When Americans retire abroad, they face complex taxation issues due to the interaction between U.S. tax laws and foreign tax systems. In this deep dive, we explore two scenarios—one where the person lives in France and another in Greece. We’ll examine how each country taxes the following sources of income for a single person:

• $3,000/month in Social Security
• $600/month in pension income
• $500/month in IRA distributions
• $500/month in Roth IRA distributions

Case Profile:

• Total Income:
  • Social Security: $3,000/month or $36,000/year
  • Pension: $600/month or $7,200/year
  • IRA Distribution: $500/month or $6,000/year
  • Roth IRA Distribution: $500/month or $6,000/year
• Country of Residence: Scenario 1: France, Scenario 2: Greece

Scenario 1: Living in France

1. Social Security. Under the U.S.-France Tax Treaty, Social Security benefits are only taxed by the U.S. This means the individual does not have to pay French taxes on their $36,000 of Social Security income.

Taxable in France: $0

Taxable in the U.S.: Social Security benefits are subject to U.S. federal tax depending on total income and filing status. In this scenario, the person might pay tax on up to 85% of their Social Security benefits.

2. Pension income is generally considered taxable in France as retirement income, subject to the French progressive tax rates. Pension income is treated as ordinary income.

In 2025, the French income tax brackets are as follows:

• Up to €10,777: 0%
• €10,778 to €27,478: 11%
• €27,479 to €78,570: 30%
• €78,571 to €168,994: 41%
• Above €168,994: 45%

For a single person receiving €7,200 (converted from $7,200), the pension will fall within the 0% bracket in France. Therefore, the pension income will not be taxed at all, assuming this is the only income subject to French taxation.

Taxable in France: €0 (Pension income is within the 0% tax bracket)

3. IRA Distributions: The IRA distribution is taxable in France as pension income under the U.S.-France tax treaty. IRA distributions are taxed as income when received, subject to French progressive tax rates.

For $6,000/year, this amount would likely fall within the 11% bracket, assuming the individual has no other deductions or exemptions. However, the exact tax rate could depend on the total income.

• Assumed tax rate: 11%
• Taxable amount: €6,000 (converted from $6,000)
• Tax Due: €660 (11% of €6,000)

4. ROTH IRA Distributions: Roth IRA distributions are treated differently in France. The French tax authorities do not always recognize Roth IRAs as tax-exempt vehicles, and they may tax Roth distributions as income unless the individual can prove that contributions were made with after-tax dollars and that the Roth account meets the definition of a retirement savings vehicle.

Given that in the absence of setting tax affairs up in accordance with the US-France tax treaty, the Roth is likely subject to income tax, the individual could be taxed on $6,000/year (approximately €6,000).

Assuming that the individual cannot prove exemption:

• Taxable amount: €6,000
• Tax Due: €660 (11% of €6,000)

Summary of Taxes in France:

Scenario 2: Living in Greece

1. Social Security: Since Greece does not have a tax treaty with the U.S. regarding Social Security, the individual will likely be subject to tax on their $36,000 of Social Security income in both the U.S. and Greece.

• U.S. taxes: Social Security is taxed in the U.S. at federal rates.
• Greek taxes: Greece considers foreign pension income taxable and applies progressive income tax rates. For $36,000 in Social Security, the individual would be taxed under Greek rates.

Greece’s progressive income tax system for individuals is as follows:

• Up to €10,000: 9%
• €10,001 to €20,000: 22%
• €20,001 to €30,000: 28%
• €30,001 to €40,000: 36%
• Above €40,000: 44%

Since $36,000 is about €33,000, it falls within the 28% bracket.

• Taxable amount: €33,000
• Tax Due: €9,240 (28% of €33,000)

2. Pension Income: Similar to Social Security, pension income is taxable in Greece as foreign-sourced income. The individual will be taxed at the 28% rate (as their income exceeds €30,000 but is less than €40,000).

• Taxable amount: €7,200 (converted from $7,200)
• Tax Due: €2,016 (28% of €7,200)

3. IRA Distributions: Greece treats IRA distributions as foreign-source income, subject to annual taxation. The total taxable amount of $6,000 (converted to €6,000) would be taxed under Greek income tax rates. This would also likely be taxed at 28%, as it is part of the overall income.

• Taxable amount: €6,000
• Tax Due: €1,680 (28% of €6,000)

4. Roth IRA Distributions: As with the IRA distributions, Roth IRA distributions are likely subject to Greek taxation. The government does not have clear provisions regarding Roth IRAs, but the assumption is that they would be taxed as foreign income.

• Taxable amount: €6,000
• Tax Due: €1,680 (28% of €6,000)

Summary of Taxes in Greece:

Conclusion:

Consult with tax professionals to structure your financial affairs to optimize tax treaties.

For a single individual living in France or Greece, both countries have distinct tax treatments. France provides favorable tax treatment for Social Security, pension, and retirement account distributions, with taxes primarily applied to the IRA and Roth IRA distributions. In contrast, Greece imposes heavier taxes on foreign income, applying a uniform 28% tax rate on various income sources, including Social Security and retirement account distributions. Expats should be aware of these differences and that taxes are constantly changing and therefore rely on a tax professional when planning their retirement income strategies.