When you’re planning a move to France, there’s a lot to think about, where to live, how to navigate the rental market, what visa you need. Taxes tend to sit somewhere lower down the list, something to sort out once you’ve arrived and settled in. That’s understandable. But it’s also, according to the experts, one of the most expensive mistakes you can make.
We hosted a live Q&A with two specialist tax professionals, a French tax attorney and a notary, and the same theme came up again and again throughout the session: the expats who run into the biggest problems are almost always the ones who didn’t plan ahead. Specifically, the ones who didn’t understand what triggers French tax residency, and what that means for the assets they left behind in the US or UK.
Here’s what you need to know before you board the plane.
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The mistake: waiting until you arrive to think about taxes
The single most common tax mistake expats make when moving to France is this: they arrive, they settle in, they start building their new life, and only then do they start asking questions about their financial situation back home. By that point, they may already be a French tax resident without realising it, and that changes everything.
As a French tax resident, you are taxable on your worldwide income and assets. That means your US or UK property, your investment accounts, your pensions, your rental income from back home, all of it needs to be declared in France. France does have tax treaties with both the US and UK to prevent outright double taxation, and in many cases you’ll receive a tax credit for what you’ve already paid abroad. But you still need to declare, and the administrative burden, and the risk of getting it wrong, is significant.
Key point: Becoming a French tax resident is not just about how many days you spend in France. French authorities look at where your main home is, where your primary professional activity takes place, and where your main economic interests lie. If France ticks any of those boxes, you may be a tax resident, regardless of the 180-day rule you may have read about in expat forums.
Selling your US or UK home: timing is everything
One of the most important, and most time-sensitive, decisions you’ll face is what to do with your property back home. And the answer from both tax specialists was unambiguous: if you’re going to sell, sell before you move.
Once you become a French tax resident, the sale of your former home in the US or UK falls within the scope of French tax law. Depending on your circumstances, you may be liable for capital gains tax in France, even if you’ve already paid tax on the sale in your home country. France does offer a primary residence exemption, meaning if the property was genuinely your main home, you may be able to claim an exemption, but the rules around this are not straightforward, and there’s no clearly defined minimum period of occupancy that guarantees the exemption applies.
The clean, simple solution our experts recommended is to complete the sale while you’re still legally a US or UK tax resident. In the words of one of our specialists: “Please, please, please make sure to sell before you board the plane”. As long as you haven’t yet established tax residency in France at the point of sale, the transaction remains outside French jurisdiction entirely. There’s no defined minimum gap between selling and applying for your French visa, so the safest approach is to have the sale completed, and the proceeds received, before you make the move.
What if you’re planning to rent out your home rather than sell? Rental income from a property abroad is still taxable in France once you’re a French resident. You’ll need to declare it in your French tax return and claim the relevant tax credit under the applicable double tax treaty. It’s manageable, but it’s another administrative layer to be aware of from day one.
Inheritance tax: the 60% surprise
Inheritance tax in France is another area where a lack of planning can lead to a very unwelcome shock. The French system calculates inheritance tax based on the relationship between the deceased and the beneficiary, not on the total value of the estate as a whole, which is how many other countries approach it. This means the rates vary significantly depending on who is inheriting.
For spouses and direct descendants such as children, there are meaningful tax allowances and lower rates. But for more distant relatives, or for unmarried partners, the picture changes dramatically. If you’re not married and your partner inherits your French property, the tax rate can reach 60%. That’s not a typo.
For Americans moving to France, there’s an additional layer of complexity around trusts. French tax authorities do not recognise trusts in the way the US does, and if a trust comes into force while you are a French tax resident, the consequences can be severe, including that same 60% inheritance tax rate applying to assets passed through the trust. The advice from our specialists was clear: if you currently have a testamentary trust, speak to a lawyer in both countries before you move, and consider whether restructuring your estate plan makes sense.
There is a window of opportunity worth knowing about. In your first six years as a French tax resident, provided you were not a French resident in the ten years prior to your arrival, you may be able to receive tax-free gifts from parents or family members who are non-French residents. This can be a meaningful way to transfer wealth before the full weight of French inheritance rules kicks in. However, this exemption has been subject to political debate in France recently, so it’s worth monitoring and acting sooner rather than later if it’s relevant to your situation.
US pensions and investment accounts: what gets taxed in France?
The short answer is: Yes, your US pensions and investment accounts need to be declared in France, but no, you won’t necessarily end up paying French tax on top of what you’ve already paid in the US.
Under the US-France tax treaty, most US-source income, including withdrawals from IRAs, 401(k)s, Roth IRAs, 457(b) plans, and Social Security, qualifies for a full tax credit in France. That means you declare the income, but the credit offsets what would otherwise be owed. In practice, for many retirees with US pensions and investment income and no French-source income, the net French tax liability on those US funds is zero.
One area to watch, however, is the PUMA tax, a French social healthcare contribution that can catch people off guard. If you have no French-source income and no social security contributions in France, PUMA may apply to your passive income. One practical way to mitigate this is to register a small micro-entreprise in France and generate a modest amount of French income, which brings you into the social contribution system and removes the PUMA exposure. It’s a small administrative step that can have a disproportionate impact.
One other important point: as a general rule of thumb, it’s worth keeping your investments in the US for as long as possible after your move. There’s rarely a tax advantage to transferring funds into French accounts, and doing so can complicate your situation considerably.
The wealth tax trap and the 5-year grace period
France applies a wealth tax (Impôt sur la Fortune Immobilière, or IFI) to real estate assets above 1.3 million. If your global property holdings exceed that threshold, it can apply to your worldwide property once you’re a French tax resident, including assets held abroad.
There is, however, a significant relief for new arrivals. For the first five years of your French tax residency, foreign property is excluded from the IFI calculation, provided you were not a French tax resident during the five years prior to your move. This gives you a meaningful window to settle in and restructure your holdings if needed, without the full scope of the wealth tax applying immediately.
What to do before you move: a practical checklist
Anticipation is everything. The earlier you start planning, the more options you have. Here’s a practical starting point:
- If you’re selling your home in the US or UK, complete the sale before establishing tax residency in France.
- Get clarity on your French visa and understand when your tax residency is likely to begin.
- Speak to a tax specialist in both your home country and France before you move, not after.
- Review any trusts, wills, or estate planning documents with an adviser familiar with both jurisdictions.
- Make a full inventory of your assets, property, pensions, investments, savings, and understand how each one will be treated under French law.
- If relevant to your situation, explore whether tax-free gifting from non-French family members makes sense in your first six years.
- Don’t assume the 180-day rule is all that matters for residency, it isn’t.
None of this is meant to put you off. France is a wonderful place to live, and thousands of expats from the US navigate this process successfully every year. But the ones who do it smoothly are the ones who took the time to understand the landscape before they arrived, not after.
> You might like: What is the wealth tax in France and will it affect you?
FAQ: Tax mistakes expats make
When do I become a French tax resident?
French tax residency is determined by three criteria: whether France is your main home, whether your primary professional activity is in France, and whether your main economic interests are centred in France. If any one of these applies, you may be considered a French tax resident. The 180-day rule is commonly discussed in expat circles but is not the primary legal test in France.
Do I have to pay capital gains tax in France on my US home?
If you sell your US property after becoming a French tax resident, the gain may be subject to French capital gains tax. However, you may be eligible for the primary residence exemption if the property was your main home, or for reductions based on how long you’ve held the property. Selling before you establish French tax residency avoids the question entirely.
Will my US pension be taxed in France?
Most US pensions and retirement accounts, including IRAs, 401(k)s, and Social Security, qualify for a full tax credit in France under the US-France tax treaty. You’ll need to declare the income in your French tax return, but the credit typically offsets any French tax liability. The PUMA social charge is a separate consideration worth discussing with a specialist.
What is the inheritance tax rate in France for expats?
Inheritance tax in France depends on the relationship between the deceased and the beneficiary. Spouses benefit from a full exemption. Children receive a significant allowance before tax applies. For more distant relatives or unmarried partners, rates can reach up to 60%. Estate planning before your move, particularly if you have trusts or complex family arrangements, is strongly advisable.
Do I need a French tax return if I've just arrived?
If you became a French tax resident during the calendar year, you’ll need to file a tax return the following spring covering that year’s income. First-time filers typically submit a paper return. Filing deadlines are communicated by the French tax authorities, usually in April, with the actual deadline falling in May. It’s worth preparing well in advance.
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