Accidental American (born in the United States): what investment options remain possible?

«"I was born in Boston, I've never been back, and my bank just asked me for an American form." This letter is not a check: it stems from the agreement between France and the United States, which obliges the institution to question its clients with a link to the United States.

1. FATCA: Why is your French bank writing to you?

A Franco-American agreement, implemented by French institutions

FATCA (Foreign Account Tax Compliance Act) is the US law that requires financial institutions worldwide to identify their US clients. The agreement between France and the United States was signed on November 14, 2013, and approved by Law No. 2014-1098 of September 29, 2014, published in the Official Journal on September 30, 2014. French institutions identify individuals exhibiting "indicators of US status," request self-certification, and report this information to the French tax authorities, who then forward it to the United States. Insurance contracts are affected: the surrender value is among the information transmitted.

The agreement requires’identify and declare. It does not require refusing a client. An insurer or bank that decides not to serve American citizens is making a business decision, which it must stand by and which you should be aware of before submitting an application.

For the technician. Agreement of November 14, 2013, "to improve compliance with international tax obligations and to implement FATCA"; report no. 2193 of the Finance Committee of the National Assembly (2014); law no. 2014-1098 of September 29, 2014, authorizing the approval of the agreement (Official Journal of September 30, 2014; text adopted by the Senate no. 165 on July 22, 2014). Article 1649 AC of the French General Tax Code (CGI) and BOI-INT-AEA-10-40 for the reporting obligations of French financial institutions. US withholding tax of 30% for institutions that do not participate.

2. What remains possible, and the two pitfalls

Trap 1: Funds established outside the United States

For the IRS (the U.S. tax authority), a foreign company is a PFIC (Private Foreign Investment Company) if at least 75% of its gross income for the year is passive, or if at least 50% of the average of its assets generates or is intended to generate passive income. A fund or SICAV (open-ended investment company) established outside the United States may meet these criteria: equity funds, ETFs (exchange-traded funds), and units of UCITS (Undertakings for Collective Investment in Transferable Securities). The qualification depends on each fund and is confirmed on a fund-by-fund basis by a U.S. tax advisor.

Consequences: one Form 8621 per PFIC per year, taxation of "excess distributions" and capital gains under Section 1291 (with late payment interest for previous years), unless the fund elects either the Qualified Electing Fund (QEF) option, which requires the fund to provide an annual statement to its unit holders, or the market valuation option for listed securities. An exception exists for small portfolios: if the total value of the PFICs held does not exceed 25,000 $ at the end of the year (50,000 $ for a couple filing jointly), and in the absence of excess distributions or capital gains on the fund, Part I of Form 8621 does not need to be completed for a fund subject to Section 1291. The other filing scenarios (distribution, sale with gain, QEF election, or market valuation) remain applicable.

Trap 2: French tax advantages are not American advantages

The Franco-American tax treaty of August 31, 1994, contains a safeguard clause: the United States may tax its citizens and residents "as if the treaty had not entered into force" (Article 29, paragraph 2). Therefore, exemptions granted by a French equity savings plan (PEA) or life insurance policy do not, in principle, protect you from US taxation. Article 24 of the treaty, however, provides for a US tax credit for French taxes paid. See the France-United States convention.

The accessibility of each type of investment from France depends on the institution. The US treatment of a foreign life insurance policy or capitalization contract depends on qualifications under US law that only a US tax advisor can confirm: this question must be addressed before subscribing.

3. American declarations of a French resident

Accounts opened in France are accounts foreigners From the American perspective, four obligations are cumulative, depending on the amounts.

• Income tax return (form 1040). Worldwide income. For a resident abroad, the deadline is automatically extended to June 15 (to October 15 upon request).
• FBAR (Report of Foreign Bank and Financial Accounts, FinCEN Form 114). As soon as the cumulative value of foreign accounts exceeds 10,000 $ at any time during the year. Deadline: April 15, automatically extended to October 15. A life insurance or annuity contract with a surrender value taken out with a foreign institution is also among the assets to be declared.
• Form 8938. For a resident abroad: more than 200,000 $ at year-end or 300,000 $ at any time during the year (single), more than 400,000 $ or 600,000 $ (married couple filing jointly). A life insurance or cash surrender value annuity contract taken out with a foreign institution is included (IRS comparative table).
• Form 8621 for each PFIC, with the income tax return.

Failure to file form 8938 exposes the taxpayer to a penalty of 10,000 $, increased for each thirty-day period following a formal notice, up to a maximum of 50,000 $ in additional penalties. The statute of limitations may remain open for up to three years after the form was filed. The exclusion of income from employment abroad applies only to income derived from employment; it does not disregard investment income.

Worked example

Situation. Resident in Lyon, American citizen by birth, single. A PEA invested in shares of funds established outside the United States, supposedly qualified as PFIC (120,000 $, converted value), a life insurance policy with surrender value (95,000 $), a savings account (20,000 $).

Issue. What US tax returns need to be filed for the year?

Strategy. Total foreign assets: 120,000 + 95,000 + 20,000 = 235,000 $. Form 8938 threshold for a single resident abroad: 200,000 $ at year-end. FBAR threshold: 10,000 $. Value of PFIC (assumption above): 120,000 $, exceeding the 25,000 $ threshold for the exception.

Result. Filing of declaration 1040, FBAR, form 8938 (235,000 $ > 200,000 $) and one form 8621 per fund. Illustrative example, calculated using the rules in effect on 23/10/2026, values assumed to be all converted into dollars at the closing date; to be confirmed by a US tax advisor.

4. Regularize, or abandon: order matters

If you have never filed a U.S. tax return, the Streamlined Foreign Offshore (SFAO) procedure is available to taxpayers who reside outside the United States and whose failure to do so is unintentional. This includes filing returns for the past three years, FBAOs for the past six years, and certification on Form 14653, without late payment penalties or on information forms, except in cases of fraud or intentional violation. The residency requirement is having spent at least 330 full days outside the United States, without having a residence there, during one of the past three years. This procedure is not available to taxpayers who are the subject of a tax audit or a criminal investigation. Tax and interest remain due.

Renouncing American citizenship This is an option, but it requires having certified on Form 8854 that all federal tax obligations for the previous five years have been met. Without this certification, the individual is considered a "covered expatriate." This is also the case if their net worth reaches $2 million, or if their average federal tax liability for the previous five years exceeds an indexed threshold (211,000 $ for an expatriation in 2026). Assets are then deemed to have been sold the day before expatriation, with an exclusion of 910,000 $ for 2026. Since April 13, 2026, the processing fee for an application to renounce U.S. citizenship (Certificate of Loss of Citizenship) is 450 $, down from 2,350 $ previously. Regularize your situation first, then decide.

For the technician. Nationality by birth: 8 USC § 1401(a). U.S. Internal Revenue Code, sections 1291-1298 for PFIC, sections 877 and 877A for exit tax (2026 values: Rev. Proc. 2025-32); forms 8621, 8938, 8854, FinCEN 114; IRS instructions for form 8621. Franco-American tax treaty of August 31, 1994, articles 24 and 29. French side: article 1649 AC of the French General Tax Code (CGI).

Frequently asked questions

Can my insurer refuse to issue me a policy because I am American?

This is a decision made by the institution, not a legal requirement: the FATCA agreement mandates identification and reporting. Ask the question before preparing your application, and request a written response.

Is a European ETF or UCITS fund a problem?

One such case is that a fund established outside the United States may qualify as a PFIC based on its income and assets, requiring annual Form 8621 and Section 1291 tax treatment unless elected. Below $25,000 $ of PFIC ($50,000 $ for a couple), Part I of the form may not be required, but other obligations remain.

I have never declared my income in the United States. What should I do?

Do not file anything before consulting with a U.S. tax advisor. The Streamlined procedure allows for regularization without penalty when the omission is unintentional and no audit is initiated; the tax and interest remain due.

To learn more: living in the United States, leaving France for the United States, return to France from the United States, accounts and contracts abroad, declare a life insurance policy opened abroad and Funds and SICAVs: fees and risks to read about.

Were you born in the United States and do you live in France?

The first interview lists your assets and contracts, identifies what is reportable and what needs to be restructured, and prepares the dialogue with your US tax advisor.

Are you a notary, chartered accountant, lawyer, or fellow consultant? And you are following a client affected by FATCA? We intervene in a joint venture on the architecture of the investments: the client remains yours.

Book an appointment

The initial consultation is to establish your exact situation and determine if there is anything that can be done—sometimes there is nothing, and we will say so as well. Thirty minutes, with no obligation.

Book an exchange with Balmont Conseil

Alexis Sagnier, financial and real estate investment advisor, insurance broker, AMF certified. ORIAS 13003497. Updated on 23/10/2026.

Official sources consulted

• IRS—Instructions for Form 8621 (PFIC)
• IRS—Instructions for Form 8938
• IRS — Comparison of Form 8938 and FBAR requirements
• IRS—Report of Foreign Bank and Financial Accounts (FBAR)
• IRS — US citizens and resident aliens abroad
• IRS — US taxpayers residing outside the United States (Streamlined Foreign Offshore Procedures)
• IRS — Streamlined filing compliance procedures
• IRS — Expatriation tax
• IRS — Foreign earned income exclusion
• IRS — France-United States Tax Convention of August 31, 1994 (text)
• US Code — 8 USC § 1401 (nationality at birth)
• IRS — Revenue Procedure 2025-32 (2026 values: exit tax)
• Federal Register — processing fee for certificate of loss of citizenship (March 13, 2026)
• Senate — legislative file for law no. 2014-1098 (approval of the FATCA agreement)
• BOFiP — FATCA reporting obligations (BOI-INT-AEA-10-40, article 1649 AC)
• National Assembly — Report No. 2193 on the Franco-American FATCA agreement
• Senate — adopted text no. 165 (July 22, 2014), approval of the FATCA agreement