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US estate tax: the French resident's case

What the France–US treaty changes, concretely, for a French resident holding US-listed ETFs.

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The treaty in two dates

France and the United States are bound by an estate-tax treaty of 24 November 1978, in force since 1 October 1980, deeply amended by a protocol of 8 December 2004, in force since 21 December 2006 — whose most protective clauses (marital deduction, exemptions and credits) apply retroactively to estates opened since 10 November 1988. It is one of the so-called “modern” treaties: it does not merely allocate assets between the two States, it assigns exclusive taxing rights and extends to the French resident a fraction of the US allowances.

The fate of ETFs: Article 8

This is the point the general table cannot state in a single cell. The treaty allocates assets by category: real estate is taxable in the State where it is located (Article 5), the assets of a permanent establishment where it operates (Article 6), tangible movable property where it is situated (Article 7). Everything else — and securities in particular: shares, fund units, ETFs — falls under the residual article (Article 8): taxable in the State of the decedent's domicile, the citizenship criterion being reserved to the United States alone.

For a French resident who is not a US citizen, the consequence is radical: their US-listed ETFs are taxable only in France. By the very text of the treaty, the United States has no right to tax this sleeve — whatever its amount. Where the Spanish or Portuguese holder faces the full $60,000 threshold, the French resident is outside the scope of the estate tax for their securities. This is not a credit that brings the tax down to zero: it is an allocation that sets it aside from the outset.

The US-citizen exception

Article 8 nonetheless reserves to the United States the right to tax its own citizens. A US citizen domiciled in France therefore remains within the scope of the estate tax on their securities, both States then holding a right to tax, with double taxation eliminated by credit. Dual nationals and former long-term US residents are subject to rules of their own: for them, this page is not enough.

US real estate: the prorated credit

For the assets the United States can still tax in a French resident's estate — US real estate first and foremost — the 2004 protocol replaced the meager non-resident credit (the equivalent of the $60,000 threshold) with a prorated unified credit: the estate receives the US-citizen credit, prorated to the share of taxable US-situs assets in the worldwide estate, if that calculation is more favorable to it.

With a federal allowance raised to $15 million per person in 2026 (an amount made permanent and indexed), the mechanics are massively protective. An example: a French resident leaves a worldwide estate of $4M, including an $800,000 vacation home in Florida. Their effective exemption is worth $15M × (0.8 / 4) = $3M — far above the $800,000 taxable: no tax. The general rule that follows: as long as the worldwide estate stays below the federal allowance, the proration always covers the US share — the tax is zero by construction.

The surviving spouse

The 2004 protocol added two protections for the spouse, applicable to the assets the United States can tax (Articles 5, 6 and 7): an allowance equal to half the value of those assets when the surviving spouse is not a US citizen, and a treaty marital deduction modeled on the one in US domestic law, subject to conditions. For ETFs, the question does not arise: they are already outside the US scope under Article 8.

What does not change: the procedure

The treaty allocation sets aside the tax, not the friction. At death, the US broker freezes the holdings until the IRS transfer certificate; to obtain it, the estate files Form 706-NA, claiming the benefit of the treaty in it. No tax, full file, delays in months: everything described by the general page remains true for the French resident. The heirs' survival liquidity is to be planned outside US accounts.

The French side

The treaty assigns to France what the United States gives up: for a decedent domiciled in France, French inheritance duties apply to the worldwide estate — US ETFs included — under domestic rules (schedules, allowances, exemption of the spouse and of the PACS partner). The treaty avoids double taxation; it neither creates nor removes the French tax.

Design responses

For the French resident who is not a US citizen, the hierarchy of risks is reversed compared with the reader with no treaty: the US tax risk on ETFs is set aside by the text; what remains is the procedural risk (freeze, 706-NA, delays) and the possible US real-estate sleeve (covered by the proration as long as the worldwide estate stays below the allowance). The design responses follow: a prepared estate file — the treaty claim on the 706-NA is not improvised — ; the heirs' liquidity outside US accounts; and UCITS substitution reserved for those who want to remove even the procedure, not just the tax.