Advertisement

money For Members

Americans in France: What you need to know about your pension

The Local France
The Local France - [email protected]
Americans in France: What you need to know about your pension

The food. The weather. The wine. The lifestyle. France has plenty to offer retirees - but ensuring you make the most of your hard-earned pension will make your new life in l’hexagone even better.

Advertisement

Lots of Americans retire to France, and there are generous bilateral agreements in place that make matters relatively straightforward.

First things first; US citizens can bring any type of US-based pension to France - although you'll have to inform the US tax authorities that you’ll be paying French income tax on it.

You can move either before or after your pension starts to pay out and it doesn't affect your payments.

US citizens coming to retire in France still have to file a US tax return every year, as well as a French one. Dual taxation agreements mean that you won't pay tax twice on the same income, but you do have to complete two sets of tax declarations.

Advertisement

You can only forego US income tax responsibilities if you renounce your US citizenship - a process that is lengthy and expensive.

Tom Goold, founder of international financial advisers Valiant Wealth, said: "Generally, France is an attractive retirement destination for US expats with one of the best double taxation agreements and favourable views on US retirement accounts such as IRA 401(k)s and the like.

"If you pay state income tax in the US then this is eliminated in France. One negative could the higher estate taxes in France but there are certain structures that help navigate this issue.

"If this is a concern then you should work with an appropriately qualified advisor who has US experience and regulation."

For further information, log on to the IRS website for advice and information on exclusions and deductions.

Tax matters

You should inform tax authorities in the USA that you’re moving to France. 

Pensioners are treated favourably here, with a 10 percent reduction factored in on income up to €36,600. You also pay tax as a household so you probably end up paying less tax than you might elsewhere.

If you own property in France expect to pay property taxes in addition to taxes on your income.

Once you have been living in France for three months you are entitled to register within the health system and if you become ill, incapacitated or need extra care as you get older, France has a generous social security system

Americans in France: What's the deal with health insurance?

Currency matters

Be aware that currency fluctuations will mean that the amount that finally makes it into your bank account will change from month to month.

Advertisement

Other challenges

There's a piece of US legislation known as FATCA that means all Americans in France, not just pensioners, may struggle to open a bank account - here's some tips on how to get round this.

READ ALSO What are the biggest challenges for Americans in France?

In all cases, it is best to obtain independent advice that's appropriate to your personal situation, from a financial expert.

More

Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

tcwatkins 2022/02/26 08:55
“ If you pay state income tax in the US then this is eliminated in France. ” This is not true. You remain domiciled in your state until you are domiciled in another state. Domicile is not the same as “living in”. Most, if not all states, will require you technically to continue to pay state income tax if you are domiciled in the state even if you are not living in the state.
kurtinsonoma 2022/02/25 22:22
Thanks for the useful information!

See Also