French Investors: US Investment Guide
Comprehensive tax treaty, no capital controls, and E-2 visa eligibility for French nationals
France Investment Overview
Tax Treaty
Dividend Rate
Visa Eligible
Capital Controls
France maintains a comprehensive tax treaty with the United States dating from 1994, providing French investors with reduced withholding rates and estate tax protections. As an EU member, France imposes no capital controls, and French citizens qualify for E-2 treaty investor visas to live and work in the US.
France-US Tax Treaty
Withholding Rate Reductions
The France-US Income Tax Treaty (1994, amended 2009) provides:
| Income Type | Standard Rate | Treaty Rate | Notes |
|---|---|---|---|
| Dividends (portfolio) | 30% | 15% | Under 10% ownership |
| Dividends (participation) | 30% | 5% | 10%+ corporate owner |
| Interest | 30% | 0% | Generally exempt |
| Royalties | 30% | 0% | Generally exempt |
Estate Tax Treaty
The France-US Estate Tax Treaty provides crucial protections:
Treaty Benefits
- Pro-rata unified credit available
- Marital deduction for transfers
- Credit for French droits de succession
- Eliminates most double taxation
French Considerations
- France taxes worldwide estates
- Droits de succession up to 45%
- Coordinate with US planning
- Consider SCI structures
Tax Credit Mechanism
France provides credits for US taxes paid:
| Income Type | French Treatment |
|---|---|
| US rental income | Credit for US federal and state tax |
| US dividends | Credit for 15% withholding |
| US capital gains (real estate) | Credit for FIRPTA tax paid |
| US business profits | Exempt in France if PE exists |
Capital Controls
EU Free Movement of Capital
France, as an EU member, guarantees free capital movement:
No Restrictions
- Unlimited investment abroad
- No pre-approval requirements
- No foreign currency limits
- Free repatriation of returns
Reporting Requirements
- Form 3916 for foreign accounts
- Form 2047 for foreign income
- IFI declaration (wealth tax)
- Tracfin for AML compliance
Entity Formation
Recommended Structures
French investors should consider these options:
US LLC (SMLLC)
- Disregarded for US tax
- France may treat differently
- Good for real estate
- Check French transparency rules
US C-Corporation
- 21% US corporate rate
- 5-15% dividend withholding
- Clear French treatment
- Best for active business
French SAS + US Sub
- French holding company
- 5% dividend rate eligible
- Parent-subsidiary directive
- Good for multiple investments
SCI for Real Estate
- Civil real estate company
- Owns US LLC
- Estate planning benefits
- French succession advantages
US Real Estate Investment
Tax Treatment
| Tax Type | US Treatment | French Treatment |
|---|---|---|
| Rental income | Up to 37% (elect ECI treatment) | Credit for US tax paid |
| Capital gains | FIRPTA 15% withholding | Credit, but French tax may apply |
| Wealth tax (IFI) | N/A | Real estate assets included |
| Estate tax | Treaty relief | Credit for US tax paid |
Popular Markets for French Buyers
New York
- Strong French community
- Cultural familiarity
- High property values
- Direct Air France flights
Florida
- No state income tax
- Vacation property potential
- Growing French expat community
- Miami international hub
California
- Tech and entertainment
- Strong appreciation
- High state tax (13.3%)
- Los Angeles, San Francisco
Texas
- No state income tax
- Growing markets
- Lower entry prices
- Business-friendly
E-2 Treaty Investor Visa
E-2 for French Nationals
French citizens are eligible for E-2 treaty investor visas:
Requirements
- Substantial investment ($100K+ typical)
- Active business (not passive)
- Majority ownership (50%+)
- Direct and develop business
- More than marginal enterprise
Benefits
- 5-year initial term
- Renewable indefinitely
- Spouse can work (EAD)
- Children can attend school
- Apply at Paris Embassy
French Tax Reporting
Required Declarations
French tax residents must report worldwide assets and income:
Annual Forms
- Form 3916: Foreign accounts
- Form 2047: Foreign income
- Form 2042: Main declaration
- IFI if wealth over 1.3M EUR
Penalties
- 1,500 EUR per unreported account
- 10,000 EUR if in non-cooperative state
- Additional tax penalties possible
- Criminal prosecution for fraud
Frequently Asked Questions
How does France treat US LLCs?
France may classify US LLCs as opaque (corporate) rather than transparent, depending on their characteristics. This can lead to different tax treatment than expected. A single-member LLC might be treated as a branch, while multi-member LLCs may be treated as corporations. Careful structuring and French tax advice is essential.
Is US real estate subject to IFI?
Yes, French wealth tax (IFI - Impot sur la Fortune Immobiliere) applies to real estate worldwide, including US property. The tax applies to net real estate assets over 1.3 million EUR at rates from 0.5% to 1.5%. Property held through companies is also included.
Can I use an SCI for US real estate?
Yes, a French SCI (Societe Civile Immobiliere) can own US real estate, typically through a US LLC. This structure can provide estate planning advantages under French succession law, but adds complexity and costs. The SCI itself does not reduce US taxes.
What about the exit tax if I move to the US?
France has an exit tax on unrealized gains in securities when leaving France. If you hold significant shares in a French company and relocate to the US, taxes may be deferred but eventually due. The US treaty has provisions, but pre-move planning with both French and US advisers is essential.