France-U.S. Tax Treaty: Who Taxes What for a French Resident?
The tax treaty signed on August 31, 1994, between France and the United States specifies, for each type of income, which country may tax an investor domiciled in France.
Rental income and capital gains from land located across the Atlantic are taxable there first.
The French tax authorities also tax them, then deduct the U.S. tax: you never pay twice.
A second agreement, dated November 24, 1978, covers estates and gifts. Here are the relevant articles, a table showing “what is taxed on what,” and a step-by-step calculation.
In a nutshell
- Signed in Paris on August 31, 1994, the agreement has been in effect since December 30, 1995; it was amended by two addenda, in 2004 and 2009 (BOFiP).
- Rental income and capital gains from a building or land located in the United States are taxable there (Articles 6 and 13).
- For capital gains on real estate, the tax authorities credit the tax paid in the United States, up to the amount of their own tax (Article 24).
- In France, capital gains on real estate are subject to a 19% income tax and a 17.2% social security contribution, with no tax deduction until the sixth year of ownership (service-public.fr, 2026).
- Dividends paid by a U.S. corporation are subject to a withholding tax of no more than 15% for individuals (Section 10).
- Upon the death of a foreign national who does not live in the United States, the IRS requires Form 706-NA if the deceased has $60,000 or more in assets located in the United States (IRS, 2026).
What is the France-U.S. Tax Treaty?
This is a treaty concluded between the Government of the French Republic and the Government of the United States of America.
Its title states that it is concluded “for the purpose of avoiding double taxation and preventing tax evasion and tax fraud with respect to taxes on income and wealth.”
It replaced the convention of July 28, 1967.
A first amendment was signed in Washington on December 8, 2004; a second was signed on January 13, 2009, and has been in effect since December 23, 2009.
Without a treaty, both countries could tax the same gain: the country where the income is generated and the country where the investor resides.
The law allocates the right to tax and limits its benefits to beneficiaries who meet its requirements (Article 30), in order to combat tax evasion and tax fraud.
These dates are listed in the official BOFiP commentary, which was updated in 2020.
The consolidated version is available on the tax treaties page of impots.gouv.fr.
Which taxes are covered?
In France, Article 2 covers income tax, corporate income tax, payroll tax, and the solidarity tax on wealth.
Under the provision extending the rule to identical or similar future taxes, the BOFiP adds the CSG, the CRDS, and the IFI to the list.
This provision explains why social security contributions are included in the calculation of French taxes.
At the federal level, only income taxes collected by the federal government are covered, excluding social security contributions.
Local taxes in each state—such as the one where your property is located—are not included.
Are you a resident as defined by the convention?
Yes, if the law requires you to pay income tax based on your domicile or residence (Section 4).
In cases of dual residence, Article 4 determines the order of priority as follows: permanent residence, center of vital interests, habitual residence, and then nationality.
A special case is that of U.S. citizens residing here: Washington may tax them, just as it does all its citizens, as if the convention did not exist (Article 29).
This provision imposes heavier tax obligations on these citizens; they are not addressed here.
Who sets the rules between France and the United States?
The treaty does not create any taxes. For each type of income, it specifies which country has the right to tax it first, and then how the country of residence eliminates double taxation.
The table below provides an overview.
| Income or property of a taxpayer domiciled in France | Which one comes first? | What the Tax Authority Does | Article |
|---|---|---|---|
| Rent for a building located in the United States | USA | Includes them in the calculation of the rate, then offsets its own tax (effective rate) | 6 and 24 |
| Capital Gains on the Resale of Real Estate or Land | USA | Taxes the capital gain and credits the U.S. tax, up to the amount of its own tax | 13 and 24 |
| Capital gain on shares in a “partnership” that owns real estate in the U.S. | USA | Same rule as for the property itself | 13 and 24 |
| Dividends from a U.S. Company | U.S., 15% maximum for an individual | Taxes the dividend and credits the U.S. withholding tax, capped at its own tax | 10 and 24 |
| Real estate portfolio located in the U.S. | No federal wealth tax is involved | Submits it to the IFI | 23 and 24 |
| Inheritance or Gift of Real Estate Located in the United States | USA | Taxes the entire estate, then deducts the U.S. estate tax, up to the limit of its own | 1978 Convention, Articles 5 and 12 |
Sources: Agreements dated August 31, 1994, and November 24, 1978, as amended (impots.gouv.fr).
How does the tax treaty eliminate double taxation?
Income earned abroad—in this case, from a U.S. source—must still be reported in France.
Tax paid to the IRS is not deductible: the treaty provides that it may be credited against French tax in two ways (Article 24).
For Rent: The Effective Rate Rule
The tax credit granted is equal to the French tax corresponding to these rents.
So they aren't taxed a second time, but they do increase the tax rate applied to your other earnings.
That is what ensures the progressive nature of the tax scale.
For capital gains and dividends: a capped credit
For capital gains on real estate (Article 13, paragraph 1) or dividends, the amount credited is equal to the tax paid to the IRS, but may not exceed the French tax on that same gain.
Only the tax “actually paid in full” counts; advance payments do not.
Information sheet 2047 on impots.gouv.fr (2025 income) specifies that the French tax generally refers to income tax plus social security contributions.
If the amount paid to the IRS exceeds this limit, the excess is not applied to anything else and is not refunded.
Example with figures: Capital gains on land sold after 5 years
An investor residing in Lyon purchases land in the U.S., either directly or through a structure that is transparent on both sides.
He sold it five years later for a profit of 40,000 euros (amounts converted to euros).
Assumption: Once the federal tax return is filed, the final tax paid to the IRS amounts to 6,000€.
| Step | Calculation | Amount |
|---|---|---|
| Gross Capital Gain | Sale price – purchase price | 40 000€ |
| Final Federal Tax (Hypothetical) | After filing Form 1040-NR | 6 000€ |
| Tax Deduction Based on Holding Period | 0% for up to 5 years | 0€ |
| Capital Gains Tax | 40,000 × 19% | 7 600€ |
| Social Security Contributions | 40,000 × 17.2% | 6 880€ |
| Total due before allocation | 7,600 + 6,880 | 14 480€ |
| Allocation of the Federal Tax (Section 24) | €6,000 paid, with a cap of €14,480 | -6 000€ |
| Amount still owed to the French government | 14,480 – 6,000 | 8 480€ |
| Total load | 6,000 + 8,480 | 14 480€ |
The 19% rate, the 17.2% rate, and the lack of a deduction before the 6th year are taken from the real estate capital gains fact sheet on service-public.fr, verified on April 15, 2026.
Keep this in mind: you pay the higher of the two amounts, never the sum of the two. In this case, the French level takes precedence.
At the time of sale, the buyer generally withholds 15% of the price as a FIRPTA withholding. This is only a down payment: our article on the FIRPTA withholding explains how it is settled.
The calculation of federal tax itself is explained in detail in our guide to federal taxation for foreign investors.
On this side of the Atlantic, capital gains must be reported within one month of the sale on Form 2048-IMM, with the allocation determined by the treaty.
This is what the page on impots.gouv.fr states regarding the sale of property located outside France.
What if you go through a project management firm?
Many real estate transactions involve an LLC (limited liability company).
When it is structured as a “partnership” in the United States, its profits are distributed among its partners, each of whom receives a K-1 form.
The agreement takes this into account: the partner is deemed to have earned his or her share of the profits, of the same nature and origin (Article 7, paragraph 4).
The capital gain on the resale of the land therefore retains its real estate character.
For a company, the general rule is different: its profits are taxable only in its home country, unless it has a permanent establishment in the host country (Article 7).
However, income derived from a company’s real estate remains governed by Article 6 (paragraph 4).
Interests in a “partnership” that derive their value from real property located in the United States are also taxable there (Article 13, paragraph 2).
According to the IRS page on withholding for “partnerships, ” when such a partnership receives income from a U.S. source, it withholds tax on the share of its foreign partners (Section 1446).
That leaves the question of whether the company is transparent. The two tax authorities may give different answers.
It all depends on the characteristics of each LLC (Section 4, paragraph 3), and this affects how your income is taxed.
Our guide to forming an LLC in the United States provides details on these structures. A holding company that reinvests proceeds from a sale must also comply with the rules governingthe 150-0 B ter contribution-and-sale arrangement.
What does the convention provide for regarding inheritance and gifts?
The Franco-American Convention of November 24, 1978, on Inheritance and Gifts, as amended in 2004, applies to the federal inheritance and gift tax and to French transfer taxes (Article 2).
For a deceased person or a donor residing in France:
- Real estate is taxable where it is located, including shares in a corporation at least 50 percent of whose assets consist of real estate (Article 5);
- other shares and claims are recognized only in the State of domicile or nationality (Article 8);
- Paris taxes the entire estate, then deducts the tax paid to the IRS on those assets, up to the limit of its share (Article 12);
- The IRS grants a unified credit calculated on a pro rata basis based on the value of the assets located in the United States within the total estate (Section 12).
The IRS page on estates of nonresidents requires Form 706-NA when these assets exceed $60,000 at the time of death.
Our guide to investing in the U.S. incorporates these rules into a wealth-transfer strategy.
Is land in the United States subject to the real estate wealth tax (IFI)?
Yes, if your net taxable real estate assets exceed €1,300,000 as of January 1, 2026.
A taxpayer domiciled in France reports his or her real estate located in France and abroad, including shares in companies to the extent of their real estate assets.
This is what the IFI fact sheet on service-public.fr states, as verified on March 6, 2026.
With regard to assets, the tax treaty provides that Washington may tax such property (Article 23).
However, it does not affect any federal government wealth tax: nothing is offset, and the IFI remains payable in full.
What are the reporting requirements on both sides of the Atlantic?
These reporting requirements don't end with payment: each country has its own forms.
| Where | What You Report | Document |
|---|---|---|
| USA | Rent and capital gains from a property located on-site | Form 1040-NR, the Federal Tax Return for Nonresidents |
| USA | Dividends at a reduced rate of 15% | Form W-8BEN submitted to your bank |
| France | Income from Foreign Sources and Allocation | Tax Return 2047, then 2042 C (box 8TK for property income) |
| France | Capital gains on real estate in the U.S. | 2048-IMM, within one month of the sale |
| France | Real estate assets exceeding the threshold | IFI Declaration |
For dividends from publicly traded real estate investment trusts, see our article on REITs and their tax treatment.
Investing in Real Estate in the United States with LandQuire
LandQuire, founded in 2021 by Romain Daniellou and Thibaut Guéant, has completed 50 real estate projects in the United States, 37 of which have been sold.
It buys land on the outskirts of growing cities, obtains development permits, and then resells it to American builders.
Each site is managed by a dedicated project company, established for a term of 5 years, which may be extended by one year.
The grant amount is $100,000 per project; the costs are included in each project's budget.
Tax matters for project companies are handled by an independent CPA (certified public accountant), and each investor receives a K-1 form each year.
LandQuire project companies are LLCs that are taxed as “partnerships” in the United States, which is why the K-1 form is sent.
Recent offerings are made, under Regulation S, to investors who do not reside in the United States.
This investment is illiquid until it is sold, is exposed to the U.S. dollar, and carries a risk of loss.
It is essentially a niche area of estate planning. Have your situation reviewed by a tax advisor who is familiar with both countries.
Frequently Asked Questions
What is the France-U.S. Tax Treaty?
This is the tax treaty signed on August 31, 1994, by the Government of the French Republic and the Government of the United States of America.
It divides the authority to tax income and wealth between the two countries.
It prevents double taxation, most often through a tax credit granted by the country of residence.
Are rental income from a property located in the United States subject to taxation in France?
They are taxable locally (Article 6). On your tax return, they are listed, but the corresponding tax is offset.
They are used solely to determine the tax rate applied to your other income.
How is capital gain on land taxed in the U.S.?
It is taxable there (Section 13) and also in your country, at a 19% income tax rate plus 17.2% in social security contributions.
The tax authority credits the amount paid to the IRS, up to the limit set by the IRS: you pay whichever of the two amounts is higher.
What is the withholding tax on dividends from a U.S. company?
Up to 15% of the gross amount for an individual, if you submit Form W-8BEN to your bank (Section 10).
Since dividends are also taxable in France, they are then subject to the single flat-rate withholding tax, with a cap on the amount that can be credited against that tax.
How is an investment through an LLC taxed?
An LLC that is taxed as a "partnership" passes its income to its members, who receive a K-1.
In France, the procedure depends on the company's specific circumstances: have it reviewed by a legal advisor.
What happens upon death with regard to property located in the U.S.?
If on-site assets exceed $60,000, the 706-NA form is required.
Under the 1978 agreement, Washington is allowed to levy a tax on real estate. Paris then deducts this tax from its inheritance tax, up to the amount of its share.
Is land in the U.S. subject to the IFI?
Yes, for a taxpayer domiciled here whose net real estate assets exceed €1,300,000 as of January 1, 2026.
Shares in companies are valued based on the value of their real estate assets.
Are you planning a real estate investment in the United States and want to understand the tax implications?
Explore our real estate opportunities in the United States or talk to the LandQuire team to find out if a project is a good fit for your portfolio.
This article is for informational purposes only and does not constitute personalized tax, legal, or investment advice.
The tax rules and treaties cited are those in effect as of the date of this update. You should consult a tax advisor familiar with both countries to assess your specific situation.
Any investment carries the risk of capital loss. A real estate investment ties up your money for several years.