Expat Tax Clarity™ Workshop

1) U.S. Social Security Benefits Are Not Taxed in France
Summary: Article 18(1)(b) of the U.S.-France Tax Treaty stipulates that U.S. Social Security benefits are taxable only in the United States, not in France, even if the recipient resides in France.

2) U.S. Retirement Accounts (401(k), IRA, Roth IRA, SEP IRA) Are Not Taxed in France
Summary: Article 18(1)(a) of the treaty provides that pensions and other similar remuneration derived and beneficially owned by a resident of a Contracting State are taxable only in that State. This includes distributions from U.S. retirement accounts such as 401(k), IRA, Roth IRA, and SEP IRA, meaning they are taxable only in the U.S. and not in France.

3) U.S.-Based Investment Accounts Are Not Taxed in France
Summary: Article 24 of the treaty addresses the elimination of double taxation. For U.S. citizens residing in France, France provides a tax credit equal to the French tax on income that may be taxed in the U.S., such as dividends, interest, and capital gains. This mechanism effectively prevents double taxation on U.S.-sourced investment income.

4) Taxation of Rental Income from U.S.-Based Property
Summary: Article 6 of the treaty states that income from real property may be taxed in the Contracting State in which the property is situated. Therefore, rental income from U.S.-based property is taxable in the U.S. For French tax purposes, such income is generally exempt, but it must be declared, and a tax credit is provided to avoid double taxation.

1) U.S. Social Security Benefits

Tax Treatment: Taxed in Italy for U.S. citizens resident in Italy.
Treaty Article: Article 18 (Pensions, Annuities, Alimony, and Child Support)
Summary: The U.S.-Italy Tax Treaty does not provide exclusive taxing rights to the U.S. on Social Security benefits. Instead, under Article 18, pensions and similar remuneration—including Social Security—are taxable only in the country of residence, which is Italy in this case. The taxpayer may receive a foreign tax credit in Italy for U.S. taxes paid, avoiding double taxation.

2) U.S. Retirement Accounts (401(k), IRA, Roth IRA, SEP IRA, etc.)

Tax Treatment: Taxed in Italy for U.S. citizens resident in Italy.
Treaty Article: Article 18 also covers these types of retirement income.
Summary: The treaty makes no distinction between private pensions and other retirement savings vehicles such as IRAs or 401(k)s. Italy taxes this income as part of global income unless exempted under domestic law (which generally it is not). The taxpayer may receive a foreign tax credit in Italy for U.S. taxes paid, avoiding double taxation.

3) U.S.-Based Investment Accounts (Dividends, Capital Gains, Interest)

Tax Treatment: Taxed in Italy, with a possible foreign tax credit for U.S. tax paid.
Treaty Articles:
Article 10 – Dividends
Article 11 – Interest
Article 13 – Capital Gains
Article 23 – Relief from Double Taxation
Summary: These articles allow both the U.S. and Italy to tax such income, but Italy has primary taxing rights as the country of residence. The taxpayer may receive a foreign tax credit in Italy for U.S. taxes paid, avoiding double taxation.

4) U.S.-Sourced Rental Income

Tax Treatment: Taxed in both the U.S. and Italy. Italy will provide a credit for taxes paid to the U.S.
Treaty Article: Article 6 – Income from Real Property
Summary: Article 6 allows the U.S. to tax U.S.-sourced rental income, and Italy as the country of residence also taxes it. However, Italy offers a foreign tax credit under Article 23, reducing or eliminating double taxation.