Table of Contents
Who this is for
This article is written for individuals facing France–US double taxation: US citizens living in France, green card holders residing in France, and French nationals with US-source income.
⚠ Disclaimer
This article is provided for general informational purposes only. French and US tax rules, and interpretations of the bilateral tax treaty, change regularly. The information below reflects the state of the law as of the date of writing and may become outdated. It does not constitute personalised tax advice. Please consult a qualified tax professional for any tax decision.
Double taxation occurs when two countries tax the same income in the hands of the same taxpayer. Between France and the United States, this risk is structural: the US taxes its citizens and permanent residents (green card holders) on their worldwide income, regardless of where they live; France taxes all individuals who are tax residents on their worldwide income.
An American living in France is therefore subject to both systems simultaneously. The France–US tax treaty of 1994 (amended by a protocol in 2009) and the internal mechanisms available in each country allow this double taxation to be eliminated — or at least substantially reduced. This guide explains how these mechanisms work, income type by income type.
Why Does Double Taxation Arise?
US Citizenship-Based Taxation
The United States applies citizenship-based taxation: every US citizen — as well as every green card holder residing abroad — must file a federal tax return (Form 1040) with the IRS each year, reporting worldwide income. This is one of the defining features of the US tax system, shared by very few other countries.
French Residence-Based Taxation
France, like the vast majority of countries, applies residence-based taxation. Any individual physically resident in France — regardless of nationality — is taxed on worldwide income. A US citizen living in Paris is a French tax resident, subject to the progressive French income tax on worldwide income.
The Overlap Zone
The combination of these two principles creates an overlap zone: the income of a US citizen living in France is in principle taxable in both countries simultaneously. Without corrective mechanisms, the combined tax burden would be unsustainable. This is precisely the purpose of the bilateral treaty and the internal mechanisms (FEIE, FTC).
The France–US Tax Treaty: Structure and Limits
The Convention between France and the United States for the avoidance of double taxation and the prevention of fiscal evasion was signed on 31 August 1994 in Paris and entered into force on 30 December 1995. It was amended by a protocol signed on 13 January 2009, which entered into force on 23 December 2009.
The Saving Clause — Article 29
The saving clause is the most significant provision for US citizens: it states that the United States retains the right to tax its citizens and permanent residents as if the treaty did not exist. In practice, a US citizen resident in France cannot invoke the treaty to escape US taxation — they remain subject to the full scope of US tax rules.
The treaty applies fully to non-US nationals: a French citizen resident in France who receives US-source income can invoke the treaty to reduce US withholding tax and claim a French tax credit.
France’s Method for Eliminating Double Taxation
For income that the treaty assigns primarily to the source country (the US), France uses the conventional tax credit method: France includes the US income in the global taxable base to calculate the effective tax rate (thereby determining the marginal rate applicable to French-source income), and then grants a tax credit equal to the French tax attributable to that income. The practical effect is a de facto exemption of US-source income in France, while maintaining its effect on the rate applied to other income.
Income-by-Income Treatment Under the Treaty
The treaty allocates taxing rights differently depending on the nature of the income. The table below summarises the main categories.
| Income category | Treaty treatment (France–US) |
|---|---|
| Employment income (Art. 14) | Taxed in the country where the activity is performed. If a US citizen works in France for a US employer and is not present for more than 183 days, a specific exception may apply. |
| Dividends (Art. 10) | Source country may withhold tax (max 15% generally, 5% for qualifying shareholdings). Residence country also taxes, with a credit for the withholding. |
| Interest (Art. 11) | Taxed only in the country of residence of the beneficial owner. Article 11 eliminates source-country withholding tax on interest. |
| Royalties (Art. 12) | Taxed only in the country of residence of the beneficial owner. |
| Capital gains — securities (Art. 13) | Generally taxed in the country of residence. Exception: shares in real estate-rich companies, taxable in the country where the property is located. |
| Real estate income (Art. 6) | Taxable in both countries (country of situs AND country of residence), with tax credits to prevent double taxation. |
| Private pensions (Art. 18) | Taxed in the country of residence of the beneficiary. A US citizen in France receiving 401(k) distributions reports them in the US AND in France, with a French credit. |
| Government pensions (Art. 19) | Taxed exclusively in the country paying the pension (employing state), unless the recipient is a national of the other state. |
Dividends: US withholding tax
Dividends from US companies paid to a French resident who is not a US citizen are generally subject to a 15% US withholding tax (reduced to 5% if the recipient holds ≥10% of the company’s capital). This withholding is credited in France against the French tax due. For a US citizen resident in France, the IRS also taxes these dividends, but the Foreign Tax Credit (Form 1116) can be used to prevent double taxation on the US side.
US Mechanisms to Eliminate Double Taxation
Foreign Earned Income Exclusion (FEIE) — Form 2555
The FEIE allows US citizens resident in France to exclude a portion of their foreign earned income from their US taxable base. For tax year 2025, the exclusion ceiling is $130,000 per qualifying individual per IRS instructions for Form 2555. To qualify, the taxpayer must meet either the bona fide residence test (stable residence in France for a full calendar year) or the physical presence test (330 full days in a foreign country during any consecutive 12-month period).
Important: the FEIE applies only to earned income (wages, self-employment income). It does not cover passive income (dividends, interest, rent, pensions). It also does not remove the obligation to file Form 1040.
Foreign Tax Credit (FTC) — Form 1116
The FTC allows taxes paid to France to be credited directly against the US tax liability, dollar for dollar, up to the US tax due on that foreign income. Unlike the FEIE, the FTC can be applied to all income types — active and passive — and is not limited by a fixed exclusion ceiling. For expats subject to France’s high tax rates, the FTC is often sufficient to eliminate the US tax liability entirely.
French taxes eligible for the FTC include income tax (IR) and, since 2019, CSG and CRDS — recognised by the IRS as creditable foreign taxes following the US tax authority’s 2019 administrative position.
FEIE or FTC: how to choose?
These two mechanisms cannot be combined on the same income. The FTC is generally more advantageous for French residents because French tax rates often exceed equivalent US rates, which allows the French tax paid to absorb the US tax liability entirely. The FEIE may be preferable in specific situations (lower income levels, income not subject to French income tax). A case-by-case analysis is essential.
French Mechanisms to Eliminate Double Taxation
France eliminates double taxation on US-source income using two methods, depending on the income category and the treaty provisions:
The Conventional Tax Credit Method (Effective Rate)
For most US-source income (dividends, real estate income, certain salaries), France applies the conventional tax credit method. This works in two steps: (1) US income is included in the overall French taxable base to calculate the effective tax rate; (2) a tax credit equal to the French tax attributable to that income is applied, eliminating the French tax on it. In practice, these revenues are included for rate purposes but do not increase the net French tax burden.
Exemption with Progression
For certain income categories expressly provided for by the treaty (notably certain government pensions), France may apply the exemption with progression method: the relevant income is exempt from French tax, but is taken into account to determine the effective rate applicable to other income in the household.
Specificities for Green Card Holders Residing in France
Green card holders are subject to the same US tax obligations as citizens: they must file a federal return on worldwide income for as long as they hold US permanent resident status. The France–US treaty applies to them in the same way as for US citizens.
In the event of a green card surrender (relinquishment), specific rules apply — most notably the exit tax (IRC Section 877A), which may impose a deemed gain on all assets as if they had been sold the day before expatriation. This requires careful advance planning.
US exit tax: plan ahead
Any person classified as a ‘covered expatriate’ — a US citizen renouncing citizenship or a green card holder surrendering their card — may be subject to the exit tax (IRC Section 877A), which taxes a deemed capital gain on all assets as if sold the day before expatriation. The threshold triggers include: net worth exceeding $2 million, or average annual US net tax liability for the five prior years exceeding the indexed threshold.
Common Mistakes to Avoid
- Assuming the treaty removes the US filing obligation. The treaty does not exempt US citizens from filing a Form 1040. It prevents double taxation — it does not remove the filing obligation.
- Combining FEIE and FTC on the same income. These two mechanisms are mutually exclusive on the same income. Claiming the FEIE on an amount of income bars the FTC on that same amount.
- Overlooking French social contributions in the FTC calculation. Since 2019, CSG and CRDS are creditable in the US. Failing to include them in Form 1116 results in overpaying US tax.
- Forgetting to declare US dividends and interest in France. US-source income must be reported in France even if US withholding tax has already been deducted — the conventional tax credit then eliminates the French-side double taxation.
- Surrendering a green card without tax planning. Returning a green card without prior tax preparation can trigger significant consequences, including the exit tax and penalties for late prior-year returns.
How Expand CPA Can Help
Managing France–US double taxation is one of the most complex situations in international personal taxation. It requires simultaneous mastery of US and French tax law, as well as a precise reading of the bilateral treaty and its protocols. Expand CPA is a Franco-American firm specialising in expat and international taxation, with offices in Paris, New York, and Tel Aviv.
The firm assists US citizens in France, green card holders, and French nationals with US income in filing tax returns on both sides of the Atlantic, optimising the FEIE/FTC decision, and navigating IRS regularisation procedures (Streamlined Compliance Procedures). For more information: expand-cpa.com/en/services/us-taxes/ and expand-cpa.com/en/services/french-tax-advisor/.
Frequently Asked Questions
Can a US citizen invoke the France–US treaty to avoid paying US tax?
No, because of the saving clause (Article 29 of the treaty). The US reserves the right to tax its citizens and permanent residents as if the treaty did not exist. The treaty primarily serves to prevent double taxation through the tax credit mechanism — it does not eliminate the US tax obligation.
Are dividends from a French company received by a US citizen taxable in the US?
Yes. For a US citizen, all income — including French-source dividends — must be reported to the IRS on Form 1040. Any French tax withheld at source and French income tax paid on those dividends can be claimed as a Foreign Tax Credit (Form 1116) to reduce the US tax due.
Does a French national with a US account need to report US income in France?
Yes, if they are a French tax resident. US-source income (dividends, interest, capital gains) must be declared in France. The conventional tax credit method prevents double taxation: France grants a credit equal to the French tax attributable to that income, neutralising the French tax on it.
What is the non-discrimination clause of the treaty?
Article 26 of the treaty prohibits either country from subjecting nationals of the other country to more burdensome taxation than it imposes on its own nationals in comparable circumstances. This protects US citizens in France from formal tax discrimination relative to French nationals.
