France-United States Tax Treaty: Safeguard clause, tax credit and inheritance

Two conventions bind France and the United States: the convention of August 31, 1994, concerning income and wealth taxes, and the convention of November 24, 1978, concerning inheritance and gift taxes. The first contains, in Article 29, a safeguard clause: the United States may tax its citizens and residents as if the convention did not exist. This page presents the articles as read from the official source.

Two conventions, each amended in 2004

The administrative list (BOI-ANNX-000306, April 29, 2026) includes both texts. The United States is not included in the list of conventions modified by the multilateral convention (BOI-ANNX-000511). The 1994 convention applies only to residents of one or both states (Article 1). For France, it covers income tax, corporate tax, payroll tax, and wealth tax; for the United States, it covers federal income taxes, "excluding social security contributions" (Article 2).

The safeguard clause: what the United States keeps

Article 29, paragraph 2, stipulates that the United States "may tax its residents as defined in Article 4 (Resident) and its citizens as if the Convention did not exist." France reserves the right to tax entities whose place of effective management is in France.

Paragraph 3(a) removes several benefits from this mechanism: paragraph 3(a) of Article 13, paragraph 1 of Article 18 (pensions), and Articles 24 (elimination of double taxation), 25 (non-discrimination), and 26 (mutual agreement procedure), among others. According to this text, a U.S. citizen living in France therefore retains the tax credit under Article 24. The IRS specifies that U.S. citizens living abroad report their income as if they were residents of the United States.

The clause runs beyond the loss of status: a former citizen or long-term resident (permanent resident for at least eight of the last fifteen taxable years) can be taxed for ten years on source income in their state.

Resident: citizens, green card holders, and those eligible for tie-breaking.

Article 4, paragraph 2(a), establishes a rule for citizens and green card holders: France considers a U.S. citizen or green card holder to be a resident of the United States only if they reside there as their principal residence, or if they would be a resident of the United States and not of a third country under the principles of paragraphs 3(a) and 3(b). For a person resident in both countries, Article 4, paragraph 4, considers, in order of importance: permanent home; closest personal and economic ties (center of vital interests); habitual residence; nationality; and finally, an agreement between competent authorities. Legal doctrine clarifies that the concept of resident status under the convention takes precedence over domestic tax domicile (BOI-INT-DG-20-10-10).

Maximum deductions and key rules

Dividends. The 15 % threshold applies "in all other cases," therefore for an individual shareholder. For a distributing company resident in France, the minimum holding for the 5 % rate is 10 % of the share capital. The exemption under Article 10 § 3 requires holding at least 80 % for twelve consecutive months and compliance with the benefit limitation clause (BOI-INT-CVB-USA-10-30). For payments from the United States to a resident of France, IRS Table 1 (May 2023 edition) shows 15 % and 5 % on dividends, 0 % on interest, and on most royalty categories (the industrial equipment line is marked "n/a").

Wages. Article 15, paragraph 2(a), counts 183 days over "any twelve-month period beginning or ending in the relevant fiscal year." The calculation is not limited to the calendar year. Two additional conditions apply: the employer is not a resident of the other State, and the remuneration is not borne by a permanent establishment or fixed base.

Pensions. A pension is considered to originate from a state only when it is paid by a pension scheme established in that state. Social security is governed by a separate agreement, signed on March 2, 1987 (CLEISS).

Eliminating double taxation: Article 24

Resident of France. Income from US sources taxable in the United States is subject to French tax. US tax is not deductible, but entitles the taxpayer to a tax credit against French tax. This credit is equal to the corresponding French tax for most types of income. For dividends, interest, gains under Article 13 § 1, directors' fees, and income paid to artists and athletes, it is equal to the tax paid in the United States, but cannot exceed the corresponding French tax. The 2026 Income Tax Guide includes US income for salaries under this method; the tax return is filed using form 2047.

Resident of France and American citizen. Article 24, paragraph 1(b), extends the French tax credit to certain income from US sources. On the US side, Article 24, paragraph 2(b), provides for a deductible credit against French tax paid after the granting of the French credit, without reducing the portion of US tax creditable against French tax. The income covered is listed in the text.

Resident of the United States. The United States grants a deductible credit for French tax paid (Article 24 § 2 a)); the IRS indicates form 1116.

Inheritance and gifts: the 1978 convention

The administrative list indicates that the United States line item also covers inheritances and gifts. The scope (Article 1) covers the estates of individuals domiciled in France at the time of death, and those of individuals subject to US law "by virtue of their domicile in that country or their US citizenship." The taxes concerned are the US federal gift and inheritance tax, and French inheritance and gift taxes (Article 2). Three rules stand out:

• buildings are taxable by the State where they are located (article 5); ;
• Shares, receivables, other intangible assets and cash are taxable by a State only if the deceased or donor possessed citizenship or was domiciled there, and if its legislation taxes them (Article 8); ;
• The United States retains the right to tax the inheritance or gift of a U.S. citizen, a person domiciled in the United States, or a former citizen or long-term resident for ten years after a waiver for the purpose of avoidance (Article 1 § 4 a)).

When the deceased or the donor was domiciled in France, France taxes the entire asset and grants a deduction equal to the tax paid in the United States on the assets taxable in both States, up to the limit of the corresponding French tax share (Article 12 § 2 a)).

What this page does not cover

Articles 14, 16, 17, 19 to 22, 25 to 27, and 30 are not detailed. Article 23, paragraph 6, excludes assets located outside France from the tax base for the wealth tax of a US citizen without French nationality who becomes a resident of France on January 1st of each of the five calendar years; it concerns the former wealth tax (ISF); its application to the current real estate wealth tax (IFI) is not established here. State taxes and assurance-vie contracts are not addressed.

The 183 American days: a numerical example (fictional profile)

Situation. A fictional employee residing in France, employed by a French company, undertakes three assignments in the United States: 76 days from October 1 to December 15, 2025, 89 days from February 1 to April 30, 2026, 61 days from September 1 to October 31, 2026.

Issue. In the calendar year 2026, there are 89 + 61 = 150 days, which is 33 days below the threshold of 183 days.

Strategy. It recalculates over any twelve-month period beginning or ending in 2026, using for the sake of example the fiscal year in question as the calendar year 2026.

Result. The period from October 1, 2025, to September 30, 2026, totals 76 + 89 + 30 = 195 days, which is 12 days above the threshold. Calculating based on the calendar year is insufficient. The conditions relating to the employer and the responsibility for remuneration still need to be examined.

What changes depending on your situation

• Your nationality: American citizenship activates the safeguard clause, even for a resident of France.
• Your residence as defined in the convention, after the cascade of Article 4.
• The nature of the income and, for a dividend, your shareholding.
• The number of days spent in each state, and the location of your assets for inheritance purposes.

An article should be read in light of the facts in your case. Points of American law should be verified with an American professional.