The US tax treaties have been discussed on Brock, most frequently those the US has with Canada and Australia but not so much about the others. In this article, John Richardson examines facets of the France-US Tax Treaty.

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Introduction, purpose And summary

It is clear that US citizens, who are tax resident of countries outside the United States are generally subjected to a more punitive system of taxation than US residents. That said, the U.S. has different tax treaties with different countries. Some treaties (example Australia) make living outside the United States very difficult. Other tax treaties (Canada and the UK) make living outside the United States easier in a relative sense. The relative difficulty is somewhat dependent on the extent to which the treaty contains provisions for U.S. citizens who are “resident” in the treaty partner country. These treaties are an additional recognition of U.S. citizenship taxation.

If a U.S citizen contemplating a move abroad asked the following question:

Q. How will I be taxed if I move outside the United States and live as a tax resident of another country?

The answer will be:

A. I don’t really know. It depends what country you are considering moving to.

Not only are US citizens living outside the United States taxed more punitively than U.S. citizens living inside the United States, but their taxation by the United States depends on the country they move to! (In addition, both income tax treaties and estate tax treaties may contain provisions that affect the way U.S. citizens may be taxed by the treaty partner country!)

The curious case of the U.S. France Tax Treaty and U.S. Citizens resident in France

In 1994 the United States and France entered into a new tax treaty. The 1994 treaty replaced the previous treaties. Generally, the 1994 treaty continued the “spirit” of the earlier treaties. Of particular note in the introduction to the 1994 treaty is the paragraph:

The new Convention preserves the special French tax benefits for U.S. citizens residing in France and for French residents who are partners of U.S. partnerships.

https://www.irs.gov/pub/irs-trty/france.pdf

(Note also that the 1994 Treaty has been revised by various protocols in 2004 and 2009.)

Much of what follows is rather technical. Therefore, I will begin with a summary of the main points gleaned from an analysis of the U.S. France Tax Treaty. What are those “special French tax benefits for U.S. citizens residing in France”?