Topic · France
Do Americans in France pay the net investment income tax?
Yes, once MAGI passes the threshold — and the French flat tax you already paid does not reduce it. The PEA, the assurance-vie, the CTO and the Livret A, one by one, against 3.8%.
By Danilson Ramos · Founder, Atamatax
Published June 2026 · Updated September 2026
Part of the France desk — every US tax topic for France in one place.
Check it for your own income
Does the 3.8% reach your investment income?
Four banded answers, no figures typed, no email. The read says which side of the threshold you sit on and — if you paid tax abroad — what that credit can and cannot do.
Free, no account, nothing you answer leaves this page. Open the full NIIT Exposure Check
A banded screen for a US citizen or resident; Form 8960 settles the exact figure. Four answers give bands for net investment income and MAGI, and no read here nets a foreign tax credit against the 3.8% — the Code allows none.
France taxes investment income heavily and, for its favoured products, not at all. Neither fact helps an American resident there with the net investment income tax. Where France taxes, the credit stops at the regular US tax; where France exempts, there is no credit at all. This page goes product by product.
The threshold, with the exclusion added back
Most Americans in France use the foreign earned income exclusion on their salary. For §1411, that excluded amount is added back: a single filer excluding $120,000 of salary with $90,000 of investment income has an AGI of $90,000 and a MAGI of $210,000 — over $200,000 by $10,000, so the tax is 3.8% of $10,000, not of the $90,000. Someone taking the foreign tax credit on their salary instead has the salary in AGI already; the arithmetic lands in the same place.
Product by product
| Product | PFIC inside? | FBAR | Form 8938 | NIIT | Person decides? |
|---|---|---|---|---|---|
| PEA | Likely | Likely | Likely | Counts | — |
| Assurance-vie | Likely | Likely | Likely | Depends | Review |
| CTO (compte-titres ordinaire) | Possible | Likely | Likely | Counts | — |
| SICAV / FCP (OPCVM) | Likely | — | Likely | Counts | — |
| UCITS ETF (Amundi, Lyxor, iShares, Vanguard — Irish, Luxembourg or French domicile) | Likely | — | Likely | Counts | — |
| Livret A / LDDS / LEP | — | Likely | Likely | Counts | — |
| PER | Possible | Likely | Likely | Depends | Review |
| French social security pension | — | Unlikely | Unlikely | No | Review |
| PEE / PERCO / PERECO | Likely | Likely | Likely | Depends | Review |
| SCPI / OPCI | Possible | Unlikely | Likely | Counts | Review |
| French rental property | — | — | Unlikely | Counts | — |
CTO (compte-titres ordinaire). Dividends and gains are taxed by France at the 30% flat tax (or the scale, on election) and reported on the IFU your bank sends each spring. They are net investment income in the US. The French tax is a Form 1116 credit against the regular US tax on the same income and usually cancels it; the 3.8% survives.
PEA. Exempt from French income tax after five years, subject to 17.2% social charges. The gains are US capital gains and net investment income in the year realised, however the PEA's French clock is running. With no French income tax on them, the Form 1116 credit is limited to whatever creditable social charges apply; the PEA page covers the funds inside it, which are usually PFICs.
Assurance-vie. Whether the contract is insurance, a trust or a look-through account for US purposes is the first question, and it is unsettled; on the look-through view, the income of the unit-linked funds is net investment income as it arises and the funds are PFICs. The assurance-vie page sets out the positions.
Livret A, LDDS, LEP. Interest exempt in France; taxable interest and net investment income in the US, with no French tax to credit against anything.
French rental property. Rent is net investment income; French tax on it credits against the regular US tax. The gain on sale — taxed by France at 19% plus social charges with holding-period abatements, exempt for a principal residence — is net gain for §1411 to the extent it is taxable in the US after §121.
PER and French pensions. A PER's growth may be deferred under the treaty's pension article, and a French state pension is taxable only in France for a citizen resident there under Article 18(1)(b). Neither is investment income; a distribution from a PER is a classification question a preparer settles, because §1411(c)(5) excludes US plans only.
Social charges
CSG and CRDS are levied on French investment income at 17.2% and were for years treated by the IRS as social-security contributions covered by the totalization agreement and therefore not creditable. After the Eshel litigation the IRS changed position in 2019, and they are now generally claimed as creditable foreign income taxes on Form 1116. That helps against the regular tax on a CTO or a PEA; it does nothing against Form 8960.
What to check
- Add the §911 exclusion back to AGI and compare MAGI with the threshold for your status.
- Total the investment income across the CTO, PEA, assurance-vie (on the look-through view), livrets and any property — from the IFU and the annual statements.
- Take the French income tax and creditable social charges on Form 1116 against the regular tax, with re-sourcing under Article 24(2)(b)(ii) where France taxes first.
- Compute Form 8960 on the same income with nothing credited against it; consider the line 9b deduction only where the credit is not being claimed.
- Run the PFIC analysis on every fund in the PEA, the CTO and the assurance-vie — Form 8621 decides the chapter 1 income the §1411 base is built on.
Where do you stand?
Four banded answers and a read on the 3.8%, with Christensen named on the credit line for France.
Authorities cited
- IRC §1411 — IRC §1411 — Net Investment Income Tax (3.8%)
- IRS Form 8960 — About Form 8960 — Net Investment Income Tax (Individuals, Estates, and Trusts)
- IRS Form 1116 — About Form 1116 — Foreign Tax Credit (Individual, Estate, or Trust)
- US–France Income Tax Treaty — Convention between the United States and France (signed 1994), as amended by the 2004 and 2009 Protocols
- Christensen v. United States (Fed. Cir. 2026) — Christensen v. United States, No. 24-1284 (Fed. Cir. Aug. 31, 2026) (precedential) — the U.S.–France treaty's Article 24(2)(a) and 24(2)(b) credits are subject to the Code's §§27/901(a) limitation and do not offset the §1411 net investment income tax; reversing 168 Fed. Cl. 263 (2023)
- IRC §911 — IRC §911 — Foreign earned income exclusion + housing exclusion/deduction
- service-public.fr · PEA — République française — Plan d'épargne en actions (PEA): fonctionnement et fiscalité
- service-public.fr · assurance-vie — République française — assurance vie: fonctionnement et fiscalité
- service-public.fr · Livret A — République française — Livret A: fonctionnement, plafond et fiscalité
- service-public.fr · PER — République française — Plan d'épargne retraite (PER): fonctionnement et fiscalité
- U.S.–France Totalization Agreement — U.S.–France Social Security (Totalization) Agreement
Primary sources (Cornell Legal Information Institute for the US Code and CFR; IRS.gov for forms, procedures, and treaty documents). This page is general information, not individualized tax or legal advice.
Atamatax provides tax preparation support and educational resources. This website does not constitute legal or tax advice.