Income Tax Planning. We are always alert to changes or upcoming changes in the U.S. and French tax laws that affect our clients' fiscal well being. We believe that there is no substitute for timely tax planning. Included in our services are:
- Tax planning before you make a temporary or long-term move to France
- Application of tax treaty allowances, foreign tax credits, tax exemptions and deductions
- Analysis of your investment holdings in the U.S. or abroad for their French income tax consequences
- Analyze IRA and other retirement plans in the U.S. and France
- Analyze your small business structure or proposed business plan (corporation, self-employed, partnership) and explain the income tax (as well as estate planning) pros and cons of each, recommending changes where appropriate and cost-effective
- Analyze special planning needs and existing structures of high net worth individuals (family partnerships, charitable reminder trusts, family trust arrangements, etc.) to determine their tax validity in France.
- Identify “PFIC”s , such as “assurance vie”, and explain how these tricky rules work. ( PFIC stands for Passive Foreign Investment Company)
- French stock options
- Analyze and advise on the special tax problems of an executive domiciled in France for income tax purposes but who works in another country (e.g., England), and pays income tax in the other country.
- Special needs of retired individuals
French Wealth Tax Planning
- Explaining the mechanics of the French wealth tax (ISF)
- Advance planning prior to your feeling its full impact. ISF planning may be critical for Americans after their 5th full year of French tax residence.
- Analyze impact of the U.S.-France income tax treaty on the ISF
- The use of trusts or other vehicles to minimize the ISF.
- ISF non-filers: Considering the options; avoidance of penalties
- Identifying exempt assets, such as business interests, art and antiques.
- Assistance with property valuation issues.
- Representation at wealth tax audits.
- Explaining how the 5-year exemption period may be re-started.
Special Tax Problems of High Net-Worth Individuals
High Net-Worth Individuals in France frequently face special tax problems. Our firm specializes in assisting with:
- Income tax planning, wealth tax planning and estate planning have special meaning for the high net worth individuals
- We analyze and/or draft U.S. trust provisions in order to determine their taxability in France
- We advise on the tax implications of anticipated legacies or gifts from abroad.
- We help maximize the potential of the treaty-based 5-year exemption from the French wealth tax (ISF)
- We work with French Notaires to revise marital contracts so as to harmonize the U.S. and French tax result at death
- We set up holding company structures for ownership of French real estate and U.S. real estate
- In general, we help the high net worth individual to understand the interplay of the two tax systems and to avoid paying more tax than is necessary
- We help the high net worth individual to decide whether to become a tax resident of France. The first order of business is to explain and elucidate how the French tax system works, how it impacts on compensation, investment holdings, compensation holdings, pension holdings, real estate holdings, anticipated gifts and bequests of the individual or the couple, how it may affect existing or proposed estate plans. Have you provided in your will for persons outside your immediate family? How will the French inheritance tax affect those gifts? Indeed, may any of those gifts be challenged by your children under the French forced heirship rules? What about generation skipping trusts, family partnerships, charitable remainder trusts, and other U.S.-based planning tools that are already part of your estate plan? Are you engaged in a systematic gift plan to children? How will that be affected? Do you have asset holdings in more than one country? How does the French wealth tax apply to those holdings? We can assist you to understand all of these vital areas, to identify issues as they pertain to your situation, and to create tax positions that will focus the matrix of interconnected issues and, where possible, avoid unwanted results. Pre-move planning is of course best, but if that is not possible under the circumstances, post-move re-arrangement of investments, re-casting of compensation arrangements, modification of testamentary or trust arrangements, and other permissible actions, some large and some small, will have a cumulative impact on the bottom line. It goes without saying that preparation of correct income tax returns is indispensable to presenting the best possible profile to the tax authorities, taking tax-saving positions that, while aggressive in some cases, are defensible in the event of audit.
Retiring in France
Retiring in France or otherwise moving to France for non-working purposes? We can make the transition more manageable by:
- Obtaining the appropriate visa
- Tax planning - how to avoid income tax in France
- Filing French tax returns
- Estate planning - how to avoid inheritance tax if you decease during the first five years of your residency in France
- Explaining “wealth tax” consequences of living in France
- Assist in periodic transfers of U.S. pension funds to France
- The process usually begins with the visa and resident card, which we can help you obtain. We can help the retiree to France understand the tax environment that affects his or her situation, and to analyze and if necessary change his or her estate plan to accommodate the effects of the French law. Please do not believe that because your estate plan was "fixed in stone" before you entered France that the French tax and inheritance laws will not affect it. This is not the case at all! We can identify certain safe harbors - those provided by treaty - that give you up to five years breathing space in certain instances, but we will urge you to focus your attention on areas that may not be protected and, of course, to look further down the road when these treaty safe-harbors lapse.
Special U.S. Tax Problems
- U.S. beneficiaries of foreign trusts
- Renunciation of U.S. citizenship or Green Card status, including related U.S. tax filings
- PFIC issues (Passive Foreign Investment Company)