Relocating to France for dual-citizenship couples with U.S. retirement assets

Relocating to France with U.S. retirement assets is a complex undertaking, but for a dual-citizenship couple, the path is well-defined, though it requires meticulous financial and tax planning. Residency rules govern the process, the U.S.-France Tax Treaty, and French social contribution laws. Here is a detailed breakdown of what you need to know.

Key Takeaways: The Short Answer

  • Residency: If one spouse is a French citizen, the other (U.S. citizen) can obtain a long-stay visa as a "spouse of a French national," which is a relatively straightforward process.

  • Income Tax on Pensions: The U.S.-France Tax Treaty (Article 18) is your most important document. It stipulates that U.S.-sourced retirement income (including 401(k)s, IRAs, and U.S. Social Security) is taxable only in the United States, not in France.

  • The "Gotcha" (Social Charges): While your retirement income is exempt from French income tax, it is subject to French social charges (CSG/CRDS), which run at approximately 9.1%.

  • The Solution (Foreign Tax Credit): You can generally use the CSG/CRDS paid in France as a foreign tax credit on your U.S. tax return (via IRS Form 1116) to offset the U.S. taxes owed on that same income. This is the mechanism that prevents double taxation.

  • Wealth Tax: Your U.S. retirement accounts (401(k)s, IRAs) are NOT subject to the French wealth tax on real estate (Impôt sur la Fortune Immobilière or IFI), as they are financial assets, not property.

  • Mandatory Action: You must engage a cross-border tax professional and financial advisor who specializes in U.S.-France taxation before you move.

1. Residency and Relocation

Your status as a "dual-citizenship couple" greatly simplifies the move. The most common scenario is one spouse holding French (and possibly U.S.) citizenship and the other holding U.S. citizenship.

  • The French Citizen Spouse: Can move to France at any time as a citizen.

  • The U.S. Citizen Spouse: Can apply for a long-stay visa (VLS-TS) under the "spouse of a French national" (conjoint de Français) category. This is a privileged status that grants the right to live and, in most cases, work in France.

    • You will apply for this visa from the U.S. before you leave.

    • Upon arrival in France, you must validate this visa online within three months to convert it into a formal residence permit.

Once you live in France for more than 183 days per year, you will be considered a French tax resident, which means you are subject to French tax rules on your worldwide income (even if that income is ultimately exempted under the treaty).

2. Taxation of Your U.S. Retirement Assets

This is the most critical component of your plan. The U.S.-France Tax Treaty determines the rules.

Income Tax (Impôt sur le revenu)

According to Article 18 of the treaty, pensions and other similar remuneration are taxed as follows:

  • Private Pensions (401(k), IRA, etc.): Taxable only in the source country. This means distributions from your U.S.-based 401(k)s and IRAs are taxable by the IRS in the U.S., not by the French government.

  • U.S. Social Security: The same rule applies. Your U.S. Social Security benefits are taxable only in the U.S.

You must still report this U.S. income on your annual French tax declaration. It will be listed as income exempted by the treaty. This income is not taxed directly, but it is used to calculate your household's taux effectif (effective tax rate), which will be applied to any other income you have that is taxable in France (e.g., rental income from a French property).

Social Charges (Prélèvements Sociaux)

This is the most important "catch" for U.S. retirees in France.

  • What they are: Separate from income tax, France levies social contributions (CSG and CRDS) to fund its health and social security system.

  • Who pays: As a resident of France, you are liable for these charges on most of your income, including foreign retirement income.

  • The Rate: The rate on pension income is typically around 9.1%.

So, while your 401(k) distribution is not hit by French income tax, it will be subject to the 9.1% CSG/CRDS.

How to Avoid Double Taxation

This is where it all comes together. You will face two tax bills on the same income:

  1. U.S. Income Tax (at your regular U.S. tax rate)

  2. French Social Charges (at ~9.1%)

The U.S. IRS now officially recognizes the French CSG/CRDS as a creditable "income tax." This means you can file IRS Form 1116 (Foreign Tax Credit) with your U.S. tax return. You claim the amount you paid in CSG/CRDS as a credit, which directly reduces your U.S. tax bill, often on a dollar-for-dollar basis.

Example:

You take a $50,000 distribution from your IRA.

France charges you $4,550 in CSG/CRDS (9.1%).

The U.S. IRS calculates you owe $6,000 in U.S. federal income tax on that distribution.

You file Form 1116 and claim a $4,550 foreign tax credit.

Your final U.S. tax bill is reduced to $1,450 ($6,000 - $4,550).

(Note: This is a simplified example. Your actual tax credit depends on your total income and tax situation.)

3. Other Critical Financial Considerations

  • French Wealth Tax (IFI): France's wealth tax, the IFI, applies only to real estate assets with a net value over €1.3 million. Your U.S. retirement accounts and other financial assets (stocks, bonds) are exempt.

  • U.S. Brokerage Accounts: This is a major logistical hurdle. Many U.S. brokerages (such as Fidelity, Vanguard, and Schwab) do not offer full-service accounts to clients with a foreign address. They may freeze your account, preventing you from buying new assets (though usually allowing you to sell). You must:

    1. Contact your brokerage before you move to ask about their policy for non-resident U.S. citizens.

    2. Be prepared to move your assets to a firm that services expats (e.g., Interactive Brokers is a common choice).

  • U.S. Tax Filing: You must continue to file a U.S. tax return every year, regardless of where you live.

  • FBAR and FATCA: You must also file:

    • FBAR (FinCEN Form 114): If the combined total of your foreign bank accounts exceeds $10,000 at any time during the year.

    • FATCA (Form 8938): If your foreign financial assets exceed a much higher threshold (starting at $200,000 for couples living abroad).

4. Your Mandatory Next Steps

  1. Hire a Professional: You need a tax advisor or financial planner who is a qualified expert in U.S.-France cross-border taxation. Please don’t rely on a U.S. accountant or a French comptable who does not specialize in this niche.

  2. Contact Your Brokerages: Call your 401(k) administrator and IRA custodian. Ask them, "What is your policy for account holders who move to France and become non-resident aliens (for state purposes)?"

  3. Review Account Types: Discuss the implications of Roth vs. Traditional accounts with your advisor. The tax-free nature of Roth IRA distributions is generally (but not always perfectly) recognized in France, but it's a complex area that requires expert validation.

  4. Gather Residency Documents: The French citizen spouse should ensure their French passport is current, and they have a livret de famille (family record book) to prove the marriage for the U.S. spouse's visa application.

Last Updated: Oct. 30,2025