# American Living in France



## ccik14

Hi,

I'm an American digital marketing consultant living in France. I have a titre de sejour (residency) and am living here with my French husband and our son. I currently own an LLC in the United States.
I am having a lot of issues figuring out taxes here and basically how to not get completely f**ked.
My main issues are:

What I'm seeing a lot (and hearing from CPA's I've talked to) is that I NEED to register a business here. I cannot just continue to run my LLC and pay taxes on that income. I've heard it's a really bad idea to register a business entity in France and to avoid it.
If I do register, or if not, how will paying income taxes work for me? I know about the foreign earned income exclusion but would I still have to pay self employment tax in the US + income tax in France + social charges in France?
Does anyone have any advice or experience in this?


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## Bevdeforges

If you are living in France with your French husband, you are taxed as a "household" and if you are not properly observing the French tax (and cotisation) laws then not only you, but your husband can be held responsible for what amounts to tax evasion. Now, practically speaking it's not like the US in these matters and chances are you can work something out. But, to take your concerns into account:

1. I have to assume that you are talking to US CPAs who have no idea what the laws are here in France. You are physically in France while doing whatever work it is you do. You are therefore working in France and should be paying French taxes and should be properly registered in the French cotisation system. Period. It is not a "bad idea" to register your business in France, it's the law.

2. You should already be declaring and paying French income taxes (with your husband - there is no "married filing separately" here in France). Yes, you can take the FEIE on your salary (when you file for the US, where you will most likely file as "married, filing separately") - but, if you are properly registered as a French business, you will be paying into the French system of benefits and social insurances, including the health care system. That means that you wouldn't pay "self-employment" tax to the US. (You need proof of your enrollment and payments in the French "sécu social" but you get that automatically anyhow when your business is properly registered.)

Trust me on this one. I worked for 15 years for my husband's French SARL, filing US tax returns that resulting in my paying 0 taxes to the IRS for years. How long have you been living in France? If you just arrived in 2020, it should be fairly easy to sort this out with the current tax filing year. (French taxes don't get filed until May or June.) But get that business registered here in France ASAP. It's a bit of a bewildering experience, but contact the local Chambre de Commerce and they have lots of resources available to help you through the steps.


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## 255

ccik14 -- Basically, you have no choice -- you are required to pay both income taxes and social charges in France, for work you are doing in France. There are many options, some may depend on how you formed your LLC (single or multi-member,) and how you have chosen to have it taxed in the U.S. (S-Corp., C-Corp., Partnership, Disregarded Entity or something else.) You can start some kind of French (or other EU) entity to both pay your earnings and pay income tax withholdings and social charges (you'd be exempt from U.S. social taxes.) International Programs - Totalization Agreement with France (ssa.gov) You'll be able to either exclude your French earned compensation utilizing the Foreign Earned Income Credit (FEIE, IRS form 2555,) 2020 Form 2555 (irs.gov) or take a tax credit for French taxes paid 2020 Form 1116 (irs.gov) As long as you retain your U.S. citizenship, you'll be obligated to be in the U.S. tax system, probably by filing zero tax returns each year. France - Tax Treaty Documents | Internal Revenue Service (irs.gov) 

You have plenty of options -- your new French company can be a contractor to your U.S. LLC or depending on the entity, it can be a subsidiary of the LLC. There are also options to form a French "Branch" of your company. France also has many different types of entities. Depending on your situation, you could close the LLC and migrate all you business to a new French company.

Alternatively, you can register your U.S. company, in France to pay French taxes and social charges directly: Registering for social security in France - Welcome to France Whether you continue to pay yourself from your LLC or form a French entity -- there are many "payroll tax" firms in France, that can handle everything for you, for a fee.

There is also an option to contract with a French "Portage Salarial" (Google will list tons, both big and small, national and local.) With this option, you will be an employee of the portage firm and they will also take a percent of income your LLC pays to you and they will handle everything else -- in this situation, you'll be treated as an employee.

A common recommendation is for you to visit the local "Chamber de Commerce et d'Industrie" in your area for advice. You may also want to visit an attorney to help "keep you on the straight and narrow" in forming any new French Entity. Cheers, 255


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## aft00

@255 and @Bevdeforges -- you both seem to have knowledge regarding this subject, so I'd like to continue this discussion as I'm doing research about a possible move to France as well. 
Background - I'm married to a French/US citizen. I'm in the arts/advertising world and have an LLC taxed as S-Corp registered in California and generally receive payment from my agent, who collects from clients on my behalf. I am my only employee (I was formerly a sole proprietor, but tax-wise it made sense to change the structure and put myself on payroll). 
We are seriously considering moving to France in a year or two. For the foreseeable future all of my work will continue to be out of the US and I will likely travel back as needed. I'd like to at least try and keep things the same as far as my business is concerned when it comes to my clients (meaning I maintain the US based business bank account / w-9 info, etc.) But only if it the cost of doing so isn't vastly different from closing everything and setting up solely in France.
Since payments are generally coming from US clients/agent and it would introduce what could be too much complication to have them pay a foreign bank account -- what are likely the best options to consider in order to set up a corresponding French entity so that I could be compliant for social charges, etc?
Could it be possible to stop paying myself a salary from the S-Corp in the US -- so that I don't have US social charges deducted and instead set up some sort of French entity that pays me? (My income is sporadic and changes constantly). Would my French entity be essentially a "Vendor" to my US entity? Or could it be better to have a French "subsidiary" of my US S Corp? 
Basically, if I can leave my S Corp operating, stop paying myself on payroll in the US, and instead take either "distributions" where I'd pay French social charges -- that would be one solution I think could work. Or, if I set up a French entity and pay it as a "vendor" from my S-Corp in the US that could also work - but I don't know how that works if I'm no longer my own "employee".
Any ideas or thoughts you have would help guide me (I do understand this may be fairly complex, but I'm looking to know where to start) and what would be the most opportune fiscal choices as well.
Thank you!


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## 255

aft00 -- First of all, you have one to two years to make adjustments to your entity structuring plan. This gives you a little while to come up with a plan and make changes, as necessary. As you have read in the posts above and I'm sure, on many other threads in this forum, there is no one right answer -- I'll give you a few points to consider:

a. Maintaining your current structure and taking "distributions" probably won't fly. One of the established tenets in being able to take advantage of "S Corp." taxation is that you pay yourself a "reasonable" salary. If you stop taking a salary, you're sure to have problems with the IRS.

b. CA is a tough state to leave. If you move to France from California, you'll likely not be able to extricate yourself from the CA tax system -- especially, if you maintain a business and have bank accounts in California. Bottom line, you'll not eliminate any CA taxes for the company nor yourselves. Options might be to move the Company to WY, move yourselves to Florida and totally leave CA.

c. There are many options to form an entity in France. One member here recently opened a "branch" in France for his U.S. company, to pay himself. Others have formed various French entities (my personal choice would be to form an SAS.) You might consider forming a French company that is wholly owned by your new WY C Corp. In this situation, you'd have the option to designate it as a "disregarded entity" for tax purposes (all income and expenses would "roll-up" to your C Corp.) I don't know how I would handle this at this time -- the current U.S. Administration has designs on grabbing more income from foreign entities owned by U.S. tax payers.

d. If you decide to operate a foreign entity (unless it's disregarded,) become familiar with the U.S. GILTI taxes. There is talk of them going away, but only if they can capture more of your earnings, some other way.

e. As I mentioned before, I would consider reforming as an C Corp. This is a lot cleaner on the French side and no distributions to mess with.

f. If you closed your U.S. entity and solely operated out of France, be aware that you might have to bill your clients VAT for your work from France. Probably best to keep operations and billings for U.S. clients, in the U.S. and pay yourself a salary and take all deductions for social charges and income tax withholding from your French company.

g. Alternatively, it might be simpler to just register your U.S. company with France to pay French residents and deduct taxes and social charges for a U.S. company with no presence in France there is a link in my post above.)

Good luck and let us know what you decide. There are many viewers/members that are interested in the same questions, you are asking. Cheers, 255


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## aft00

Thank you so much for such a thoughtful and detailed response. 

Regarding item f:
"If you closed your U.S. entity and solely operated out of France, be aware that you might have to bill your clients VAT for your work from France. Probably best to keep operations and billings for U.S. clients, in the U.S. and pay yourself a salary and take all deductions for social charges and income tax withholding from your French company."

If I'm to keep operations and billing Stateside and pay myself a salary with social and income tax withholding from my French company --- I'm trying to understand how I could structure that particular setup. As you stated above -- my S corporation requires me to take a salary in the US (which would mean I'd also have social charges and withholding in the US as well -- which perhaps is why suggest change to a C Corp). And then, would my French entity would essentially be acting as a vendor billing my US entity? And from the French entity is where my personal salary, social charges, and income withholding are taken? If that's the case, which entity would work best in the US to do that? Am I understanding properly, that since it's a C-Corp -- it's possible to avoid taking a salary stateside? On the France side of things, if my salary/income were to be under the threshold - could I theoretically be an auto-entrepreneur and would that be worth looking into as well? Perhaps that VAT situation would possibly apply if I'm acting as a vendor from France to my US based entity --- even though all of the work I do would be performed on US soil.

I'll also check out item g more in depth. Thank you so much!






255 said:


> aft00 -- First of all, you have one to two years to make adjustments to your entity structuring plan. This gives you a little while to come up with a plan and make changes, as necessary. As you have read in the posts above and I'm sure, on many other threads in this forum, there is no one right answer -- I'll give you a few points to consider:
> 
> a. Maintaining your current structure and taking "distributions" probably won't fly. One of the established tenets in being able to take advantage of "S Corp." taxation is that you pay yourself a "reasonable" salary. If you stop taking a salary, you're sure to have problems with the IRS.
> 
> b. CA is a tough state to leave. If you move to France from California, you'll likely not be able to extricate yourself from the CA tax system -- especially, if you maintain a business and have bank accounts in California. Bottom line, you'll not eliminate any CA taxes for the company nor yourselves. Options might be to move the Company to WY, move yourselves to Florida and totally leave CA.
> 
> c. There are many options to form an entity in France. One member here recently opened a "branch" in France for his U.S. company, to pay himself. Others have formed various French entities (my personal choice would be to form an SAS.) You might consider forming a French company that is wholly owned by your new WY C Corp. In this situation, you'd have the option to designate it as a "disregarded entity" for tax purposes (all income and expenses would "roll-up" to your C Corp.) I don't know how I would handle this at this time -- the current U.S. Administration has designs on grabbing more income from foreign entities owned by U.S. tax payers.
> 
> d. If you decide to operate a foreign entity (unless it's disregarded,) become familiar with the U.S. GILTI taxes. There is talk of them going away, but only if they can capture more of your earnings, some other way.
> 
> e. As I mentioned before, I would consider reforming as an C Corp. This is a lot cleaner on the French side and no distributions to mess with.
> 
> f. If you closed your U.S. entity and solely operated out of France, be aware that you might have to bill your clients VAT for your work from France. Probably best to keep operations and billings for U.S. clients, in the U.S. and pay yourself a salary and take all deductions for social charges and income tax withholding from your French company.
> 
> g. Alternatively, it might be simpler to just register your U.S. company with France to pay French residents and deduct taxes and social charges for a U.S. company with no presence in France there is a link in my post above.)
> 
> Good luck and let us know what you decide. There are many viewers/members that are interested in the same questions, you are asking. Cheers, 255


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## 255

aft00 -- Yes, you would not be required to take a "salary" from a C Corp. as you would with an S Corp. Although there are many other reasons to use a C Corp., in this instance (medical reimbursement plan/accountable plan reimbursements, solo 401k contributions for bonuses paid while in the U.S. and more.) From a French perspective, you just own stock -- so simple. The C Corp. tax rate is currently 21% (I know the U.S. administration is trying to raise it,) which is relatively low. Of course, you could zero out any income with expenses, like paying your French firm, and avoiding or minimizing corporate taxes.

If you form a wholly owned subsidiary, your wages would come from the French company and you would just have a "book" transfer to the French firm from the U.S. company. If you decide to form a totally separate French company, with both French and U.S. reporting requirements -- the French company could invoice the U.S. company for "labor services," (possible requiring VAT.)

Since you are married to a French citizen, your choice of entity structure is perhaps not as crucial, as some other posters, who are/were qualifying for the "Passeport Talent" visa/resident status, to come to France in the first place. Many posters have gone with the micro-enterprise regime (formerly auto-entrepreneur.) The one caution, is that of a business only having one client (your U.S. company.) Just as in the States, France has the same employee versus contractor (W-2 vs. 1099,) issues.

If all your work with this company will be performed on U.S. soil -- you'll owe taxes and social charges to the U.S. (for the work performed in the U.S.) You'll just have to report your U.S. earnings on your French and U.S. tax returns. In this case, you probably would not qualify for the F.E.I.E., but you would be able to take advantage of the F.T.C., to offset the taxes you paid France on your U.S. tax return. I'm sure you know, as long as you and your spouse are U.S. citizens, you'll be obliged to file U.S. income tax returns. Cheers, 255


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## aft00

Thank you.

The 2nd to last sentence is something I don't quite understand.

"If all your work with this company will be performed on U.S. soil -- you'll owe taxes and social charges to the U.S. (for the work performed in the U.S.) You'll just have to report your U.S. earnings on your French and U.S. tax returns."

I was just in France and spoke with a tax attorney as well as an accountant who does expat tax returns to try and get an idea of how I might do things. Perhaps I wasn't clear enough with them, but it seemed to me that they indicated if my legal residence was in France I'd be required to pay into the French social system (and I would certainly plan to use Assurance Maladie). Perhaps that was with the thought that I'd have to have a French entity set up and register with Social Security through that group that my entity belonged to. 

It's certainly a lot of food for thought -- thank you for all of your help.





255 said:


> aft00 -- Yes, you would not be required to take a "salary" from a C Corp. as you would with an S Corp. Although there are many other reasons to use a C Corp., in this instance (medical reimbursement plan/accountable plan reimbursements, solo 401k contributions for bonuses paid while in the U.S. and more.) From a French perspective, you just own stock -- so simple. The C Corp. tax rate is currently 21% (I know the U.S. administration is trying to raise it,) which is relatively low. Of course, you could zero out any income with expenses, like paying your French firm, and avoiding or minimizing corporate taxes.
> 
> If you form a wholly owned subsidiary, your wages would come from the French company and you would just have a "book" transfer to the French firm from the U.S. company. If you decide to form a totally separate French company, with both French and U.S. reporting requirements -- the French company could invoice the U.S. company for "labor services," (possible requiring VAT.)
> 
> Since you are married to a French citizen, your choice of entity structure is perhaps not as crucial, as some other posters, who are/were qualifying for the "Passeport Talent" visa/resident status, to come to France in the first place. Many posters have gone with the micro-enterprise regime (formerly auto-entrepreneur.) The one caution, is that of a business only having one client (your U.S. company.) Just as in the States, France has the same employee versus contractor (W-2 vs. 1099,) issues.
> 
> If all your work with this company will be performed on U.S. soil -- you'll owe taxes and social charges to the U.S. (for the work performed in the U.S.) You'll just have to report your U.S. earnings on your French and U.S. tax returns. In this case, you probably would not qualify for the F.E.I.E., but you would be able to take advantage of the F.T.C., to offset the taxes you paid France on your U.S. tax return. I'm sure you know, as long as you and your spouse are U.S. citizens, you'll be obliged to file U.S. income tax returns. Cheers, 255


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## 255

aft00 -- Please look at the U.S. -- France Social Security Totalization Agreement (link in 3d post to this thread, first paragraph.) Bottom line, if you are working in the U.S. -- you'll owe income and payroll taxes primarily in the U.S. and vice versa in France. Both countries will tax you on your worldwide income, but in most cases, you'll only owe social insurances in the country where you are doing the work.

In your previous post you alluded that all the work would be done in the U.S. If your principal residence is in France, you and your spouse will file a joint income tax declaration for France. You'll do the same for the U.S. As far as payroll taxes, if you do your work and get paid in the U.S. -- you'll owe payroll tax in the U.S. -- not France.

If on the other hand, you take your salary in France, you will owe social insurances and have income tax withheld in France (assuming your salary will be paid to you in France for work you do while in France (company management?)

Your ability to sign-up for the French medical system will be immediate, if you are working and paying into the French system. If, on the other hand, you are resident in France, and not working (or working part time in the U.S.) -- you'll be eligible for coverage after 3 months residence in France. If you are not retired, you may be expected to pay a contribution for your health coverage. Cheers, 255

P.S. There are many ways to set-up your affairs, but most immigrants (that may want to naturalize, when eligible,) tend to want French income, to show they are integrated. You, as the spouse of a French national have reduced requirements for naturalization.


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## Bevdeforges

OK, the approach 255 is suggesting sounds way over-complicated to me, but it really does depend on the extent of your business set up in the US and what your intentions are. You will be subject to French income taxes and social insurances (payroll taxes in US jargon) if your primary residence is in France. (The French tax system takes a rather simple approach to determining tax residence.) If most of the work will be done in the US, you may wind up squandering the opportunity to use the FEIE - until and unless you qualify as a bona fide resident of France (for US tax purposes).

Over in the France forum there is a regular who worked part time in the US after he and his wife moved to France. I'm not sure how he managed that, though I believe there was a certain unavoidable level of "double taxation" for the social insurances. Ultimately, he retired and so the travel back and forth ended. But maybe he can cast a bit of light on the subject - or at least how he did things. I've dropped him a note to ask him to wander by here to at least explain what he did in somewhat similar circumstances.


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## aft00

Thank you.

Yes, my only residence would be in France. The work performed would be in the US on US soil most likely (although -- technically, the bidding process and much of the pre-production and post-production would likely occur from France -- and then traveling back to the US to perform the actual production aspect of the work.) My US entity would be billing US client for that work. However, at that stage -- my US entity would have only collected income from clients and I would prefer for it to not be paying out a salary to me. Instead, I would prefer to take my salary in France somehow-- (in order to be in the French system) --- by either a) having the US entity either paying my French salary and French payroll taxes directly as you've indicated is worth exploring -- or b) paying my French entity from my US entity and then taking my salary from my French entity. I believe this would be my ultimate goal if possible.

So my hope would be to be able to go with either scenario a) or b) above. 





255 said:


> aft00 -- Please look at the U.S. -- France Social Security Totalization Agreement (link in 3d post to this thread, first paragraph.) Bottom line, if you are working in the U.S. -- you'll owe income and payroll taxes primarily in the U.S. and vice versa in France. Both countries will tax you on your worldwide income, but in most cases, you'll only owe social insurances in the country where you are doing the work.
> 
> In your previous post you alluded that all the work would be done in the U.S. If your principal residence is in France, you and your spouse will file a joint income tax declaration for France. You'll do the same for the U.S. As far as payroll taxes, if you do your work and get paid in the U.S. -- you'll owe payroll tax in the U.S. -- not France.
> 
> If on the other hand, you take your salary in France, you will owe social insurances and have income tax withheld in France (assuming your salary will be paid to you in France for work you do while in France (company management?)
> 
> Your ability to sign-up for the French medical system will be immediate, if you are working and paying into the French system. If, on the other hand, you are resident in France, and not working (or working part time in the U.S.) -- you'll be eligible for coverage after 3 months residence in France. If you are not retired, you may be expected to pay a contribution for your health coverage. Cheers, 255
> 
> P.S. There are many ways to set-up your affairs, but most immigrants (that may want to naturalize, when eligible,) tend to want French income, to show they are integrated. You, as the spouse of a French national have reduced requirements for naturalization.


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## aft00

Thank you. Having gone through the options as best I understand them this is what I would likely want to do if possible. 

a) having my US entity either paying my French salary and French payroll taxes directly (so I would be an employee of a US entity that is a legal French resident)

or 

b) Have my US entity (likely a C corporation after changing from an S corporation) pay my French entity (TBD on which entity that will be)and then take my salary from my French entity -- and have all payroll/social charges taken on the French side. The only thing here is trying to make sure I can avoid any VAT charges on the payment from my US entity to my French entity. 

I'm not so concerned about the first 1/2 year of this transition as I know there will be some overlap -- on the tax resident side of things, but once I've passed that window and am legally a French tax resident (1/2 year) -- I just want to be in the French system, while at the same time, being able to collect from my US clients as I've always done without introducing any banking complications or VAT issues for them. To keep my US entity without employees in the US -- file a corporate tax return there, and minimize any requirements on the US personal tax side of things other than filing and showing that our personal taxes and social charges have been paid in France and avoid double taxation.






Bevdeforges said:


> OK, the approach 255 is suggesting sounds way over-complicated to me, but it really does depend on the extent of your business set up in the US and what your intentions are. You will be subject to French income taxes and social insurances (payroll taxes in US jargon) if your primary residence is in France. (The French tax system takes a rather simple approach to determining tax residence.) If most of the work will be done in the US, you may wind up squandering the opportunity to use the FEIE - until and unless you qualify as a bona fide resident of France (for US tax purposes).
> 
> Over in the France forum there is a regular who worked part time in the US after he and his wife moved to France. I'm not sure how he managed that, though I believe there was a certain unavoidable level of "double taxation" for the social insurances. Ultimately, he retired and so the travel back and forth ended. But maybe he can cast a bit of light on the subject - or at least how he did things. I've dropped him a note to ask him to wander by here to at least explain what he did in somewhat similar circumstances.


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## RayRay

There are several things to consider here. I believe, from your original post, that the items below are the most important ones. Your situation isn’t that dissimilar to my own (except that you’re married to a French national, which will smooth your path quite a bit). Because France is quite different, it’s easy, I found, to be overwhelmed about taxes. I recommend, for clarity’s sake, that you do your best to think simply. 

*You have said you will perform your work in the US and that you want to maintain your current business structure:* If your current US business structure suits you, you should keep it. If not, return to a sole proprietorship. If you perform your work when you are physically in the United States, you can pay your taxes to the US. If you wish to be paid and pay taxes on your US income in France, get a food French tax attorney (and see below).
*You are married to a French citizen and you will live in France.* Because you and your husband will live together in France, you will be considered by France to be resident in France. You can keep your US and French income (if any) separate. Income taxed in the US isn’t generally taxed in France. There are exceptions, but normally the tax treaties between the two countries provide for paying tax in one country and getting a credit in the other. If you decide to receive income and pay tax in France, the tax bite will be significantly higher as it will include your social charges (pension & healthcare). 
*You will perform your work in the state of California:* You will perform work in CA as a non-resident. California’s tax code requires non-residents to pay income tax to the state. I believe that the same is true for S corporations (which are basically you). As a result, you’ll need to continue to pay California taxes. 
*French health insurance: *You must have health insurance in France. It is a legal requirement. You can engage private insurance that is comparable to insurance provided by France. The cost for purchasing insurance from France is broadly 8% of one’s income over the first 10,000€. French health insurance pays about 70% of one’s fees. One can also purchase supplemental private health insurance for the portion not paid by France, though it is not required to do so. Once one retires and receives a pension (even a pension from the US), one no longer pays for French health insurance. You could, however, continue to pay for and receive private supplemental health insurance. 
There are a lot of “moving parts” here, so to speak here. Nonetheless, what you will want to do should be fairly straightforward. You have a choice to make. You can study the tax treaty between the US and France, which changes as often as yearly, and study both the US and French tax codes, then file your own taxes. Alternatively, you can engage a French tax attorney whose job it is to stay current on both the treaty and the tax codes of the countries involved. I recommend the latter as it will make your life much easier.

Your French tax attorney can do as much or as little as you like, ranging from advising you only to preparing and filing your US and French tax returns. S/he can also assist you to establish a French tax entity if that seems appropriate to your situation. We do our own US taxes and our tax attorney advises us on how to prepare them. He also prepares and files our French taxes. French tax attorneys’ services aren’t inexpensive. I have found what our tax attorney provides to be far more valuable than what he charges. 

As regards French health insurance, you and your husband will be required to engage private insurance for approximately the first year you live in France. After 3 months of residence, you can apply to France for health insurance from your nearest CPAM office. It will take between 1 - 6 months or more to get it set up. Once you have it, you can purchase private supplemental insurance, should you desire. 

Best of luck. Keep it simple. 

Ray


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## Bevdeforges

Hi Ray - thank you mille fois for jumping in here! I knew you'd you'd have some thoughts on the process.

Yes, keep it simple. Just a note here to the OP - your clients can pay you anywhere or in whatever currency you choose. (Definitely check into a "borderless account" with Wise for transferring funds between the US and France.) The accountant side of me says that if you choose to have your company in the US pay you a salary, you should try to find a way that the business is a legal entity unto itself so that the business can register in France with URSSAF to pay your cotisations (as a foreign employer with no physical presence in France). But my knowledge of S, C and other US business forms is way out of date these days, so I leave it to you to seek US tax advice on how that might (or might not) work out for you.


aft00 said:


> once I've passed that window and am legally a French tax resident (1/2 year)


This statement made me twitch. There is no legal recognition of the 183 days thing - other than frequent statements from the Fisc that anyone who spends 183 days in a calendar year in France can be "presumed" to be tax resident in France. The fact that some of your work will be done from in France could complicate matters - at least on the US side. However, there are 3 criteria for being considered tax resident in France and they are fairly simple. Meet any one of them and you are tax resident. The first one is that you have your primary residence in France - no indication of how long you have to be in said residence. 

Anyhow, you might want to consider a membership in AARO, which is a Paris based organization for Americans overseas. They have lots of information about taxes (both US and French), run an annual tax seminar, and most of the best tax advisors in Paris (mostly tax attorneys) are members. (Nice to be able to meet the people socially before you have to commit to paying them for advice.) But it does sound like you will want to at least talk to a tax attorney somewhere along the way here.


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## aft00

Thank you.

If I were to return to a sole proprietorship -- that would make me subject to the Self-employment tax in the US. One of the reasons I switched to an S Corp was to take a reasonable salary, get into the US payroll system including UI and SDI benefits and to lower the SE tax. Since my income is unpredictable there are many years (the good ones, business-wise) where I likely paid quite a bit more tax under the Sole proprietorship entity than I would have with the S Corp, even after factoring in the additional costs of the S corp itself (compliance/accounting/etc). 

There is another concern about paying tax in the US -- I was under the impression we'll need my personal income to be considered French income to be able to qualify for a mortgage, get a bank account, etc. (As best I understand it). 

It seems from what you've written, I could itemize based on the where the work is performed and be taxed accordingly: Work performed in the US is taxed in the US -----and then for work performed in France (like the remote work I'd be doing ) -- that work would be subject to French social charges. My initial take on this is that 90% of the income I earn, for the first few years, will be derived from the US based work. 

At the same time, I do want to be "integrated" French system as it's unlikely we'd change our residence back to the US once we make the move.





RayRay said:


> There are several things to consider here. I believe, from your original post, that the items below are the most important ones. Your situation isn’t that dissimilar to my own (except that you’re married to a French national, which will smooth your path quite a bit). Because France is quite different, it’s easy, I found, to be overwhelmed about taxes. I recommend, for clarity’s sake, that you do your best to think simply.
> 
> *You have said you will perform your work in the US and that you want to maintain your current business structure:* If your current US business structure suits you, you should keep it. If not, return to a sole proprietorship. If you perform your work when you are physically in the United States, you can pay your taxes to the US. If you wish to be paid and pay taxes on your US income in France, get a food French tax attorney (and see below).
> *You are married to a French citizen and you will live in France.* Because you and your husband will live together in France, you will be considered by France to be resident in France. You can keep your US and French income (if any) separate. Income taxed in the US isn’t generally taxed in France. There are exceptions, but normally the tax treaties between the two countries provide for paying tax in one country and getting a credit in the other. If you decide to receive income and pay tax in France, the tax bite will be significantly higher as it will include your social charges (pension & healthcare).
> *You will perform your work in the state of California:* You will perform work in CA as a non-resident. California’s tax code requires non-residents to pay income tax to the state. I believe that the same is true for S corporations (which are basically you). As a result, you’ll need to continue to pay California taxes.
> *French health insurance: *You must have health insurance in France. It is a legal requirement. You can engage private insurance that is comparable to insurance provided by France. The cost for purchasing insurance from France is broadly 8% of one’s income over the first 10,000€. French health insurance pays about 70% of one’s fees. One can also purchase supplemental private health insurance for the portion not paid by France, though it is not required to do so. Once one retires and receives a pension (even a pension from the US), one no longer pays for French health insurance. You could, however, continue to pay for and receive private supplemental health insurance.
> There are a lot of “moving parts” here, so to speak here. Nonetheless, what you will want to do should be fairly straightforward. You have a choice to make. You can study the tax treaty between the US and France, which changes as often as yearly, and study both the US and French tax codes, then file your own taxes. Alternatively, you can engage a French tax attorney whose job it is to stay current on both the treaty and the tax codes of the countries involved. I recommend the latter as it will make your life much easier.
> 
> Your French tax attorney can do as much or as little as you like, ranging from advising you only to preparing and filing your US and French tax returns. S/he can also assist you to establish a French tax entity if that seems appropriate to your situation. We do our own US taxes and our tax attorney advises us on how to prepare them. He also prepares and files our French taxes. French tax attorneys’ services aren’t inexpensive. I have found what our tax attorney provides to be far more valuable than what he charges.
> 
> As regards French health insurance, you and your husband will be required to engage private insurance for approximately the first year you live in France. After 3 months of residence, you can apply to France for health insurance from your nearest CPAM office. It will take between 1 - 6 months or more to get it set up. Once you have it, you can purchase private supplemental insurance, should you desire.
> 
> Best of luck. Keep it simple.
> 
> Ray


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## Bevdeforges

aft00 said:


> I was under the impression we'll need my personal income to be considered French income to be able to qualify for a mortgage, get a bank account, etc. (As best I understand it).


Sort of, but not quite. To get a bank account, you usually need to show some regular source of income. This can be a somewhat regular transfer of funds from your US bank to your French bank - via Wise or any other FX type of intermediary. (This is what retirees here do with their pensions in many cases.) And since mortgages are usually based on your banking history, this should also work for applying for a mortgage.

Putting aside all considerations of S and C Corporations, there is always the option of billing your US company for your services (as a sort of contractor), with your billings becoming deductible expenses for your US based company. You would need to talk to an attorney or tax person to figure out the best way to do this - and precisely how the taxes on both you personally and the business entity in the US would work, especially the state taxes to California. The other possibility is to consider if you really need to return to the US to do your work or if you could work remotely, which would solve a whole bunch of issues.


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## aft00

Good to know that mortgages are based on banking history as opposed to strictly "salary". The regular transfer thing would be simple.


_*"there is always the option of billing your US company for your services (as a sort of contractor), with your billings becoming deductible expenses for your US based company."*_

Yes, in my mind this is one of the most "Simple" ideas --- but wasn't sure if it was a good idea or not.

That was why I was asking about which French type of entity I would need to set up to do that -- and to just bill my US entity as a vendor. Essentially I have 2 companies/entities and the French one bills the US one. (But hopefully avoid a situation where I'm subject to charging VAT from my French entity to my US entity). 

I was looking at Auto-entrepreneur (as it was formerly called) to be able to do this as far as keeping things simple-- and I guess if I were to leave any amounts above the income threshold levels that have been set by France in the US entity, and just bill for services with my French entity, that could possibly be a simple solution?

My work is production work -- so I prep from anywhere (usually a home office) -- travel on site to do the work for short period of time -- then do the post work/admin back at my home office. 













Bevdeforges said:


> Sort of, but not quite. To get a bank account, you usually need to show some regular source of income. This can be a somewhat regular transfer of funds from your US bank to your French bank - via Wise or any other FX type of intermediary. (This is what retirees here do with their pensions in many cases.) And since mortgages are usually based on your banking history, this should also work for applying for a mortgage.
> 
> Putting aside all considerations of S and C Corporations, there is always the option of billing your US company for your services (as a sort of contractor), with your billings becoming deductible expenses for your US based company. You would need to talk to an attorney or tax person to figure out the best way to do this - and precisely how the taxes on both you personally and the business entity in the US would work, especially the state taxes to California. The other possibility is to consider if you really need to return to the US to do your work or if you could work remotely, which would solve a whole bunch of issues.


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## aft00

I think the caveat to this has been if I, as a French based contractor, derive all of my income from one company, then -- like it's gone in California and NY recently as well, there's a possibility that the French authorities would consider me an employee instead of contractor.




aft00 said:


> Good to know that mortgages are based on banking history as opposed to strictly "salary". The regular transfer thing would be simple.
> 
> 
> _*"there is always the option of billing your US company for your services (as a sort of contractor), with your billings becoming deductible expenses for your US based company."*_
> 
> Yes, in my mind this is one of the most "Simple" ideas --- but wasn't sure if it was a good idea or not.
> 
> That was why I was asking about which French type of entity I would need to set up to do that -- and to just bill my US entity as a vendor. Essentially I have 2 companies/entities and the French one bills the US one. (But hopefully avoid a situation where I'm subject to charging VAT from my French entity to my US entity).
> 
> I was looking at Auto-entrepreneur (as it was formerly called) to be able to do this as far as keeping things simple-- and I guess if I were to leave any amounts above the income threshold levels that have been set by France in the US entity, and just bill for services with my French entity, that could possibly be a simple solution?
> 
> My work is production work -- so I prep from anywhere (usually a home office) -- travel on site to do the work for short period of time -- then do the post work/admin back at my home office.


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## RayRay

The advantage of physically performing the work in the US is that it makes paying US taxes very simple and the Fisc won’t give you a hard time about it. There is recognition, so says my French tax attorney, that one must often make phone calls, email, etc. while in France to arrange and manage things, but that as long as the work is done in the US, you can be taxed there. He did strongly recommend that I have a US office to give me a US presence. I did that, and then deducted what I paid for the office from my US taxes. 

I think Bev is right about you having lots of options regarding getting funds from your production company. Use whatever approach seems best. There’s no reason to change your US business entity unless keeping the one you have would prove problematic when paying French social charges. I don’t know how paying cotisations in France would affect (from an deductible expense point of view) your US or California income taxes. But that is simply another reason to have a good French tax attorney.

I do understand the nature of production work in terms of predictability. It can be feast or famine. However, as long as you’re willing to share your US bank records or your US and French bank records, once you’ve established a history of transferring money to France, I think you’ll be OK. I was self-employed in the US and all I did was print my US and French bank statements showing dollars leaving my US account and then the equivalent number of euro showing up in my French account. Happily, bank statements don’t need translation…debits and credits are easy to ready. 

Best of luck.

Ray


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## aft00

Thank you.





RayRay said:


> The advantage of physically performing the work in the US is that it makes paying US taxes very simple and the Fisc won’t give you a hard time about it. There is recognition, so says my French tax attorney, that one must often make phone calls, email, etc. while in France to arrange and manage things, but that as long as the work is done in the US, you can be taxed there. He did strongly recommend that I have a US office to give me a US presence. I did that, and then deducted what I paid for the office from my US taxes.
> 
> I think Bev is right about you having lots of options regarding getting funds from your production company. Use whatever approach seems best. There’s no reason to change your US business entity unless keeping the one you have would prove problematic when paying French social charges. I don’t know how paying cotisations in France would affect (from an deductible expense point of view) your US or California income taxes. But that is simply another reason to have a good French tax attorney.
> 
> I do understand the nature of production work in terms of predictability. It can be feast or famine. However, as long as you’re willing to share your US bank records or your US and French bank records, once you’ve established a history of transferring money to France, I think you’ll be OK. I was self-employed in the US and all I did was print my US and French bank statements showing dollars leaving my US account and then the equivalent number of euro showing up in my French account. Happily, bank statements don’t need translation…debits and credits are easy to ready.
> 
> Best of luck.
> 
> Ray


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## RayRay

We crossed posts…however, your last two posts make it clear that you’re thinking appropriately about the complexities. The issue is clearly that you’re now at the stage you need expert advice. I think you will want to talk to a French tax attorney, tell him what you want to have happen, and then ask how he’d recommend you set up your business(es) in the US and France. 

I think you’ll find that having someone who can definitively tell you what will work and, perhaps more importantly, what will not work, will be to your advantage. 

Best of luck.

Ray


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## aft00

Thanks. Yes -- I've spoken with one attorney before I understood things as I do now -- it might be time to revisit. 
If you have any other resources on where to find a quality French tax attorney (another poster mentioned AARO) I'll further my research there as well. Thanks.




RayRay said:


> We crossed posts…however, your last two posts make it clear that you’re thinking appropriately about the complexities. The issue is clearly that you’re now at the stage you need expert advice. I think you will want to talk to a French tax attorney, tell him what you want to have happen, and then ask how he’d recommend you set up your business(es) in the US and France.
> 
> I think you’ll find that having someone who can definitively tell you what will work and, perhaps more importantly, what will not work, will be to your advantage.
> 
> Best of luck.
> 
> Ray


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