The France-US tax treaty: residence, tax credits and US citizens

The rules that come up in our files

• Residence (article 4). An individual resident in both states is assigned, in this order, to the state of their permanent home, then their centre of vital interests, habitual abode and nationality (paragraph 4). France treats a US citizen or green card holder as a US resident only if they have their principal abode there, or would be a US rather than a third-state resident under those same criteria (paragraph 2).
• Dividends (article 10). The state of the paying company may withhold at most 15%, or 5% for a company holding at least 10% of the capital (France) or voting rights (United States), subject to specific rules for investment and real estate vehicles (REITs, SIICs, SICAVs) and to the limitation on benefits of article 30. A company holding at least 80% for twelve months may be exempt, under the additional conditions of paragraph 3.
• Interest (article 11). In principle taxable only in the state of residence of the beneficial owner. Interest determined by reference to the issuer's profits may also be taxed in the source state, up to 15%.
• Capital gains (article 13). Real estate gains, including on certain real-estate-rich companies and entities, are taxable in the state where the property is located, as are gains on the assets of a permanent establishment. Outside these cases and a few special regimes, capital gains, notably on shares, are taxable only in the seller's state of residence.
• Pensions (article 18). Social security benefits and pension plan distributions, including lump sums, are taxable only in the state where they arise. A 401(k) or IRA distribution paid to a French resident is therefore in principle taxable in the United States, France taking it into account to set the tax rate, with a credit equal to the corresponding French tax; the qualification of the plan and of the distribution is checked case by case.
• Pension contributions (article 18, paragraph 2). A non-French individual resident in France, employed or self-employed, who keeps contributing to a US plan they belonged to before arriving may deduct the contributions within French limits. The treaty deems US social security, 401(a) qualified plans, individual retirement plans (IRAs) and 403(a) and 403(b) plans to correspond generally to a French scheme; for other plans, the French competent authority must accept the correspondence. On the US side, Article 29(3)(b) limits this benefit for US citizens and green card holders.
• Elimination of double taxation (article 24). France taxes its residents on worldwide income and grants a credit: equal to the French tax for most income, equal to the US tax capped at the French tax for dividends, interest, certain capital gains, directors' fees and artists' income.

Five decisions that settle how the treaty is read

A treaty is read together with the decisions that applied it. These come up in the firm's files, from residence to the tax credit.

• Tax credit without any US tax paid. A French resident had worked more than 183 days in the United States without paying any US tax. The Conseil d'État held that the article 24 credit, equal to the French tax, is not conditional on the salary actually being taxed in the United States (CE, 29 June 2011, no. 320263).
• US partner in a French SCI. A US resident holding shares in an SCI that lets a property in France is taxable in France on their share of the result; neither article 4, paragraph 2, nor the treaty's other-income clause prevents it (CE, 13 February 2013, no. 342085).
• Permanent establishment in the United States. A French company owning businesses let under a management lease and then operated in the United States by a group company with its own means does not itself carry on a business there and has no permanent establishment within the meaning of article 5 (CE, 27 May 2020, no. 434412, Fromageries Bel).
• Classifying an LLC. For French tax purposes, a limited liability company whose members are liable only up to their contributions is treated, in the light of all its features, as a company limited by shares, in that case an SAS, not as a partnership; each LLC is assessed on its own terms (CE, 12 November 2025, no. 502894, Carmejane LLC).
• Residence: where the family lives. A taxpayer with a home in both countries, whose spouse and children live in the United States where he regularly joins them, has his permanent home there; and even assuming a home in both States, his centre of vital interests is there too, given his stays, activities and assets (CAA Bordeaux, 9 March 2004, no. 99BX01361, decided under the 1967 treaty and usefully transposable to the tie-breaker method of article 4 of the 1994 treaty).