1.) Social media nonsense that tells people healthcare and such here are free. We pay big taxes for the services.
2.) Social media and Facebook nonsense talking about “remote work.” “Remote work” is a gray area. And if your tush is in a chair in France, you probably owe French taxes.
Yes, that’s why I included the partial view of a French payslip—the deductions give pause. And yes, about remote work—I’ve been down that route working from home in France under a contract issued in Ireland, and the treaties are clear—it’s taxed in France; my income from Substack is trivial since I have just 2 paid subscribers, but my tax accountant is clear that it’s taxable in France.
Yup, yup, yup. I have seen many people online, and a few in real life (with a smirk on their face) ask about "Would the French govt know?" "Yeah, but it doesn't matter, I am paid by an American company." The fact that people think they can just not pay taxes is...something else.
One of the reasons a relative gave up her US citizenship after decades in Canada was US taxes. The relative wanted to sell her house, and apparently the capital gains are taxable in the US. This would also apply if her child, also a US citizen, was to inherit the house and sell it. My relative is a lawyer and consulted other lawyers about this, and decided the simplest thing was to renounce.
Renouncing is generally only worthwhile if it will protect significant sums of money; it's also not something one should do without thoroughly understanding all the implications (such as being subject to an exit tax)--and it sounds like your relatives wisely chose to do so. These days the process is expensive (USD $2,350) and for expatriates involves and interview and, in some countries, there is a waiting list of a year or more. Moodys Tax has a free webinar on the subject one can sign up for: https://www.moodystax.com/us-citizenship-renunciation/.
John, your information is interesting. I must admit I do not understand all of the tax charges. I was looking at a discussion of the new US budget bill and they talked about SALT. I had to look it up. My husband has done our taxes for the duration of our marriage because he wants to do them. Do you do your own taxes or do you have someone do them for you?
An additional disadvantage of having to submit taxes in 2 countries is that most of he people I know pay someone to do at least one of their taxes because they are worried about doing something wrong.
In Germany mortgage interest is not a tax deduction because this is a country of renters, but home improvements are tax deductible. Those are also differences.
Also, I have been told that a lot of people abroad don't vote because they are not submitting taxes and don't want to come to the attention of the US government. I wonder how much energy the US government spends going after people abroad who do not pay their taxes. It cannot be the people who collect social security from the US, because I assume these payments would be stopped.
We have a US tax accountant in Ireland who does the US taxes; they’re sufficient complexity that I don’t feel we could do them as competently ourselves. The return is generally about 50 pages long. We also have an Irish accountant do our taxes there, after 12 years of doing them ourselves. In Ireland, however, when your income transitions from PAYE to pension income, entirely different procedures kick in, so we found a tax accountant to handle things thereafter. As with everything in Ireland, things get done through connections, and it has turned out to be useful to have someone with contacts inside the Revenue division.
In France our taxes are relatively simple and we pay no income tax here. But we do support an adult dependent which complicates things a bit, so we also work with an accountant here. Most people I know in France file their taxes themselves online (the first time one files, it has to be on paper).
As for expatriates who don’t declare US taxes, they have to live with the risks involved. I knew one couple in Ireland—Irish man, American woman—where the woman had not filed US taxes for almost 50 years. She was completely unaware that as a citizen she had a responsibility to do so. But who knows whether a much-diminished IRS has any capacity to hunt such things down.
Who knows if anything in the running of the US government will function going forward. Your having to file taxes in 3 countries is complex. I do not yet know enough about our taxes in Germany to speak to them. I do think we should be discussing this from time to time because I can imagine many people don't fully understand their obligations when they live abroad. I think this is a great topic for an article.
Thanks so much for this, a very clear consideration - especially as we're looking to change our visa classification this year! Thanks so much for thorough work.
This is so clear and well researched, thank you.
There are two things that get in my craw:
1.) Social media nonsense that tells people healthcare and such here are free. We pay big taxes for the services.
2.) Social media and Facebook nonsense talking about “remote work.” “Remote work” is a gray area. And if your tush is in a chair in France, you probably owe French taxes.
This Substack is a wealth of information.
Yes, that’s why I included the partial view of a French payslip—the deductions give pause. And yes, about remote work—I’ve been down that route working from home in France under a contract issued in Ireland, and the treaties are clear—it’s taxed in France; my income from Substack is trivial since I have just 2 paid subscribers, but my tax accountant is clear that it’s taxable in France.
Yup, yup, yup. I have seen many people online, and a few in real life (with a smirk on their face) ask about "Would the French govt know?" "Yeah, but it doesn't matter, I am paid by an American company." The fact that people think they can just not pay taxes is...something else.
One of the reasons a relative gave up her US citizenship after decades in Canada was US taxes. The relative wanted to sell her house, and apparently the capital gains are taxable in the US. This would also apply if her child, also a US citizen, was to inherit the house and sell it. My relative is a lawyer and consulted other lawyers about this, and decided the simplest thing was to renounce.
Renouncing is generally only worthwhile if it will protect significant sums of money; it's also not something one should do without thoroughly understanding all the implications (such as being subject to an exit tax)--and it sounds like your relatives wisely chose to do so. These days the process is expensive (USD $2,350) and for expatriates involves and interview and, in some countries, there is a waiting list of a year or more. Moodys Tax has a free webinar on the subject one can sign up for: https://www.moodystax.com/us-citizenship-renunciation/.
Yes, it did take quite a while and was pricey. The relative was coached through it by a specialist in the area. She is well-connected in the law. ;-)
John, your information is interesting. I must admit I do not understand all of the tax charges. I was looking at a discussion of the new US budget bill and they talked about SALT. I had to look it up. My husband has done our taxes for the duration of our marriage because he wants to do them. Do you do your own taxes or do you have someone do them for you?
An additional disadvantage of having to submit taxes in 2 countries is that most of he people I know pay someone to do at least one of their taxes because they are worried about doing something wrong.
In Germany mortgage interest is not a tax deduction because this is a country of renters, but home improvements are tax deductible. Those are also differences.
Also, I have been told that a lot of people abroad don't vote because they are not submitting taxes and don't want to come to the attention of the US government. I wonder how much energy the US government spends going after people abroad who do not pay their taxes. It cannot be the people who collect social security from the US, because I assume these payments would be stopped.
Hi Linda,
We have a US tax accountant in Ireland who does the US taxes; they’re sufficient complexity that I don’t feel we could do them as competently ourselves. The return is generally about 50 pages long. We also have an Irish accountant do our taxes there, after 12 years of doing them ourselves. In Ireland, however, when your income transitions from PAYE to pension income, entirely different procedures kick in, so we found a tax accountant to handle things thereafter. As with everything in Ireland, things get done through connections, and it has turned out to be useful to have someone with contacts inside the Revenue division.
In France our taxes are relatively simple and we pay no income tax here. But we do support an adult dependent which complicates things a bit, so we also work with an accountant here. Most people I know in France file their taxes themselves online (the first time one files, it has to be on paper).
As for expatriates who don’t declare US taxes, they have to live with the risks involved. I knew one couple in Ireland—Irish man, American woman—where the woman had not filed US taxes for almost 50 years. She was completely unaware that as a citizen she had a responsibility to do so. But who knows whether a much-diminished IRS has any capacity to hunt such things down.
Who knows if anything in the running of the US government will function going forward. Your having to file taxes in 3 countries is complex. I do not yet know enough about our taxes in Germany to speak to them. I do think we should be discussing this from time to time because I can imagine many people don't fully understand their obligations when they live abroad. I think this is a great topic for an article.
Thanks Keith, I'm glad it was helpful!
Thanks so much for this, a very clear consideration - especially as we're looking to change our visa classification this year! Thanks so much for thorough work.
More research to do on our end...