Tax lawyer France – USA and cross-border tax control
An expertise dedicated to Franco-American tax issues
Tax situations between France and the United States are among the most complex in international taxation. Installation in the United States, return to France, double residence, U.S. income, financial accounts held abroad, cross-border investment or professional activity in both countries: each situation involves the articulation of two tax systems based on different principles.
Complexity is reinforced by U.S. rules based, in certain situations, on the citizenship or tax status of the taxpayer, regardless of his or her place of residence. A person living in France may thus remain subject to certain U.S. tax obligations, while an U.S. resident with income or assets in France may be required to comply with reporting obligations in both states.
The firm supports individuals, executives, investors and companies facing tax issues between France and the United States. Its intervention aims to determine the applicable rules, prevent double taxation, secure reporting and anticipate the risks of cross-border tax control.
Tax residence between France and the United States
Determining the Tax Status of the Taxpayer
The determination of tax residence is the first step in any Franco-American analysis. The French and American internal rules may lead both countries to treat a person simultaneously as a tax resident.
The tax convention between France and the United States provides criteria for resolving residential disputes in certain situations. The analysis takes into account the permanent home, the centre of vital interests, the usual place of residence and nationality.
The firm intervenes to secure departures from France, facilities in the United States, returns to France and situations in which a taxpayer retains personal, professional or property interests in both countries.
Anticipating the consequences of an expatriation or return to France
A change in tax residence may change the treatment of wages, capital gains, financial income, executive remuneration or assets. Certain transactions before or after the transfer of residence may also have significant tax consequences.
A prior analysis allows for the organisation of international mobility, the verification of reporting obligations and the identification of possible risks related to the calendar of business or heritage operations.
Taxation of French-American income and heritage
Professional and financial income
Taxpayers may collect income from France and the United States: wages, self-employment income, executive remuneration, dividends, interest, capital gains, retirement pensions or real estate income.
The place of taxation depends on the nature of the income, its source, the status of the taxpayer and the applicable treaty provisions. Tax credit or exemption schemes may limit double taxation, provided that the returns are correctly drawn up in each country.
The firm analyses the tax treatment of cross-border revenues and assists its clients in securing their French obligations, in coordination, where necessary, with American councils.
Investments and assets held in the United States
Holding bank accounts, financial portfolios, corporate interests, real estate or investment contracts in the United States may result in specific obligations in France.
Conversely, US residents or citizens holding French assets may be subject to specific US rules. Certain current investments in one country may be subject to unfavourable or complex tax treatment in the other.
It is therefore essential to analyse the tax consequences of an investment before it is made, but also to check regularly the conformity of structures and investments already held.
Reporting obligations and exchange of information
Reporting of foreign accounts and assets
French tax residents may be required to report certain bank accounts, financial contracts or structures held abroad. Failure to report may result in fines, an extension of re-entry periods and, depending on the circumstances, tax recalls with increases.
At the same time, taxpayers with ties to the United States may be subject to US obligations relating to foreign financial accounts and assets. These obligations must be addressed in a coordinated manner in order to avoid inconsistencies between the declarations filed in both countries.
FATCA and Franco-American Cooperation
The mechanisms for information exchange have considerably increased tax transparency between France and the United States. Under FATCA, financial institutions provide certain information about taxpayers with tax links with the United States.
These exchanges make it easier for administrations to identify undeclared accounts, differences in income reported in each country or foreign structures whose tax treatment has not been properly assessed.
Cross-border tax control France – USA
Anticipating tax administration applications
A tax check on a Franco-American situation may concern tax residence, the origin of the funds, foreign income, bank transfers, accounts held in the United States or interests in American companies.
The administration may request bank statements, foreign declarations, contracts, proof of residence and documents relating to investments made. The consistency of the information transmitted to the French and American administrations is decisive.
The firm intervenes upstream to conduct a compliance audit, identify risk areas and prepare documents that may be requested.
Assistance and defence in fiscal control
In case of control, the firm accompanies the taxpayer in its dealings with the French tax administration. It analyses requests, prepares responses, challenges unjustified corrections and ensures the proper application of the Franco-American tax convention.
Where a reorganization results in taxation in both countries, specific procedures may be considered to seek the elimination of double taxation. The strategy must be constructed taking into account the time limits and procedures applicable in each State.
Customised tax support France – USA
Each Franco-American situation has specific characteristics related to nationality, residence, the nature of income, assets held and taxpayer's plans. Personalized analysis is essential to ensure compliance and to limit tax risks.
Grâce à une pratique exclusivement consacrée à la fiscalité internationale, le cabinet accompagne ses clients dans la structuration de leurs opérations entre la France et les États-Unis, la régularisation de leurs obligations déclaratives et leur défense dans le cadre des contrôles fiscaux transfrontaliers.
