing your return.

Tax credits

Tax credits directly reduce the amount of tax owed, rather than reducing taxable income. Expats can claim credits for several personal and family-related expenses, and even donations to recognized charities can qualify for a tax credit.

Childcare expenses for children under six, schooling expenses for children in secondary or higher education, and hiring domestic help (cleaners, gardeners, caregivers) all qualify for tax credits. Additionally, investments in energy-efficient home improvements can earn substantial credits under France’s energy transition program.

Global limit on tax credits

France imposes a cap on the total value of tax deductions and credits that can be claimed annually. If your total tax advantages exceed the annual threshold, the surplus is added back to your tax liability.

How to file French taxes as a US citizen

Here’s a simple step-by-step guide for filing your taxes in France:

1. Get your tax number in France (numéro fiscal)
   If you're filing for the first time, visit your local tax office with proof of identity and residence to obtain your unique 13-digit tax number.
2. Register online
   Create an account on the tax portal (impots.gouv.fr) using your numéro fiscal. This portal lets you file returns and manage tax matters online.
3. Complete your tax return
   Fill out your annual French income tax return online, usually using Form 2042. Check pre-filled details, add worldwide income, and include any extra forms as needed.
4. Save your filing receipt
   After submitting, save or print the accusé de réception (filing receipt) as proof, which may be needed for administrative purposes.
5. Review your tax assessment
   Your avis d’imposition (tax assessment) arrives in late summer, showing your final tax liability. If there are errors, contest them online or at your local tax office.
6. File on time
   Deadlines are typically in May or early June. Late filing can result in penalties, so timely submission is important.

Most popular tax forms for US expats

US citizens abroad, including those in France, must file a US tax return annually, reporting worldwide income. The most commonly used US tax forms for expats are:

• Form 1040: The standard US individual income tax return. All US citizens must file this if they meet minimum income thresholds.
• Form 2555: Used to claim the Foreign Earned Income Exclusion (FEIE), allowing you to exclude up to $126,500 (2024) of foreign earned income if you meet residency or physical presence tests.
• Form 1116: To claim the Foreign Tax Credit (FTC), offset US tax liability with income taxes paid to France. This is especially effective since French tax rates are often higher than US rates.
• Form 8938: For reporting specified foreign financial assets under FATCA if they exceed $200,000 (single) or $400,000 (married filing jointly) at year-end.
• FBAR (FinCEN Form 114): Required if your combined foreign financial account balances exceed $10,000 at any point in the year. This is filed electronically with FinCEN, separate from your tax return.
• Form 8833: Used to claim benefits under the US-France tax treaty or disclose treaty-based return positions.

France tax forms for US expats

When filing French taxes, US expats typically use:

• Form 2042: The main French tax return, similar to the US Form 1040. All income, including foreign, must be reported here.
• Form 2047: For declaring income received from abroad, including US earnings. This form ensures proper credit or exemption under tax treaties.
• Form 3916: To declare all foreign bank, investment, and crypto accounts – even if inactive or with zero balance. Severe penalties apply for non-disclosure.
• Form 2044: For reporting rental income from property.
• Form 2074: For declaring capital gains from the sale of assets.

Need help? Our specialists can guide you through every step, ensuring you meet all US and French tax compliance requirements accurately and on time.

How to avoid double taxation as a US expat in France

Avoiding double taxation is a top concern for US expats facing both US and French taxes in France. Fortunately, several mechanisms help ensure you don’t get taxed twice on the same earnings.

The US-France tax treaty is the primary safeguard against double taxation. While the treaty assigns taxing rights for different types of income (employment, pensions, and rental income), it contains a saving clause allowing the US to tax its citizens as if parts of the treaty didn’t exist.

Still, the treaty clarifies which country has primary taxing rights and provides reduced withholding rates on dividends, interest, and royalties. It also offers guidelines for determining residency and facilitates information exchange between tax authorities.

For most expats, the Foreign Tax Credit (FTC) is the most effective tool. By claiming the FTC on IRS Form 1116, you can offset your US tax liability with French taxes paid. Since French income tax rates are often higher than US rates, the FTC can frequently reduce your US tax bill to zero, and any surplus credits may be carried forward. This is especially advantageous for those in a higher French tax bracket.

Alternatively, the Foreign Earned Income Exclusion (FEIE), claimed on IRS Form 2555, allows you to exclude up to $126,500 (2024) of foreign-earned income from US taxation. However, for many expats paying high French taxes for expats, the FTC is more beneficial than the FEIE.

Additionally, all US expats must comply with FBAR and FATCA reporting. If your French financial accounts exceed $10,000, file an FBAR; if your foreign assets surpass $200,000 ($400,000 for joint filers), file FATCA Form 8938. Non-compliance can result in severe penalties, regardless of the tax owed.

By leveraging the tax treaty, FTC, FEIE, and meeting reporting requirements, you can minimize or eliminate double taxation, even with progressive French rates and high rates on certain income.

Key tax deadlines in France (2025)

Understanding and adhering to French tax deadlines is crucial for compliance. Here are the key dates for your calendar in 2025:

Income tax deadlines

The filing period for annual income tax returns runs from mid-April to early June, with exact dates varying by department. Zone 1 (departments 01–19 and non-residents) typically has a deadline in late May. Zone 2 (departments 20–54) usually has a deadline at the end of May. Zone 3 (departments 55–974/976) generally has a deadline in early June.

Income tax assessments (avis d'imposition) are typically issued in September or October. For those not covered by withholding, monthly tax installments are due on the 15th of each month.

Property tax deadlines

Property tax (taxe foncière) payments are due by mid-October, while residence tax (taxe d'habitation) on second homes must be paid by mid-December.

Wealth tax deadlines

The filing deadline for real estate wealth tax (IFI) for properties valued over €1.3 million is typically mid-June, with payment due by September 15.

NOTE! France imposes penalties for late filing and payment, typically starting at 10% of the tax due for filing after the deadline.

For US expats, it's important to coordinate these French deadlines with US tax obligations. US individual tax returns are due April 15, though Americans abroad automatically receive an extension until June 15. FBAR forms must be filed by April 15, with an automatic extension to October 15. The overlapping tax seasons in spring can be challenging to manage, making preparation essential.