Visa holders · From France
An assurance vie must pass a US life insurance test after moving to the US from France. Taxes reach its growth every year, as ordinary income, if the policy fails.
IRC 7702 counts a policy as life insurance only if it passes US tests that weigh its cash value against its death benefit. The IRS has published no guidance on how an assurance vie fares under them. The treaty’s interest article may spare a withdrawal’s gain from French withholding if you file form 5000. If it does, French tax you could have avoided that way earns no US credit.
Updated · Sources
Your assurance vie after you leave France
- 12.8%
- of the gain in a withdrawal is withheld once you are non-resident, on premiums paid since September 27, 2017. No social levies apply.
- 7.5%
- is the rate a refund claim gets you once the contract is eight years old, on up to €150,000 of premiums.
- 1%
- of each premium you pay into it as a US resident can be owed to the IRS as excise tax, on Form 720.
Under Rev. Proc. 2003-78, the treaty waives the 1% only if the insurer and the IRS have signed a closing agreement. In September 2026, no French assurance vie insurer was on the IRS lists.
What does France expect from you in the year you move?
France taxes by tax domicile, so a French citizen whose domicile has moved abroad owes French tax only on French income.
Your home, job or finances stay in France
France treats you as tax domiciled if your home or main stay, your main work or the center of your economic interests is there. One of those is enough. The treaty’s tie-breaker assigns you one country of residence when both claim you. Since February 16, 2025, if it names the US, France no longer counts you as domiciled, even with family there.
The year you leave splits in two
France taxes your worldwide income from January 1 to the day you leave, then only your French income. The next year, you report the first part on form 2042 and the second on form 2042-NR. If you have no French income after you leave, you state that on form 2042-NR.
You leave your French employer
Leaving the job lets you take out your PEE, the company savings plan, early and free of French income tax. A PER, a French retirement savings plan, generally stays locked until retirement. Moving abroad is not one of the reasons France allows an early withdrawal. The US generally does not tax a PEE payout you receive while still a nonresident.
An LDD, a Livret jeune or an LEP, France’s regulated passbook savings accounts, cannot stay open once your tax domicile is abroad. Ask your bank how to close them before you leave.
Two years after you leave, France’s exit tax on holdings up to €2.57 million is cancelled if you still own them.
France’s exit tax applies if you were a French tax resident for at least six of the last ten years. Your household must also hold over €800,000 in shares, bonds and fund units, or rights to at least 50% of one company’s profits. Holdings in a PEA, the French share savings plan, do not count. For a 2025 move to the US, payment was deferred automatically, with no security to post. The example assumes France’s deferral list for 2026 moves, due next year, still names the US.
Exit tax on leaving
€565,200
That is 31.4% of the €1.8 million gain.
Shares kept for two years
€0
France cancels the deferred tax, as long as you file form 2074-ETD and its yearly follow-ups.
Shares sold in year one for €1.2 million
Up to €314,000
France recomputes the tax on your €1 million actual gain. It then credits the matching share of the US tax you pay on the sale.
The rates are those for 2026 departures: 12.8% income tax plus 18.6% social levies. Above €2.57 million of holdings, the wait is five years. A sale at a loss also cancels the tax. For US tax, the shares keep their original cost, figured in dollars. Neither US law nor the France treaty resets it when you arrive.
Even a US citizen owes no US tax on French state and workplace pensions, because the US-France tax treaty leaves them to France.
The saving clause, which otherwise lets the US set the treaty aside for its citizens and residents, does not reach Article 18(1). So the pension rule protects green card holders and US citizens too. In Publication 519, the IRS’s own example says a US resident need not report French social security on Form 1040. Each row assumes the treaty treats you as a US resident.
| France | US | |
|---|---|---|
| Your French state, AGIRC-ARRCO or civil-service pension | Taxed Through non-resident withholding | Not taxed Article 18(1) |
| Pay for your work in the US | Not taxed Article 15(1), even from a French employer | Taxed |
| Dividends from a French company | 12.8% France’s own rate, under the 15% treaty cap | Taxed Can count as qualified dividends |
| Interest on a French bank account | Not taxed Article 11(1) | Taxed |
| A gain on French shares or fund units | Not taxed Article 13(6), unless half the company’s assets are French real estate, or the exit tax applies | Taxed On the gain over what you paid |
| Rent from a French home | Taxed Plus social levies of 17.2%, or 18.6% if furnished | Taxed With a credit for French income tax |
France exempts the gain on your former main home if you sell it by December 31 of the year after you leave. You must not rent it out or lend it before the sale. A move to the US should qualify.
How can French plans and paperwork cost you money in the US?
SICAVs and FCPs in your French accounts
A French SICAV or FCP is usually a passive foreign investment company (PFIC) under US rules. Such a fund generally needs its own Form 8621 every year. Inside an assurance vie, PFIC status is unsettled, since the IRS has not said whether you own the fund units yourself.
Expecting the treaty to cover your PER
The US may tax a PER’s growth each year, and no IRS guidance says how. The treaty shelters a French plan only for a US resident who is neither a green card holder nor a US citizen. Even then, it covers only plans under French social security law. A PER is not one, unless the two tax authorities agree to add it.
Working here without a certificate of coverage
The US-France totalization agreement took effect on July 1, 1988. It lets your French employer keep you in French social security during a temporary posting here. The certificate of coverage is form SE-404-1 or SE-404-2, which your employer requests from the health insurance fund that collects your French contributions. If a US employer hires you locally, you pay US Social Security and Medicare instead.
Paying tax on a research post the treaty exempts
Article 20 exempts your pay for teaching or public-interest research for up to 2 years from arrival, and only once. It applies if you were a French resident invited to teach or research at a US university or recognized research institution. Article 21 exempts up to $5,000 a year of a student’s US pay, and $8,000 over 12 months for a French employer’s trainee. A green card ends both exemptions. Becoming a resident by day count does not.
A gift from parents who still live in France
A French child’s allowance of €100,000 from each parent every 15 years still applies to you under the estate and gift tax treaty. Above it, France taxes a gift from a parent who lives there, wherever the property is. No US income tax falls on the gift, though a large one must be reported to the IRS.
We test each assurance vie under IRC 7702 before it goes on your US return.
From the year you leave France, Valim prepares your US tax returns, and we send your French accountant the figures they need.
- French bank accounts go on the FBAR in any year your combined foreign accounts pass $10,000, even for a day. Your assurance vie and PEA go on it too. Above its own, higher thresholds, Form 8938 lists them all, and we file both forms.
- We check whether each French fund is a PFIC and file its yearly Form 8621 where one is due. The instant quote prices your FBAR accounts, foreign funds and any company you own more than 20% of. Your assurance vie and PEA are priced in.
- Before you leave, we estimate the US tax a later sale of your shares would bring. We set it beside your French accountant’s exit tax figure, so you can time the sale.
- We claim the US credit on Form 1116 for French income tax and France’s social levies, the CSG and CRDS. For French rent, we set your quarterly estimated tax payments.
- When your parents in France give you more than $100,000 in one year, we report the gifts on Form 3520.
- Your fee covers our reply if the IRS or a state queries a return we prepared, such as its treatment of your assurance vie.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
How does the treaty treat your French savings?
Do France and the USA have a tax treaty?
Yes: the US-France tax treaty on income has been in force since December 30, 1995, and a 1978 treaty covers estate and gift tax. Protocols in force since December 21, 2006, and December 23, 2009, rewrote parts of the income treaty, pensions included. Its saving clause runs one way. Only the US reserves the right to tax its own residents and citizens regardless of the treaty, subject to listed exceptions.
How can US expats avoid double taxation?
The treaty and the US foreign tax credit stop most double taxation for someone who has moved from France. As a US resident, by green card or by day count, you report your French income on your US return. Where both countries may tax, as with French rent or dividends, the US credits the French income tax against its own, within limits. France’s social levies, the CSG and CRDS, can earn the credit too. Since a 2019 understanding with France, the IRS will not challenge that credit on the ground that the totalization agreement covers them.
What happens to my PEA when I move to the US?
A PEA, the French share savings plan, stays open when you move to the US. A withdrawal before its fifth year still closes it, with a few exceptions. France largely stops taxing it: as a non-resident, your gain on a withdrawal or closure is outside French income tax and social levies. No treaty article covers a PEA, so the US generally taxes the dividends and gains inside it as they are realized. Each fund inside is usually a PFIC, which generally means a separate Form 8621 each year, and the account goes on the FBAR.
Sources
- US-France income tax convention (1994)
- Protocol to the US-France convention (2004)
- Protocol to the US-France convention (2009)
- Treasury, technical explanation of the 2004 US-France protocol
- Protocol to the US-France estate and gift tax convention (2004)
- Légifrance, Code général des impôts, article 4 B (tax domicile)
- Légifrance, Code général des impôts, article 167 bis (exit tax)
- DGFiP, notice for form 2074-ETD (2026)
- impots.gouv.fr, declaring income for the year you leave France
- impots.gouv.fr, non-resident withholding on salaries and pensions
- BOFiP, levy on assurance vie gains paid to non-residents
- impots.gouv.fr, assurance vie withdrawals by non-residents
- impots.gouv.fr, investment income of non-residents (form 5000)
- BOFiP, the PEA after a move abroad
- BOFiP, withholding on dividends paid abroad
- Service-Public.fr, Plan d’épargne retraite (PER) (F34982)
- Service-Public.fr, early release of employee savings (F31622)
- Service-Public.fr, social levies on investment income (F2329)
- impots.gouv.fr, gift rules for non-residents
- impots.gouv.fr, what you can give your children free of gift tax
- BOFiP, BOI-ANNX-000508, states with assistance agreements (2025)
- impots.gouv.fr, exemptions on a non-resident’s property sale
- Social Security Administration, US-France social security agreement
- IRS, Totalization agreements (CSG and CRDS)
- IRS, Publication 519 (2025), U.S. Tax Guide for Aliens
- 26 U.S.C. § 7702, Life insurance contract defined
- 26 U.S.C. § 4371, Imposition of tax (policies issued by foreign insurers)
- IRS, Rev. Proc. 2003-78
- IRS, Exemption from section 4371 excise tax
- IRS, Instructions for Form 720 (Rev. June 2026)
- 26 U.S.C. § 1297, Passive foreign investment company
- 26 C.F.R. § 1.1298-1, Section 1298(f) annual reporting for PFIC shareholders (Form 8621)
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- IRS, Instructions for Form 8938
- IRS, Instructions for Form 3520 (Rev. December 2025)
- 26 U.S.C. § 901, Taxes of foreign countries
- 26 C.F.R. § 1.901-2, Income, war profits, or excess profits tax paid or accrued
- IRS, Notice 2011-64 (treaties that qualify dividends)
- 26 U.S.C. § 1012, Basis of property: cost
- 26 U.S.C. § 102, Gifts and inheritances
Reviewed and updated October 2026. General information, not advice for your situation.