Investing from France as an American, without the tax traps
The short version
- US PFIC rules make French mutual funds and most EU ETFs punitively taxed for US citizens
- The usual pattern: US-domiciled investments at a broker that welcomes overseas Americans
- Keep your 401k and IRA; the US-France treaty treats them kindly
- Do not open an assurance-vie without cross-border advice; it is usually a PFIC minefield
Investing as an American in France means living inside a polite double-bind. US tax law punishes you for buying non-US funds, while many mainstream US brokers restrict or close accounts once you report a French address. Each side quietly pushes you toward the other's exit.
The good news: thousands of Americans in France invest anyway, and most converge on the same practical pattern. This guide explains the traps, the pattern, and the accounts worth keeping.
Up front: this is general information, not investment or tax advice. Cross-border portfolios are precisely where personal advice earns its fee.
The PFIC problem, in plain words
The core trap has an ugly acronym. Most pooled investments domiciled outside the US, French mutual funds, most European ETFs, the funds inside many assurance-vie contracts, are PFICs under US law.
PFIC in plain words: a passive foreign investment company is, roughly, any fund that is not US-domiciled. The IRS taxes gains from PFICs under a punitive regime and demands a dense annual form for each fund you hold. The standard cross-border summary: Americans avoid them.
Individual stocks are not PFICs, French or otherwise; the problem is pooled products. The US-side rules live on the IRS international taxpayers pages.
The pattern most expats follow
Keep your investments in US-domiciled assets, held at a broker that openly welcomes Americans living abroad. Interactive Brokers is the usual answer, and Schwab International is the frequent runner-up. Mainstream brokers vary wildly once a French address appears: some tolerate it, some freeze purchases, some mail a closure letter.
Europe adds its own wrinkle. EU rules known as PRIIPs require funds sold to EU residents to publish a specific disclosure document, which most US-listed ETFs do not, so many brokers simply block EU residents from buying them. One more reason the expat-friendly brokers are the standard answer.
The green list and the red list
Green and red here describe US tax treatment, not quality. French funds are perfectly good products for French people; the complication is your blue passport.
| Generally workable | Usually a trap |
|---|---|
| US-domiciled stocks and ETFs at an expat-friendly broker | French mutual funds, which are PFICs |
| Plain cash in US and French bank accounts | Most EU-listed ETFs, PFICs with PRIIPs friction on top |
| A Livret A and similar simple French savings accounts | An assurance-vie opened without cross-border advice |
| Your existing 401k and IRA | Any new non-US pooled product bought on enthusiasm |
The Livret A, France's standard savings account, is genuinely fine: simple interest, no fund structure, no PFIC. Just report the interest on your US return and count the account toward your FBAR total, as the US taxes guide explains.
Retirement accounts: keep them
Keep the 401k. Keep the IRA. The US-France treaty is unusually kind to US retirement accounts, and France generally taxes them only when the US does, which makes them some of the most comfortable assets an American in France can hold.
New contributions are the subtle part. An IRA contribution requires US earned income that is not fully excluded by the Foreign Earned Income Exclusion; exclude your entire salary and there may be nothing left that qualifies. It is a classic interaction to plan with a professional before the tax year ends.
Assurance-vie: admire it from a distance
The assurance-vie is France's beloved investment wrapper, a life-insurance envelope with tax and inheritance perks that French bankers recommend reflexively. For a US person it is usually a PFIC minefield: the funds inside are non-US funds, and the wrapper does not hide them from the IRS.
That is not quite a never; specialists can sometimes structure workable versions. The rule: do not open one on a French banker's enthusiasm alone, and never without cross-border advice.
Before you move: the tune-up
The cheapest fixes happen while you still have a US address: consolidation is easier, transfers are simpler, and you can interview brokers about their expat policies without time pressure.
About addresses: it is tempting to keep a relative's US address so your broker never learns you moved. Brokers eventually notice, and the reaction can be abrupt: frozen trading or forced sales at a moment you did not choose. Update addresses honestly and pick institutions that can handle the truth.
Checklist
If there is one area of expat finance where a fee-only cross-border advisor tends to earn their fee, it is this one. A planning session before the move beats years of untangling after it.
Can I keep using my old US brokerage?
Often, until they notice the address. Policies range from indifference to account closure, and forced liquidations can create surprise tax bills in two countries. Ask directly before you move; a plain answer now beats a certified letter later.
Are French index funds really that bad for me?
As a US citizen, yes. The funds themselves are fine; the PFIC treatment is the problem, with punitive tax on gains and heavy annual paperwork per fund. The same index is usually available through a US-domiciled ETF at an expat-friendly broker without any of that.
What about crypto?
Both countries tax it, each with its own rules on gains and reporting, and the record-keeping burden lands on you. Exchanges have residence policies too, much like brokers. The details are beyond this guide; if crypto is a meaningful slice of your money, add it to the advisor conversation.