MEXICO

December 2021

Christmas is around the corner and my office will be open for another two weeks or so before closing for the holidays.

I would like to wish you all the usual season’s greetings. Like last year at the same time, we can hope for a better year in 2022 or fear that worse is coming. Many of us are just tired of the never-ending COVID crisis. Nevertheless, I hope that we all can find a way to set aside such worries and I wish you all

A MERRY CHRISTMAS AND A HAPPY NEW YEAR

Perhaps some of you agree with me that 2021 was harsh and unsettling, at best. With the end of the year near, I was hoping to have a glimpse of light soon. May things improve in 2022.

MEXICO
Owsley and Charlie, twins of the trade
Come to the Poet’s Room
Talking about the problems of the leaf
And yes, it’ll be back soon
There used to be tons of gold and green
Comin’ up here from Mexico
A donde esta la planta, mi amigo, del sol? 
But Mexico is under the thumb
Of a man we call Richard
And he’s come to call himself king
But he’s a small-headed man
And he doesn’t know a thing
About how to deal for you
How to deal for you
There are millions of you now
I mean it’s not as if you were alone
There are brothers everywhere
Just waiting for a toke on that gold
And God knows how far it can go
But thanks Uncle Charlie
For your Mexican smoke
You’re a legend Owsley
For your righteous dope
There were a half a million people on the lawn
And we sang to the faces in the dawn
How long must that damn race
Wait for the jailer’s time to end? 
How long must the Panther race
Wait for the iron bars to bend? 
No no no no no nobody waits.

“Mexico” is a single released in May 1970 by Jefferson Airplane, and written and sung by Grace Slick. I have always been a fan of Jefferson Airplane and have used their songs several times. I chose “Mexico” to illustrate something about a country that sounds and represents something really foreign, very different. When I read the lyrics I was reminded how political this band was and how much they pushed a revolutionary agenda. I am sure people who lived through the ’60s and ’70s will have personal memories associated with this song.

After all these years, I continue to be surprised by the large number of people who hold a carte de séjour and manage to renew it by themselves but continue to call it a visa and consider themselves tourists because the category of the card is visiteur. What does it take to feel like an immigrant? What does it take to realize, in their daily life in France, that this is not Kansas anymore and of course not the USA? Crossing the border with Mexico instantly gives one the feeling of entering a different country, where a different language is spoken. What is it about living in Paris that enables Americans to enjoy this slightly exotic atmosphere without changing much in their life? After 24 years in business, this continues to fascinate me.

RIGHT ON THIS SIDE OF THE BORDER, WRONG ON THE OTHER SIDE
« Vérité en deçà des Pyrénées, erreur au-delà »

Blaise Pascal (19 June 1623 – 19 August 1662)
French mathematician, physicist, inventor, philosopher, writer and Catholic theologian.

I got a lot of reactions on the topic of having money put in an escrow type of account to secure the rental of a house or an apartment in France. The information that two readers sent me is so valuable that I am sharing it with you.

It is true that the escrow solution comes with significant costs in all possible ways. I might add that this is not the only situation where a foreigner has to weigh the desire to live in France against the cost and sacrifices needed to be able to stay here. I have yet to meet one expat receiving the full expat package – salary paid in the USA, extra compensation for the cost of living in France – who would be willing to lose more than half their compensation to stay in France with a local labor contract. I hear the same kinds of comments about estate taxes and the social charges on all work compensation affecting employees and the self-employed pretty much alike. We should be rational and accept the entire system as one, and go with the saying “France: love it or leave it.” When I immigrated to the USA as a newlywed it was clear to me that living in the USA meant getting used to everything that comes with living in the USA.

At the same time, I understand where the frustration is coming from, as modern life makes it possible to have the best of both sides for a few years.

This discussion, which is a lot more complex than it appears, always takes me back to the first car trip we made in the USA. We were having dinner on a terrace on the main street of Corning, NY. I was enjoying a beer with the meal. My son was about seven years old and asked to taste the beer. This would have been commonly accepted in a similar setting in France. It was absolutely inconceivable in the USA. I still remember his temper tantrum. He could not understand that in the USA it was illegal. Growing up in France and spending my summer vacations in Denmark also led to situations where I was punished for doing the wrong things there.

Moving to a foreign country and being an immigrant means being torn between the old life and the new. Americans immigrating to France are often able to ease the process by delaying some difficult choices. So I am sharing these readers’ messages and valuable advice here.

OWNING FRENCH MUTUAL FUNDS AS AMERICAN CITIZENS 
1st READER
In your answer about a guarantor for renting, you wrote, “Then you invest this money in a mutual fund account with your bank after discussing and reviewing with your banker the financial products most compatible with your needs.”

The problem is that mutual funds are the worst kind of investment for Americans and should absolutely be avoided. The reason is that almost all are what are called Passive Foreign Investment Companies (PFICs) and they consume monstrous time and high costs for an accountant or tax lawyer each year to declare to the IRS. In addition they are taxed heavily.

PFICs are reported using Form 8621, and the IRS estimates the following time requirements for completing that form:
Recordkeeping 16 hr., 58 min. 
Learning about the law or the form 11 hr., 24 min. 
Preparing and sending the form to the IRS 20 hr., 34 min. 
https://www.irs.gov/instructions/i8621

I am of course not a tax specialist, but the reason seems to be that with French mutual funds you declare a gain or loss upon its sale, whereas in the US the dividends and capital gains of the components over the course of each year generate a payment to the holder of the fund, on which tax is paid annually. (This is usually reinvested and becomes part of the base cost, so you are not double-taxed when selling.) My understanding is essentially that Form 8621 wants to know what went on inside that fund all year.

2nd READER
Just a small item to point out in this excellent newsletter. … you should be careful recommending European bank products to US citizens, because they cannot buy them without huge US tax implications. The banks try to sell these products all the time, and they do not know US tax law. These products are known as PFICs and have drastic tax consequences to US taxpayers. Also, I believe there are now insurance companies which do this much better, such as https://www.garantme.fr/fr

BTW, the issues involving Americans are getting more and more complex; now that the banks are actually turning their American clients in (FATCA), the challenges have become increasing complicated.

—–

I am fully aware of the complications involved in opening and managing a French bank account, especially if the American citizen holds financial investments, even when these are French mutual funds invested in French instruments.

I explained the consequences of choices made by Americans as they decided to immigrate to France and settle for good. If you want a secure, long-term lease, you need a guarantor. To avoid this they can choose a less secure lease. The new insurance set-up will drastically change the situation. None of my clients has used this policy, so I do not know if the market (agencies and private owners) accepts this kind of insurance products. Also, I do not know how reliable the service is when it is asked to deliver the guaranty purchased from it. Everything is ready for the private sector to come up with the right solution, as there is clearly a valuable service to offer since I am sure neither French rental law nor IRS regulations will change any time soon.

A READER’S EXPERIENCE OBTAINING THE FRENCH HEALTH PASS
Another of my readers writes the following:

I read your periodic emails regularly and appreciate all the information contained in them. I was happy to see the reference in your current commentary on obtaining a passe-sanitaire if you were vaccinated outside France, as I and my wife were in February 2021. This summer, in anticipation of my November-December stay in Paris (I arrived yesterday!) I knew I should get started on mine.

I began the process of obtaining a passe, which documents the conversion of my Center for Disease Control (CDC) Vaccination Record Card into a Certificat Covid Numérique UE with accompanying QR code, on September 1, 2021, by submitting the application online, along with the three PDFs needed for the application (my CDC card, my passport and my airline itinerary). I received my passe and QR code on September 21, after a processing time of 20 days.

Once I was familiar with the process, it was easier to submit my wife’s application on September 23; she received her passe-sanitaire on, I believe, October 21. The processing time had expanded to 28 days by then.

My nieces, visiting us in Paris during the third week of November, submitted their applications on September 26 and I believe they’re still waiting for their passes after 36 days. In other words, the processing time has expanded a lot over the past two months. I advise anyone who is planning a trip to France to apply ASAP for their passe-sanitaire. It was not a particularly difficult application, especially if scanning and PDF usage is within your ken. But the expanding delay concerns me.

And by the way, my passe-sanitaire QR code works perfectly! I used it twice today and no problems. Well done, Ministère des Solidarités et de la Santé!

Christmas is around the corner and my office will be open for another two weeks or so before closing for the holidays.

I would like to wish you all the usual season’s greetings. Like last year at the same time, we can hope for a better year in 2022 or fear that worse is coming. Many of us are just tired of the never-ending COVID crisis. Nevertheless, I hope that we all can find a way to set aside such worries and I wish you all

A MERRY CHRISTMAS AND A HAPPY NEW YEAR

Perhaps some of you agree with me that 2021 was harsh and unsettling, at best. With the end of the year near, I was hoping to have a glimpse of light soon. May things improve in 2022.

MEXICO
Owsley and Charlie, twins of the trade
Come to the Poet’s Room
Talking about the problems of the leaf
And yes, it’ll be back soon
There used to be tons of gold and green
Comin’ up here from Mexico
A donde esta la planta, mi amigo, del sol? 
But Mexico is under the thumb
Of a man we call Richard
And he’s come to call himself king
But he’s a small-headed man
And he doesn’t know a thing
About how to deal for you
How to deal for you
There are millions of you now
I mean it’s not as if you were alone
There are brothers everywhere
Just waiting for a toke on that gold
And God knows how far it can go
But thanks Uncle Charlie
For your Mexican smoke
You’re a legend Owsley
For your righteous dope
There were a half a million people on the lawn
And we sang to the faces in the dawn
How long must that damn race
Wait for the jailer’s time to end? 
How long must the Panther race
Wait for the iron bars to bend? 
No no no no no nobody waits.

“Mexico” is a single released in May 1970 by Jefferson Airplane, and written and sung by Grace Slick. I have always been a fan of Jefferson Airplane and have used their songs several times. I chose “Mexico” to illustrate something about a country that sounds and represents something really foreign, very different. When I read the lyrics I was reminded how political this band was and how much they pushed a revolutionary agenda. I am sure people who lived through the ’60s and ’70s will have personal memories associated with this song.

After all these years, I continue to be surprised by the large number of people who hold a carte de séjour and manage to renew it by themselves but continue to call it a visa and consider themselves tourists because the category of the card is visiteur. What does it take to feel like an immigrant? What does it take to realize, in their daily life in France, that this is not Kansas anymore and of course not the USA? Crossing the border with Mexico instantly gives one the feeling of entering a different country, where a different language is spoken. What is it about living in Paris that enables Americans to enjoy this slightly exotic atmosphere without changing much in their life? After 24 years in business, this continues to fascinate me.

RIGHT ON THIS SIDE OF THE BORDER, WRONG ON THE OTHER SIDE
« Vérité en deçà des Pyrénées, erreur au-delà »

Blaise Pascal (19 June 1623 – 19 August 1662)
French mathematician, physicist, inventor, philosopher, writer and Catholic theologian.

I got a lot of reactions on the topic of having money put in an escrow type of account to secure the rental of a house or an apartment in France. The information that two readers sent me is so valuable that I am sharing it with you.

It is true that the escrow solution comes with significant costs in all possible ways. I might add that this is not the only situation where a foreigner has to weigh the desire to live in France against the cost and sacrifices needed to be able to stay here. I have yet to meet one expat receiving the full expat package – salary paid in the USA, extra compensation for the cost of living in France – who would be willing to lose more than half their compensation to stay in France with a local labor contract. I hear the same kinds of comments about estate taxes and the social charges on all work compensation affecting employees and the self-employed pretty much alike. We should be rational and accept the entire system as one, and go with the saying “France: love it or leave it.” When I immigrated to the USA as a newlywed it was clear to me that living in the USA meant getting used to everything that comes with living in the USA.

At the same time, I understand where the frustration is coming from, as modern life makes it possible to have the best of both sides for a few years.

This discussion, which is a lot more complex than it appears, always takes me back to the first car trip we made in the USA. We were having dinner on a terrace on the main street of Corning, NY. I was enjoying a beer with the meal. My son was about seven years old and asked to taste the beer. This would have been commonly accepted in a similar setting in France. It was absolutely inconceivable in the USA. I still remember his temper tantrum. He could not understand that in the USA it was illegal. Growing up in France and spending my summer vacations in Denmark also led to situations where I was punished for doing the wrong things there.

Moving to a foreign country and being an immigrant means being torn between the old life and the new. Americans immigrating to France are often able to ease the process by delaying some difficult choices. So I am sharing these readers’ messages and valuable advice here.

OWNING FRENCH MUTUAL FUNDS AS AMERICAN CITIZENS 
1st READER
In your answer about a guarantor for renting, you wrote, “Then you invest this money in a mutual fund account with your bank after discussing and reviewing with your banker the financial products most compatible with your needs.”

The problem is that mutual funds are the worst kind of investment for Americans and should absolutely be avoided. The reason is that almost all are what are called Passive Foreign Investment Companies (PFICs) and they consume monstrous time and high costs for an accountant or tax lawyer each year to declare to the IRS. In addition they are taxed heavily.

PFICs are reported using Form 8621, and the IRS estimates the following time requirements for completing that form:
Recordkeeping 16 hr., 58 min. 
Learning about the law or the form 11 hr., 24 min. 
Preparing and sending the form to the IRS 20 hr., 34 min. 
https://www.irs.gov/instructions/i8621

I am of course not a tax specialist, but the reason seems to be that with French mutual funds you declare a gain or loss upon its sale, whereas in the US the dividends and capital gains of the components over the course of each year generate a payment to the holder of the fund, on which tax is paid annually. (This is usually reinvested and becomes part of the base cost, so you are not double-taxed when selling.) My understanding is essentially that Form 8621 wants to know what went on inside that fund all year.

2nd READER
Just a small item to point out in this excellent newsletter. … you should be careful recommending European bank products to US citizens, because they cannot buy them without huge US tax implications. The banks try to sell these products all the time, and they do not know US tax law. These products are known as PFICs and have drastic tax consequences to US taxpayers. Also, I believe there are now insurance companies which do this much better, such as https://www.garantme.fr/fr

BTW, the issues involving Americans are getting more and more complex; now that the banks are actually turning their American clients in (FATCA), the challenges have become increasing complicated.

—–

I am fully aware of the complications involved in opening and managing a French bank account, especially if the American citizen holds financial investments, even when these are French mutual funds invested in French instruments.

I explained the consequences of choices made by Americans as they decided to immigrate to France and settle for good. If you want a secure, long-term lease, you need a guarantor. To avoid this they can choose a less secure lease. The new insurance set-up will drastically change the situation. None of my clients has used this policy, so I do not know if the market (agencies and private owners) accepts this kind of insurance products. Also, I do not know how reliable the service is when it is asked to deliver the guaranty purchased from it. Everything is ready for the private sector to come up with the right solution, as there is clearly a valuable service to offer since I am sure neither French rental law nor IRS regulations will change any time soon.

A READER’S EXPERIENCE OBTAINING THE FRENCH HEALTH PASS
Another of my readers writes the following:

I read your periodic emails regularly and appreciate all the information contained in them. I was happy to see the reference in your current commentary on obtaining a passe-sanitaire if you were vaccinated outside France, as I and my wife were in February 2021. This summer, in anticipation of my November-December stay in Paris (I arrived yesterday!) I knew I should get started on mine.

I began the process of obtaining a passe, which documents the conversion of my Center for Disease Control (CDC) Vaccination Record Card into a Certificat Covid Numérique UE with accompanying QR code, on September 1, 2021, by submitting the application online, along with the three PDFs needed for the application (my CDC card, my passport and my airline itinerary). I received my passe and QR code on September 21, after a processing time of 20 days.

Once I was familiar with the process, it was easier to submit my wife’s application on September 23; she received her passe-sanitaire on, I believe, October 21. The processing time had expanded to 28 days by then.

My nieces, visiting us in Paris during the third week of November, submitted their applications on September 26 and I believe they’re still waiting for their passes after 36 days. In other words, the processing time has expanded a lot over the past two months. I advise anyone who is planning a trip to France to apply ASAP for their passe-sanitaire. It was not a particularly difficult application, especially if scanning and PDF usage is within your ken. But the expanding delay concerns me.

And by the way, my passe-sanitaire QR code works perfectly! I used it twice today and no problems. Well done, Ministère des Solidarités et de la Santé!

THE CARNET OF METRO TICKETS WILL SOON NO LONGER EXIST 
The very first line of the Parisian metro was inaugurated on July 19th 1900, which is also the birthday of the metro ticket. Shortly thereafter, a new job was created: the ticket puncher, or poinçonneur du métro parisien, a man who made a hole in the ticket to allow travelers to get on the metro cars. He sat at the bottom of the stairs and people lined up on the stairs to have their tickets punched.

The most iconic tribute to this profession was the song “Le Poinçonneur des Lilas” by Serge Gainsbourg, released in September 1958.

In October 2021, the RATP began phasing out the classic carnet (book, or actually bunch) of 10 magnetized metro tickets and will eventually almost eliminate these bits of cardboard with the brown strip down the back. They have existed for 121 years of travel between more than 300 metro and RER stations in the Ile-de-France region.

The goal is to stop selling even individual tickets by 2025. In their place are digital alternatives, supposed to be more advantageous and practical, according to the RATP. Here are three things to know about the end of the metro, bus and RER ticket, which was initiated in 2016 and given final approval last April by Ile-de-France Mobilités.

1. Total disappearance of carnets by March 2022
Ile de France Mobilités has decided to make this transition gradually. The ticket machines of 106 small RER and metro stations stopped selling 10-ticket batches in October. It is still possible to buy them at the guichet (ticket office). In January, 176 additional stations will stop carnet sales, whether at the ticket office or via the machines.

By the end of December, carnets and even single named origin-destination tickets will no longer be available at RATP-approved merchants such as tobacconists. And in March 2022, the sale of ticket books will end for good in all metro and RER stations. The single paper ticket, at 1.90€, will continue to be sold at ticket counters. And it will still be possible to validate the individual cardboard “t +” tickets at the entrance to stations until 2025, according to the RATP.

2. One in ten tickets are wasted, on average
Each year, nearly 5 million tickets are demagnetized by proximity to keys or coins, the RATP points out in its effort to steer travelers toward a digital solution. The network estimates that one ticket in ten, on average, ends up not used because lost, damaged or forgotten. The RATP reckons it is more useful to group tickets together in one place on a pass or telephone.

3. Navigo “à la carte” pass and purchase via smartphone
In the spirit of gradual transition, in 2019 the RATP started selling “Navigo à la carte”, a rechargeable pass costing 2€ that allows the purchase of up to 30 entries to the system. Smartphone purchases are also available. These were rolled out initially only on Samsung phones but should now be available on all newer Android phones, with certain services available on iPhones and all of them being extended to newer model smartphones eventually.

Finally, for the bus, users can buy a single ticket for 2€ by SMS. Even with so many digital alternatives, the network still has to convince a lot of RATP users, many of whom still buy one-off cardboard tickets.

MY BUSINESS HAS A NEW FACEBOOK PAGE
Over the holidays, my assistant, Sarah, took an interesting initiative and created a new Facebook page. It is a good move for her since she and I both moderate it. She can show off her expertise and her ability to give good advice and clearly explain solutions. She does this in French, leaving the queries in English to me.

Since I am already active in a few Facebook groups and my website is my main showcase, I did not feel I needed such a page. On the other hand, it will no doubt benefit her. I do not have the time to monitor this forum and so far, it has been fairly quiet. Sarah is still figuring out how to handle this new task, being quite busy herself. I am sure it will be a great space for exchanges and hope it will pick up soon.

You are welcome to join:
https://www.facebook.com/rattachement

OFFICE CLOSED FOR CHRISTMAS
The office will close for three weeks over the Christmas holidays, starting on Friday December 17th in the evening and reopening on the morning of Monday January 3rd. As always, I will be reachable by email for emergencies and important matters. The service I offer of receiving mail for clients will continue while the office is closed. Of course, Sarah or I will honor prefecture meetings already scheduled, as well as a couple of other engagements.

I would like to remind everyone that there is no January issue.

Best regards,