🔹 Introduction
Publication date: October 12, 2025
The taxation of foreign retirement pensions primarily depends on the tax treaty concluded between France and the country from which the pension originates.
In most cases, a foreign pension received by a French tax resident is taxable in France, although certain treaties provide for important exceptions.
📄 General principle: taxation in the State of residence
As a general rule, private foreign pensions are taxable in the country of tax residence of the recipient.
Thus, when a person residing in France receives a pension from abroad (Switzerland, the United Kingdom, Germany, Belgium, the Netherlands, etc.), that pension is subject to French income tax.
🧾 Exceptions: taxation in the source country (e.g., Canada and the United States)
Some tax treaties — notably those with the United States and Canada — provide for taxation in the country of source.
However, even in these cases, the French resident must report the income in France, while benefiting from a tax credit equal to the French income tax that would otherwise apply, thereby avoiding double taxation.
👉 For more information on
tax residence, see the dedicated section in the
FAQ.
🔁 Nature of the pension: annuity or lump-sum payment
The tax treatment depends on whether the foreign pension is received as an annuity (regular payments) or a lump-sum (one-time payment).
💶 Foreign pension paid as an annuity
When the applicable tax treaty assigns taxation rights to the country of residence (i.e. France), foreign retirement annuities are generally taxed under the progressive income tax scale, in the same way as French pensions.They are also subject to French social contributions, provided the pensioner is affiliated with the French health insurance system.
When the treaty assigns taxation rights to the country of source, such as in the case of U.S. pensions (IRA, 401(k), etc.):
🔹 They must still be declared in France;
🔹 They may qualify for a tax credit equal to the French income tax, thus avoiding double taxation;
🔹 French social contributions are generally not due on these amounts.
🌿 Foreign pension paid as a lump-sum
When a foreign pension is paid as a lump-sum (single or multiple payments), three different tax regimes may apply depending on the circumstances:
Option 1: Flat tax rate of 7,5%
Upon an express and irrevocable election, it is possible to opt for a flat 7.5% income tax rate (in lieu of the progressive income tax scale), provided that the following conditions are met:
🔹 The payment is made in a single instalment (not split over several years);
🔹 The contributions paid during the accumulation phase (by you and/or your employer) were tax-deductible or related to tax-exempt income in the country of origin.
💡 Example: The Swiss second pillar pension (LPP) generally qualifies for this regime.
⚠️ The election must be made in the French income tax return (form 2042) for the year in which the lump-sum is received.
Option 2: Taxation under the “quotient” system
If the 7.5% option is not available (for example, in the case of a split payment or non-deductible contributions), the pension may be declared as an exceptional income benefiting from the “quotient” system.
This mechanism smooths out the progressive nature of income tax, thereby reducing the final tax burden.
Option 3: Taxation of investment income only
Less known but sometimes very advantageous, this approach consists of taxing only the investment income (interest, capital gains, dividends) generated by the foreign pension plan.
It applies if you can demonstrate that the contributions paid during the accumulation phase:
🔹 were not deductible from your taxable income, and
🔹 were not related to tax-exempt income in the country of origin.
💡 Example:
You receive a lump-sum of €100,000, of which €80,000 comes from your own contributions (non-deductible) and €20,000 represents investment gains.
Only the €20,000 is then taxable in France, which can result in a significant tax saving.
🌍 International careers: a complex and often overlooked issue
When a taxpayer has had an international career, the tax treatment of their foreign retirement pension becomes more complex.
The rules applicable during the contribution phase may differ from one country to another. For instance, in one country, employer contributions may be taxable, while in another they may be tax-deductible.
As a result, the tax regime applicable in France upon receipt of the lump-sum will depend on the specific facts — the nature of the contributions, the countries of employment, and the local tax rules.
💡 Example:
A professional has worked for 20 years in an international company, contributing (along with the employer) to a private pension plan.
Throughout their career, they successively worked in Switzerland, Romania, Germany and the United Kingdom.
At retirement, they receive a single lump-sum pension payment.It turns out that the contributions were deductible in some countries and taxable in others.
A detailed analysis of the career history and contributions made in each country is therefore required to determine the appropriate French tax regime.
Such an analysis may reveal whether the lump-sum qualifies for the 7.5% flat rate, or for taxation limited to investment income only (interest, capital gains, dividends).
👉 This type of review can uncover significant opportunities for tax optimisation that should not be overlooked.
💰 Securing the tax treatment of your foreign retirement lump-sum
The tax analysis of a foreign pension requires a personalised approach.
Depending on the countries where you have worked, the nature of the contributions paid, and the applicable tax treaties, the tax treatment may vary significantly. No two cases are identical.
I assist clients in the following areas:
🔹 Analysing your international career path and the relevant pension schemes;
🔹 Identifying the most favourable tax regime (7.5% flat rate, “quotient” system, or taxation limited to investment income);
🔹 Anticipating the required supporting documents (certificates, statements, foreign payslips, etc.).
In cases where necessary — and particularly when the financial stakes are significant — it is advisable to submit a tax ruling request (rescrit fiscal) to obtain an official position from the French tax authorities, thereby securing the applicable tax treatment.
👉 I assist both employees and retirees in preparing and submitting these requests, ensuring that their foreign pension capital is taxed correctly and optimised under French law.
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