An American working in France must file tax returns in both France and the United States.
But given the US/France Tax Totalisation Treaty income taxes in France the United States and French income taxes are approximately in the same range, except that the top brackets in France are truly confiscatory.
However, what the French call "social charges" for retirement and medical insurance are not capped and it may also seem to be confiscatory for even a middle manager.
With respect to this French Social Security-type charge (e.g., "l'URSSAF") and medical insurance, an American may opt to stay under the United States Social Security program for up to five (5) years of employment in France by taking advantage of the bilateral US/Social Security Treaty. To do this, the IRS must submit a bilingual form SE 404-2 "Certificate of Coverage" for the prior tax year and send it to the American taxpayer.
As the French authorities may require a copy of the form SE 404-2 "Certificate of Coverage" in connection with the issuance of a long term visa ("visa de long
sojourn"), this document should be requested from
the Social Security Administration in a timely manner (See http://www.ssa.gov/international/totalization_agreements.html)
Once the 5 years is up, or if the American decides to be under the French URSSAF program before that date, the American who works in France will be obligated to pay both URSSAF and the mandatory medical insurance charges, but he will be exempt from United States Social Security. In that case, the expatriate will need to obtain a form SE 404-2 "Certificate of Coverage" from URSSAF which each year. This form will then need to be integrated into the 1040 filing:
- At line 47 of each Form 1040, there should notation which could read as follows: "Exempt except $ ____ per US/France Tax
Totalisation Treaty".
- With respect to IRS Schedules C and SE relating to French source income, there should also be a clear reference to "US/France Tax
Totalisation Treaty".
- In addition, the executed form SE 404-2 should be separately stapled to the back if the IRS' Form SE on the left margin so it remains stapled during the processing of the return.
It should be noted that certain Prefectures have decided only to issue a 5 year long term visa
("visa de long séjour"), rather than one for 10 years, if the American decides to avail himself of the benefits of the US/France Tax Totalization Treaty and to pay Social Security in the United States.
See also tips for staying out of visa troubles
Index of Articles on Issues of French-American Business Law
| DISCLAIMER
The information provided here and on the other pages linked hereto is intended for educational purposes only, and is not legal advice. Particular situations require particular analyses that can only be provided by legal professionals who specialize in the relevant fields and who know all the details of a situation. Also, a presentation such as this does not establish the attorney-client relationship that is necessary in any rendering of legal advice. Finally, one should be aware that the law is a chameleon-like beast that changes its colors frequently, and what holds good today may be reversed by tomorrow. The comments herein should then be read in that light. |
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