Do I have to declare my pension fund in French tax return?

Reader question: In the annual tax declaration are US pension schemes such as 401(k)s supposed to be listed in the 3916 foreign bank accounts and investment schemes form, or can they safely be left out? I did not include mine this year but am wondering if I should have done.

Avocat fiscaliste Laurent Gravelle from Sophia-Antipolis, who regularly works with foreign clients, said that his US clients often do include such schemes in their 3916, on the basis that it is better to provide ‘too much’ information than too little.

As a reminder, the 3916 is for declaring the existence of foreign bank accounts, assurance vie and similar non-insurance wrappers, and cryptocurrency accounts. This is so that France knows about them, not necessarily for their contents to be taxed. 

Specifically, he said that people with Roth IRAs often declare these.

These are a type of US individual retirement savings account that is funded with money that has already been taxed.

Unlike some traditional US retirement accounts, you do not normally obtain an income-tax deduction when you put money into it but in return investments held in the Roth IRA can grow free of US tax and qualifying withdrawals in retirement are generally free of US income tax.

“If you leave the money in a Roth IRA, all the income inside is exempt – it’s a specific system – but in my view, in France it could be considered potentially taxable except for the fact that if the holder is a US national in France, it is taxable only in the US, under the US-France double tax treaty.

“However, it could be seen as being like a [stocks and shares] portfolio and should be declared.”

More generally, he said, if you wish to make sure of taking no risks, you can declare all your pension funds.

This avoids any issues as to which products France may consider a true retirement pension (not declarable) and which may be seen as being more an investment scheme.

British people with UK SIPPs also sometimes wonder if these should be declared, and the answer is generally no, as they are normally accepted as pensions, though they too can sometimes “work like a portfolio”.

He added: “Where it is one you manage yourself, choosing the investments inside, we may wonder if that tests the limit between the obligation to report or not.

"If it is a really individualised type you could declare it to be really safe.”