U.S.-French Agreement on Foreign Tax Credits

You’re now entitled to claim a tax credit on your U.S. tax return if you pay the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS) taxes on income that you report on your U.S. income tax return. You also have the opportunity to file a claim for refund for these French taxes that you previously paid and reported on your U.S. Individual Income Tax Return going back to tax year 2009.

In June 2019, the IRS announced that this year the United States and the French Republic memorialized through diplomatic communications an understanding that the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS) taxes are not social taxes covered by the Agreement on Social Security between the two countries. Accordingly, the IRS will not challenge foreign tax credits for CSG and CRDS payments on the basis that the Agreement on Social Security applies to those taxes.

Taxpayers have 10 years to file a claim for refund of U.S. tax with respect to a foreign tax credit. The 10-year period begins the day after the regular due date for filing the return (without extensions) for the year to which the foreign taxes relate.

Please contact us if you want to learn more about how this change in the tax law may affect your specific situation.