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After more than 7 years of legal battle, the American FISC acknowledges that it wrongly withheld a few million dollars in taxes from American citizens living in France. This measure applies to persons born in the USA or holding an American passport but residing in France.
The dispute in question concerned in particular the generalized social contribution, the CSG, which is considered in France to be a tax.
With its different interpretation, the American IRS considered the CSG as a social charge. Consequently, for all American taxpayers living in France, and therefore subject to tax in the USA, it was impossible for them to deduct the CSG from their American tax debt.
Indeed, despite a bilateral agreement between France and the United States, American taxpayers living abroad remain obliged to declare their income to the American FISC and are responsible for paying their taxes. Nevertheless, they are able to deduct the total tax paid in the country of residence.
Americans residing in France will now be able to deduct their contribution to the CSG on their next tax return in the USA.