Who this is for
HR, People and Global Mobility teams at French companies sending an employee from France to the US — as a transfer to a US entity, a temporary posting, or a US local hire. It covers what the employer has to decide before departure and what the employee’s position becomes on both sides. If you are the employee, see France–US tax filing: avoiding double taxation. Moving someone the other way, into France, is covered in Relocating an employee to France.
⚠ Disclaimer. General information, current at the date of publication. It is not advice for a specific assignment: individual circumstances, the France–US tax treaty and the France–US social security agreement change the answer. Speak to us before acting.
Contents
- The short version
- Which structure are you using?
- When does the employee become a US tax resident?
- State tax: the item French employers never budget for
- Social security: request the certificate from the French side
- The French departure year
- Equity granted in France, vesting in the US
- Sending an employee from France to the US: a checklist for the employer
- Five mistakes we see most often
The short version
Sending an employee from France to the US creates obligations in a country most French HR teams have never had to file in. Three of them are routinely missed: state income tax, which the tax treaty does not reach; the social security certificate, which must be requested from the French side before departure; and the French departure year, which has its own return. The rest is manageable if those three are handled first.
Which structure are you using?
| Transfer to the US entity | Temporary posting | US local hire | |
|---|---|---|---|
| Employer of record | US entity | Stays the French employer | US entity |
| Payroll | US payroll | French payroll, with US tax exposure | US payroll |
| Social security | French coverage possible with a certificate; otherwise US | French coverage with a certificate, for a limited period | US system |
| Immigration | Intra-company categories (L-1) or others | Business or work visa depending on activity | Employer-sponsored work visa |
| Typical trap | State tax registration for the employer | Creating a US taxable presence for the French company | Losing the French social security link |
Name the structure first: the immigration route, the payroll and the social security answer all follow from it. Immigration itself is outside this guide — it needs a US immigration attorney — but the tax and social security consequences of each route are below.
When does the employee become a US tax resident?
The United States applies a mechanical test. An employee who is not a green-card holder becomes a US tax resident under the substantial presence test once they are present in the US for at least 31 days in the current year and 183 days over a three-year weighted count — all of this year’s days, one third of last year’s, one sixth of the year before. A full-year assignment passes it. A short posting may not.
Once resident, the employee is taxed in the US on worldwide income — including French rental income, French investment income and French bank interest — with treaty relief and foreign tax credits available on the return, not automatically. Before residency begins, only US-source income is in scope.
What HR should tell the employee before they leave
Their French bank accounts, life insurance and investment holdings become reportable in the US once they are resident, under rules with penalties that bear no relation to the amounts involved. The employee needs to know that before the move, because the reporting looks back at the whole year.
State tax: the item French employers never budget for
This is the single biggest surprise on an outbound assignment. The France–US tax treaty binds the federal government. It does not bind the states, and several of the states where French companies most often send people — California and New York among them — do not follow federal treaty positions. An employee who is protected from federal double taxation by the treaty can still owe full state income tax, and the employer can have state payroll registration and withholding obligations from the first payroll.
- State income tax rates range from zero to double digits, and the state is determined by where the employee lives and works, not by where the US entity is registered.
- Employer registration for state withholding and unemployment insurance is a separate process per state.
- Some cities add their own income tax on top.
Budget the assignment at state level, not just federal, and confirm which state before the offer is made.
Social security: request the certificate from the French side
Under the France–US social security agreement, an employee sent temporarily to the US by a French employer can remain in the French system for a limited period. The mechanism is a certificate of coverage — and for this direction it is the French employer that requests it, from the French sickness-insurance agency that collects the employee’s contributions, using form SE-404-1 or SE-404-2. It must be in hand before US payroll would otherwise start withholding US Social Security and Medicare taxes. The mechanics in both directions — who applies, which form, and the health-cover condition attached to the exemption — are set out in our guide to the France–US social security agreement.
Timing
The certificate is an application, not a status. Requested late, the employee ends up with contributions deducted in both countries and a refund process in one of them. Requested before departure, it is routine.
If the employee moves to a US contract as a permanent local hire, French coverage generally ends and US coverage begins — which also means the years in the US count toward US benefits and are totalized with French years at retirement. That is worth explaining to the employee, who will otherwise assume the years are lost.
The option most employers do not mention: the CFE
An employee who moves onto a local US contract can join the Caisse des Français de l’Étranger (CFE) on a voluntary basis, which maintains certain French social security rights — health, maternity, occupational risk and old-age cover — alongside their US coverage. It is a contributory scheme and can be funded by the employee or the employer. For an employee who intends to come back to France, it is often the difference between a continuous French record and a gap, and it costs nothing to raise at the offer stage.
The French departure year
The employee’s French tax residence generally ends on the departure date. The departure year is then split: French residence up to departure, non-residence afterwards, with a return covering both periods filed the following spring. French-source income that continues after departure — a rented-out apartment is the usual case — remains taxable in France as non-resident income, alongside the US return.
- There is no departure clearance and no special departure filing. The employee updates their address in their personal account on impots.gouv.fr; the change to non-resident status takes effect through the income tax return that follows. Nobody has to be asked for permission to leave.
- Withholding at source continues on French pay until the last French payslip, and the departure-year return reconciles it.
- Exit tax can apply to individuals with substantial shareholdings who leave France. It rarely affects an ordinary employee, but it affects founders and senior executives, and it needs checking before the move rather than after.
Equity granted in France, vesting in the US
Awards granted while the employee worked in France and vesting after the move are generally sourced between the two countries by workdays over the vesting period. French qualifying plans have their own treatment that does not travel; US treatment applies to the US-sourced portion. Your plan administrator’s default reporting will not reflect this. Flag the employee to whoever runs the plan before the next vest.
Sending an employee from France to the US: a checklist for the employer
| When | What | Owner |
|---|---|---|
| Offer stage | Choose the structure; confirm the state; budget state tax and US employer costs | HR + finance |
| Before departure | Request the certificate of coverage (French employer, SE-404); brief the employee on US reporting; have the employee update their address on impots.gouv.fr | HR + payroll |
| Before departure | Register for state withholding if the US entity is the employer | US payroll |
| First US payroll | Confirm Social Security and Medicare are not withheld if a certificate applies | US payroll |
| Following spring | French departure-year return; first US return | Adviser |
| Ongoing | Workday record; equity vests; certificate expiry | HR |
Five mistakes we see most often
- Budgeting federal tax only. State tax is where the surprise is.
- Requesting the certificate after arrival. Double contributions, then a refund claim.
- Forgetting the French departure return. The employee thinks France is finished with them; France disagrees the following spring.
- Not warning the employee about US reporting of French accounts. The penalties are the largest number in this whole guide — see FBAR reporting.
- Treating the US posting as a French payroll matter. A posted employee can create a US taxable presence for the French company itself.
How Expand CPA can help
We prepare the French departure-year return and the US returns for the same employee, handle the certificate request from the French side, and give you a cost projection that includes state tax before the offer goes out. Both countries, one firm.
Frequently asked questions
When does our employee become a US tax resident?
Under the substantial presence test — at least 31 days in the current year and 183 days on a three-year weighted count — or immediately with a green card. A full-year assignment passes it.
Does the France–US tax treaty protect the employee from state income tax?
No. The treaty binds the federal government, not the states, and several states do not follow treaty positions. Budget state tax separately.
Who requests the social security certificate for a France-to-US posting?
The French employer, from the French sickness-insurance agency, using form SE-404-1 or SE-404-2 — before departure.
Does the employee still file in France after leaving?
Yes — a departure-year return covering the period of French residence, and ongoing non-resident returns if French-source income such as rental income continues.
What happens to equity granted in France?
It is generally sourced between France and the US by workdays over the vesting period. Tell the plan administrator before the next vest.
Sending an employee to the United States?
We will cost it at state level and set up both sides before departure. Our global mobility services for employers.
