# US citizen living in France



## egourier (Feb 23, 2018)

Hi everyone,

My husband is a US citizen living (and working) in France. I recommended him to open an ''assurance-vie'' to invest part of his salaries. This would be to invest small amounts every month. I had in mind the French taxation advantages associated with it, but didn't think about the double taxation. 

Could anyone tell us if there are some savings accounts that are more profitable having in France than others (for example, how does the livret A compare to the assurance vie?)? 

If you know a financial advisor in Paris who could help you with these issues, could you please send me his/her name (and give me an indication of the price)?

Any help appreciated! Thanks a lot,
Elise


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## Bevdeforges (Nov 16, 2007)

Being a US citizen living outside the US adds all sorts of levels of complication to your tax situation, thanks to the US policy of "citizenship based taxation" (CBT).

An assurance vie account is almost automatically considered a "foreign trust" or some such rubbish like that, and is subject to quite a bit of additional reporting - assuming you can find a financial institution that isn't actively discouraging US citizens from signing up for an assurance vie contract. 

Basically, you have to think of the tax consequences of any sort of savings or investment account as being entirely separate when it comes to the US and France (or any other country).

On an assurance vie, you will be expected to declare all earnings/gains on the account in the year they occur and pay tax on those. The tax-free accounts (Livret A, Developpement Durable, etc.) are not considered free of US income tax - although most French banks say that they do NOT report US ownership of these sorts of accounts to the Banque de France (which then forwards the information to the US IRS). Up to you (or rather, your husband) how to use or rely on this information when it comes to filling out his tax forms for the US.

If you're talking about LOTS of money and major investments, your husband may want to look into joining AARO, an association for US expats in Paris, which has quite a bit of information available on taxes for US citizens living in France. There are also a number of tax attorneys who belong to the group and who do some financial advising. (Best to get to know folks in these sorts of circumstances.) But they are pricey - and AARO has seminars and reports available to its members that could provide you with the information you need. https://aaro.org/

In theory, earnings from French investments shouldn't be double taxed, but the mechanisms of the Foreign Tax Credit are a bit tricky and don't always work out to eliminate taxation on investments that are tax-free or "tax advantaged" here in France.
Cheers,
Bev


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## egourier (Feb 23, 2018)

Thanks a lot for your quick response Bev. We will not take the chance to not report and hope things will be ok. So from what I understand, there will be double taxation whatever my husband opens here: livret A or assurance vie. Do you know if the tax rate 
is the same for all investments? 

We are not talking about lot of money here, and we definitely cannot afford a financial advisor. An alternative would be to bring the money back to the US and invest is there, but then, we would pay transfer and exchange rate fees.

Thanks again!
Elise


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## Bevdeforges (Nov 16, 2007)

It's not double taxation on the "tax-free" accounts. You're not paying tax on the interest on those accounts here in France. The US doesn't exempt the accounts from taxation, so basically you're paying only the one tax on that interest to the US on things like the Livret A or PEA or whatever.

On an assurance vie, you are supposed to declare the earnings on the contract each year (and yes, pay US tax on that) - but if you do that, there is no US tax to be paid when you withdraw funds from the assurance vie. If I understand the tax advantages of the assurance vie here in France, you don't pay tax in France on the yearly earnings of the contract, and you pay a reduced tax on withdrawal of the funds after 8 years or more.
Cheers,
Bev


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