Repatriate Renounce or Pay Up?
For those of you who either own a company outside of the US (like I do here in France) or are aspiring to do so (are you sure you want to do that? Let’s talk!), you need to know more about the US Repatriation Tax. American citizens are taxed on their citizenship, not their residency — the only country in the world to impose this form of taxation. (For a very interesting article on the history of this and why the US can’t nor won’t quit, visit nomadcapitalist.com/) And in spite of a tax treaty with France and many other countries around the world, we Americans not only have to file a tax return every year regardless of where our income is earned (if you aren’t doing that now, better start!), but now our companies are suffering from the long arm of the IRS law. This Repatriation Tax is levied on shareholders of foreign corporations on their share of post 1986 earnings and profits.
This doesn’t only apply to the big guys: Microsoft, Apple, Starbucks, McDonald’s, etc., etc., etc. (the list is too long, considering the US is the number one investor in France with an 18 percent share of all foreign investment and a 21 percent job creation!), but it applies to us little guys, too…we individual expats who are resident in France and simply trying to eke out a living. So, while our corporate tax bill to France is already very hefty (33.3 percent, planned to be reduced to 28 percent by 2020), it doesn’t stop the US from dipping into our company coffers for even more. The only real way out of this and the obligation to pay tax on your worldwide income as long as you’re holding a US passport is by renouncing your American citizenship altogether. Last year was the third record-breaking year in a row for Americans renouncing their citizenship — believe it or not, more than 5,400 of us expats said so-long to Uncle Sam. It’s not a surprise why.
I don’t need to consult the statistics to tell you that the number of Americans moving to France has significantly increased since the last election. We’ve never been so busy assisting people in making the move, finding property to rent or buy and consulting with them on how they can earn a living here. The French consulates have become so overwhelmed that they are now farming out the issuance of visas to VFS Global, a subcontractor — the visas being finally processed by the Consulate general of France in Washington. Even getting appointments with the VFS isn’t that easy. (See france-visas.gouv.fr/ for more information).
The overwhelming reason is largely political (that’s what our clients tell us) combined with the advent of a new and improved lifestyle and a lowered cost of living, regardless of how much additional tax they might pay as a result (although the French don’t tax retirement/pension income earned in the US).
I’ve been in the process of amassing the documents to apply for my own French citizenship ever since Donald Trump was elected president and at the same time there was the threat of the National Front’s Marine Le Pen being elected to the French presidency. I feared a potential immigration issue on the French side (would Marine deport me because I am an immigrant, even if a fully legal one?) and a need to renounce my US citizenship on the US side, so I started the process by sending a hefty check to a our favorite immigration attorneys to prime the pump. By committing to them, it meant making a commitment to myself, too…but, I must confess that since Emmanuel Macron was elected to the highest office in France and thereby removing my fear of deportation, I’ve been lax in getting my application together. Now with the Repatriation Tax looming over my head, I guess I better get moving on the French passport so that I will have the choice…if necessary.
Don’t take this to mean that I’m seriously considering such a drastic move, but something needs to be done by expats to battle the unfairness of citizenship-based taxation and here’s a golden opportunity. If you want to learn more about the Repatriation Tax, this is your chance to participate in a Webinar on Monday, October 8, 2018: “Repatriation tax filing deadline, what to do?” Hosted by Monte Silver. This webinar is intended for people facing Repatriation Tax issues, both US tax professionals, and US persons with holdings in foreign companies.
The webinar will discuss:
1. Overview of the Repatriation tax-related October 15, 2018 filing requirements
2. Tax planning options available
3. Tax advocacy – status & timeline
4. Alternative next steps
Here’s where and when, October 8:
Asia/Europe – 9am UK, 10am France/Germany, 11am Israel, 5pm Seoul/Tokyo, 6pm Sydney
Americans/Europe – 9am PST, 12 pm EST, 5pm London, 6 pm France Germany. 7 pm Israel.
How to enroll:
I’ve owned my own company in France for many years and helped hundreds of people make the move to France. It all starts with a consultation. If you are interested in learning more about how to go about making the move, finding a way to earn a living or opening a company in France, finding a property to rent or purchase, do not hesitate to contact us. Complete this form online and let us hear from you!
A la prochaine…
Adrian Leeds Group
P.S. Mark your calendar for next Tuesday, October 9th, when Cara Black,author of the Aimée Leduc mystery novels, speaks at Après Midi!
P.P.S. Don’t forget to watch our upcoming and newest House Hunters International Episode this week!
Paris By the Books – Cristina is leaving Boston to complete her degree in international law. Her mom is tagging along to help her find a place and settle into a new life in Paris… Details on our own House Hunters International page. Don’t miss it!