“Kathleen, I have received your newsletter for a number of years now and would like to ask a question. In spite of considerable independent research, I have not been able to gain sufficient information regarding the financial consequences of a U.S. citizen’s opting for permanent residence in France. My fear is that I would lose far too much of my retirement income, which is in U.S. dollars, to the French taxation system. Can you shed some light on this issue?”
–Susan D., United States
If your retirement income is simply Social Security income, it would be taxed in the United States (the same as it would were you living in the United States) and not in France. If your retirement income is other pensions, then it would be taxed in France and not in the United States. That’s thanks to the tax treaty between the two countries.
If you have investment income from dividends and interest, that would fall under the tax treaty, as well.
The bottom line is that a move to France should be a tax-neutral event for a typical retiree. The exception would be if you were earning income while living in France, in which case your French tax bill would likely be greater than your U.S. tax bill would be on the same income, thanks to the French social charges.
On the plus side, property taxes in France are generally less than they would be most places in the United States.
For information on the tax treaty between the United States and France, you can go here.
Keep some aspirin handy for the headache you’ll get wading through all this.