Investing as an American in France: The PFIC Trap, the Tax Treaty, and Where You Can Actually Put Your Money (2026)

If you are an American building a life in France, one question tends to surface the moment your money settles: how do you keep investing without creating a tax mess? Investing as an American in France is entirely legal, but it comes with a catch that trips up thousands of expats every year. Most of the investment products a French bank or adviser will offer you, from the beloved assurance vie to the PEA, are treated by the IRS as passive foreign investment companies, or PFICs, and holding them can be slow, expensive, and heavy on paperwork. The good news is that a compliant path exists, and thanks to the US-France tax treaty it can be unusually tax-friendly. This article is for informational purposes only and does not constitute tax or legal advice. Tax rules are complex and change frequently: consult a qualified cross-border tax professional before making any filing or planning decisions.

Can Americans invest while living in France? The short answer, and your real options

Yes. A US citizen or green card holder living in France can legally open investment accounts and build a portfolio. The problem is not permission, it is product selection. Because the United States taxes its citizens on worldwide income no matter where they live, the US tax code follows you across the Atlantic, and it treats most non-US pooled investments harshly. The result is that your real options narrow to a short list. Here is how the main vehicles compare for a US person in France:

The pattern is simple once you see it: anything that pools your money inside a foreign fund tends to be a PFIC, while US-registered funds and individual securities stay clean. The rest of this guide explains why, and how to build a portfolio around the compliant column.

What a PFIC is, and why French funds become a US tax trap

A PFIC is a foreign corporation that earns at least 75% of its income from passive sources such as dividends and interest, or holds at least 50% of its assets to produce passive income, according to the IRS instructions for Form 8621. That definition sounds narrow, but nearly every non-US mutual fund, SICAV, FCP, UCITS fund, and foreign ETF meets it, which is why foreign pooled funds are almost always PFICs for US tax purposes.

The two problems: a punishing tax and relentless paperwork

Under the default PFIC regime, tax is not the friendly long-term capital gains rate you might expect. When you finally sell or take a large distribution, the gain is spread back across every year you held the fund, taxed at the highest ordinary income rate in force for each of those years, and then charged interest as if the tax had been owed all along. Two alternative elections, the qualified electing fund and the mark-to-market election, can soften this, but they are often unavailable in practice or add their own complexity, because most foreign funds never provide the annual data those elections require.

Form 8621: one form per fund, every year

Each PFIC you hold generally gets its own Form 8621, and a fund-heavy account can mean a stack of them. There is a limited exception to the annual filing rule when your total PFIC holdings stay under 25,000 dollars (50,000 dollars for joint filers), but it disappears the moment you receive a distribution, sell, or make an election. The practical takeaway is that PFICs are less a tax problem than a compliance one: even when little or no extra US tax is due, the reporting can be substantial.

In our experience, most Americans first hear the word PFIC from their US accountant, long after a French adviser has already sold them a fund-based contract. By then the paperwork clock has usually been running for a year or more.

Where Americans get tripped up: the investments French banks recommend

The three products most likely to land on your lap in France are also the three most likely to cause you US tax trouble.

The assurance vie

The assurance vie is France's favorite savings vehicle, and for good reason if you are French: gains grow tax-deferred, and the succession benefits are generous. For a US citizen, the picture is very different. The IRS does not treat an assurance vie as US life insurance, and the unit-linked funds inside it (the unites de compte) are almost always PFICs. The insurance wrapper does not change that. US tax practitioners generally treat the policyholder as owning the underlying PFIC funds, and because French insurers rarely provide the annual statements a qualified electing fund election requires, the softer election is usually off the table. Some policy structures can also raise foreign-trust reporting questions on Form 3520. The IRS has not issued definitive guidance on every version of the wrapper, so this is a product to run past a cross-border tax professional before you sign anything, not after.

What we see most often is a well-meaning banker suggesting an assurance vie in the very same appointment where you open your checking account, with no idea that it creates a US filing headache.

The PEA

The PEA is a French equity account that becomes income-tax-free after five years, which makes it a favorite for French savers. For a US person it rarely works. The US does not recognize the French tax exemption, so gains remain taxable at home. The eligible investments are mostly European funds, which are PFICs, and while you could in theory limit yourself to individual European stocks to sidestep that, the account still buys you little on the US side. In practice, most French institutions will simply decline to open a PEA once they see a US passport or a US place of birth, which quietly solves the problem for you.

Regular French fund accounts

A standard French brokerage account, the compte titres ordinaire, is fine to own. The danger is what you put in it. French and EU mutual funds held inside it are PFICs, and you generally cannot buy US-domiciled ETFs through an EU broker (more on that below). Hold individual stocks and bonds and you avoid the PFIC problem, but the account then does little that a US brokerage account would not do better. For a fuller list of the French savings products you can and cannot use, our guide to what Americans can access, from the Livret A to the assurance vie goes account by account.

Sorting out which of these products is safe, and untangling one you may already hold, is exactly the kind of cross-border problem where a little guidance saves a lot of money and stress. Traditional cross-border wealth managers exist, but many only take clients with large portfolios. My Best Money Life fills the gap for Americans who are not in millionaire territory, with plain-English coaching and guides aimed at ordinary movers. Some links in this article are partner links that may earn EasyFranceNow a commission at no extra cost to you, and they do not change what we recommend. If you want a walkthrough of the whole money side of a move, their essential guide to moving to France is a practical place to start.

Where Americans can actually put their money

The compliant core of an American's portfolio in France looks a lot like it did back home: US-domiciled funds and individual securities, held in a US account.

US-registered funds and individual securities

US-registered mutual funds and ETFs are not PFICs, even when they invest entirely in foreign stocks and bonds, because they are US corporations rather than foreign ones. A US-domiciled total-market or S&P 500 ETF gives you broad exposure without a single Form 8621. Individual stocks and bonds are also safe: direct ownership of shares in Nestle, LVMH, or any single company does not trigger PFIC rules. For most Americans in France, a portfolio of US-domiciled index funds, plus a few individual stocks if you want them, covers everything they need.

The brokerage-access problem: can you still buy US funds from France?

Here is the practical wrinkle. EU financial rules known as PRIIPs and MiFID II, in force since 2018, require every packaged investment sold to EU retail investors to publish a short Key Information Document. US fund issuers generally do not produce one, so EU-based brokers are barred from selling US-domiciled ETFs to residents. Some US brokers apply the same restriction to their EU-resident clients, and brokerage policies for customers with a foreign address vary widely and change often: some keep an existing account open but block new fund purchases, some restrict further, and a smaller number actively serve expats. Individual stocks and bonds usually remain buyable throughout. The upshot is that most Americans invest through a US brokerage relationship rather than a French one. For what tends to happen to a specific account, our breakdown of what changes with your Fidelity or Schwab account after a move goes into detail.

In our experience, the cleanest sequence is to sort out your US brokerage relationship before you land in France, because reopening or moving an account is far harder once a French address is on file. If you would rather not assemble the banking and brokerage setup yourself, My Best Money Life's banking guide for Americans in France walks through FATCA-friendly options step by step.

The treaty advantage most Americans miss

This is where France becomes surprisingly friendly. Under Article 24 of the US-France income tax treaty, France grants US citizens resident in France a tax credit equal to the French tax that would otherwise apply to qualifying US-source dividends, interest, and capital gains, which in practice removes the French tax on that income entirely. A separate rule, Article 18, assigns US pension, 401(k), IRA, and Roth distributions to the United States alone, so a qualified Roth stays tax-free in France too. Our guide to what happens to your 401(k), IRA, and Roth in France walks through the retirement side.

Two cautions keep this honest. First, the income must still be declared in France, where it feeds the taux effectif calculation and can nudge your French-source income into a higher bracket. Second, the treaty removes the French layer, not the American one: the US still taxes your capital gains at up to 20%, plus the 3.8% net investment income tax. By contrast, French or other non-US investment income is taxed in France, where the 2026 flat tax (the prelevement forfaitaire unique) runs to 31.4%, made up of 12.8% income tax and 18.6% social charges, after the social-charge rate rose on January 1, 2026. Holding your investments on the US side, in US-domiciled assets, keeps you in the treaty-favored lane.

What you will have to report on both sides of the Atlantic

Owning investments as an American in France creates reporting duties even when little or no extra tax is due. Three US forms matter most. You file an FBAR (FinCEN Form 114) when your foreign financial accounts together exceed 10,000 dollars at any point in the year, and it goes to FinCEN, not the IRS. You file Form 8938 under FATCA at higher thresholds, which for Americans living abroad start at 200,000 dollars of specified foreign assets at year-end for single filers and 400,000 dollars for joint filers. And you file a Form 8621 for each PFIC you hold, subject to the rules above. On the French side, you declare your foreign accounts, including any US brokerage account, on Form 3916, and your investment income on the annual French return. Our foundational guide to US taxes when you live in France ties these forms together with the treaty.

Most of the Americans we work with are surprised that the FBAR is not filed with their tax return at all, and that missing it carries penalties out of proportion to how simple the form itself is.

Before you invest a euro: a readiness checklist

Run through this before you open any account or buy any product in France:

• Confirm your US tax status: if you are a US citizen or green card holder, the PFIC rules follow you regardless of how long you have lived in France.

• Decide on your US brokerage home before you move, and check whether your current broker keeps accounts for residents of France.

• Keep a valid US mailing address and a US bank account open, which most US brokers still expect to see.

• Say no, for now, to any assurance vie, PEA, or French fund account until a cross-border professional has reviewed it.

• Build the core of your portfolio from US-domiciled funds and, if you wish, individual stocks and bonds.

• Gather what you will report: account statements for the FBAR, asset values for Form 8938, and fund details for any Form 8621.

• Diarize the deadlines: your FBAR and US return are due in the spring, with an automatic extension to October, and your French return follows the French calendar.

• If you already hold a PFIC, do not simply sell in a panic: the exit itself is a taxable event, so get advice on timing first.

Doing it yourself, and when it is worth getting help

Plenty of Americans manage their own compliant portfolio in France. If your situation is straightforward, a US brokerage account holding a couple of US-domiciled index funds, an FBAR, and a Form 8938 when you cross the threshold, you can absolutely run this yourself with the steps above and a good cross-border accountant at tax time.

It is worth getting help when the stakes or the tangle rise: you already hold an assurance vie or a PEA and need to unwind it cleanly, you are near the Form 8938 thresholds, you have a mixed US and French household, or you simply do not want to gamble on getting the PFIC rules wrong. The traditional answer, a cross-border wealth manager, often comes with account minimums that put it out of reach for ordinary movers.

That gap is why we point readers to My Best Money Life. It is built for Americans who are not wealthy enough for the millionaire-only advisers but still want real guidance, pairing plain-English coaching with practical guides on the money side of a move, from banking to France visa-compliant health insurance, two of the other big-ticket decisions that sit right alongside investing when you relocate. For licensed, situation-specific US tax positions, though, you should still work with a qualified cross-border tax professional, a role that no guide or coach replaces.

FAQ

Can Americans open a brokerage account in France?

Technically yes, but it rarely helps. A US citizen can often open a compte titres with a French bank, yet the French and EU funds inside it are PFICs under US tax law, and EU rules generally prevent EU-based brokers from selling you US-domiciled ETFs. That leaves individual stocks and bonds as the only clean holdings, which a US brokerage account handles better. For this reason, most Americans in France keep their investing on the US side, using a US broker that accepts clients with a French address, and use French accounts mainly for day-to-day banking rather than for building a portfolio.

Is a French assurance vie a PFIC for US citizens?

The assurance vie itself is an insurance wrapper, but the unit-linked funds inside it (the unites de compte) are almost always PFICs, and the wrapper does not change that. US tax practitioners generally treat the policyholder as owning those underlying PFIC funds, which means Form 8621 reporting and, potentially, the punitive default tax regime on withdrawals. Some structures can also raise foreign-trust questions. The French tax deferral you enjoy as a resident does not carry over to your US return. Because the IRS has not issued definitive guidance on every version of the product, review any existing or proposed assurance vie with a cross-border tax professional.

Can US citizens buy ETFs while living in France?

Yes, but the type and the platform matter. US-domiciled ETFs, such as broad US index funds, are not PFICs and are the compliant choice, but you generally need to hold them through a US brokerage account. EU-based brokers cannot sell US-domiciled ETFs to residents, because those funds do not provide the Key Information Document that EU rules require. European UCITS ETFs are freely available in France, but for a US person they are PFICs and best avoided. The practical answer for most Americans is to buy US-domiciled ETFs through a US broker that works with expatriates, rather than through a local French platform.

What should I do with investments I already hold in a French fund or assurance vie?

Do not panic-sell. You can continue to hold a PFIC, but selling it is itself a taxable event that can trigger the harsh default calculation, so timing and method matter. Start by identifying exactly what you hold and whether any past Form 8621 filings were missed. If you have fallen behind on PFIC or FBAR reporting, the IRS offers streamlined procedures that can bring non-willful cases current, often without penalties. From there, a cross-border adviser can help you plan a phased, tax-aware exit into compliant US-domiciled holdings rather than an abrupt one. The worst move is usually a rushed sale made without understanding the tax bill.

Conclusion

Investing as an American in France is less about finding secret products and more about staying out of the PFIC trap. Skip the assurance vie, the PEA, and French fund accounts as investment vehicles, build your core from US-domiciled funds and individual securities held through a US broker, lean on the US-France treaty that quietly shields your US investment income from French tax, and keep up with the FBAR, FATCA, and PFIC reporting that comes with the territory. Do that, and you can enjoy France without handing a chunk of your returns to paperwork. If you would like a hand mapping the money side of your move, from opening accounts to deciding what to hold, My Best Money Life's guide to moving to France and its accessible coaching are a sensible next step for anyone who does not fit the traditional wealth-manager mold.