Restrictions On The Use Of Cash In France And Europe

eiffel tower france

eiffel tower franceFrance Revisits Its War On Cash

March 30, 2015
Panama City, Panama

Dear Offshore Living Letter Reader,

Cash is no longer king. At least that seems to be France’s position. While cash isn’t being exiled from the French economy altogether, the country is looking to reduce the maximum amount of an allowable cash transaction from 3,000 to 1,000 euros.

This isn’t the first time the French have had this particular bad idea. They tried to pass similar legislation in 2013 but failed.

Back in 2013, the premise for the proposal was fraud reduction. Today they’re returning to the idea in the name of the Charlie Hebdo attacks in Paris earlier this year, saying that the tighter controls on cash flow are necessary to support the ongoing war against terrorists. If the law is passed this time, the reductions will take effect Sept. 1, 2015.

Of course, terrorists and tax evaders aren’t the only ones who use cash. On the other hand, the French aren’t big on cash in general. They prefer checks. I bought an antique sword at a flea market in Champagne a couple of years ago. The owner of the stall didn’t take credit cards but was happy to take a French check from me. In fact, he seemed happier for me to write him a check than to go to Continue…

2015 Foreign Earned Income Exclusion

earn income

earn incomeFEIE, Or How To Earn More Than US$200K Tax-Free In 2015

March 26, 2015
Panama City, Panama

Dear Offshore Living Letter Reader,

The most important tool in the U.S. expat’s tax toolbox is the foreign-earned income exclusion (referred to in tax-planning circles as the FEIE or “the exclusion”).

If you qualify, it allows you to exclude up to US$100,800 in 2015 foreign-earned income from U.S. federal income tax.

All U.S. citizens and residents who earn more than US$10,150 (single) or US$20,300 (married, filing a joint return) in a year must file a U.S. personal income tax return no matter where you reside.

You must file, but that does not mean you must pay tax. One of the many benefits for an American living or retiring abroad is that, once you’re a foreign resident, you’re eligible to take advantage of the FEIE.

The exclusion applies to foreign-earned income only—that is, wages or self-employment income (independent contractor earnings, for example) you receive for services you perform while living outside the United States. Wages can come from a U.S. corporation or a foreign corporation, including an offshore corporation, and it does not matter if you are also a shareholder or owner of that foreign corporation.

Note, though, that earned income does not include interest, dividends, or other investment or passive income.

The key is to qualify. Bottom line, you qualify for the exclusion in one of two ways:

1. The 330 Day Test. To qualify for the FEIE using the 330 Day Test, you must be in another country (just being outside the United States doesn’t work if you’re in international waters, for example) for 330 days out of any 365-day period. It does not matter if the 330 days are over two calendar years (between Nov. 1, 2014, and Oct. 31, 2015, for example), and you can Continue…