Retiring in the U.S. Virgin Islands: Stay, French Pension, Taxation, Medicare and Retiree Health

The entry rules are those of the United States. France Diplomatie indicates that ESTA, valid for 2 years, allows a tourist or business stay of 90 days at most, with no professional activity or study, and that it is not a right of entry. A visa is required for a stay of more than 90 days, with a medical examination for long-stay visas. The France Diplomatie page describes no visa category specific to retirees: routes to lasting settlement go through the federal categories linked to work, study, investment or family, presented by USCIS. Overstaying the authorised period leads to removal and, generally, an entry ban of several years. A sailboat or private aircraft bound for the U.S. Virgin Islands requires a visa.

Repeated stays of several months under ESTA are left to the assessment of the immigration officer at each entry. A lasting residence project is therefore prepared with the French Consulate General in Miami, responsible for the territory, and with a specialist immigration lawyer. Registration on the roll of French nationals living abroad is recommended as soon as you settle (see living in the U.S. Virgin Islands).

The social security agreement between France and the United States, signed on 2 March 1987 and in force since 1 July 1988, expressly names the Virgin Islands in its territorial scope. It coordinates three branches: disability, old age and survivors. Your French pension remains calculated and paid by your pension funds; the agreement organises relations between the two systems for people who have contributed in both countries.

On the American side, CLEISS reminds us that the Social Security old-age pension requires 40 quarters of insurance, i.e. ten years of work; a quarter is validated from an earnings threshold revalued every year. The full-rate age reaches 67 for people born from 1960, early retirement is possible from age 62 with a permanent reduction, and deferral up to age 70 increases the pension. A retiree who has never worked in the United States draws their income from their French rights, their savings and any private annuities.

The France-US tax treaty of 31 August 1994, amended by the amendments of 8 December 2004 and 13 January 2009, defines in its article 3 the term “United States” as the United States of America, without Puerto Rico, the Virgin Islands, Guam or any other territory or possession (consolidated version published by the French tax administration). Article 18 provides that pensions and sums paid under the social security legislation of one of the two states to a resident of the other are taxable only in the paying state. These rules concern residents of the United States within the meaning of the treaty: they therefore cannot be taken for granted for a retiree settled in the Virgin Islands, whose situation should be confirmed before departure with the French tax administration and that of the territory.

On the French side, a French-source pension paid to a non-resident bears withholding tax applied after a 10% allowance: 0%, 12% and then 20% according to thresholds revised every year, the 0% and 12% bands being final and the 20% band being creditable against tax. If the retiree no longer has their tax residence in France, they pay neither CSG, CRDS nor Casa on their pension, and a health contribution of 3.2% (basic pension) or 4.2% (supplementary pension) may be withheld as long as they remain attached to a French scheme (CLEISS).

On the territory side, the Bureau of Internal Revenue (BIR) brochure explains that the federal tax code applies there in mirror form. Bona fide residents file their return with the BIR and generally pay tax only to the territory, on their worldwide income; a pension from a source outside the Virgin Islands is declared with form 1040INFO (IRS, publication 570). Bona fide resident status requires a presence condition (at least 183 days a year, or one of the three other alternatives provided), the absence of a tax home elsewhere and the absence of a closer connection to the United States or a foreign country. For estates, the brochure indicates that federal estate tax is not mirrored and remains managed by the IRS, whereas the territory’s inheritance and gift taxes are exempt. These rules are technical: a Franco-American tax adviser secures the set-up before departure.

CLEISS specifies that the 1987 agreement contains no provision allowing reimbursement of care received in the United States under a French pension: the S1 form does not exist for the Virgin Islands. For cover on site, two routes are offered: voluntary CFE membership for a French national, or private insurance. The CFE retirees’ plan is for holders of a French basic scheme pension with no professional activity, requires no health questionnaire whatever the age and has a contribution depending on country, age and family composition. It covers care received abroad; cover is immediate if membership takes place before departure or within three months, otherwise a waiting period of three months (under 44) or six months (from age 45) applies. See the glossary entry on the retirees’ plan and the guide retiree health insurance abroad.

Worldwide international insurance completes the arrangement; see retirement insurance abroad. In the Virgin Islands, the distance from heavy care matters in choosing the island: the page healthcare system in the U.S. Virgin Islands locates the three reference facilities.

Medicare covers people aged 65 and over. According to CMS, US citizens and qualified immigrants lawfully resident with at least 40 quarters of contributions receive Part A, hospital cover, without a premium. Without enough quarters, Part A can be purchased, with a reduced premium for 30 to 39 quarters and a higher one below 30 quarters. Part B (doctors) gives rise to a monthly premium and an annual deductible, and Part A to a hospital deductible; these amounts are revised every year. For Part B, permanent residents must show five years of residence.

A French retiree with no permanent resident card or contribution history therefore cannot count on Medicare on arrival and arranges their cover through the CFE or private insurance. The territory’s Medicaid requires criteria on income, assets, residence and citizenship, with a five-year waiting period for many qualified immigrants: the page healthcare system in the U.S. Virgin Islands details these schemes, and the page healthcare reimbursement in the U.S. Virgin Islands compares the situations.

Benchmarks on the cost of living, housing and climate are in the page living in the U.S. Virgin Islands. The official sources do not rank the islands by appeal to retirees; they do, however, document the hazards that matter in choosing an area: hurricane season from 1 June to 30 November, dengue and distance from a reference hospital. A retiree’s budget also includes health insurance, which is a significant item, and the costs of any medical repatriation.

• Choose the immigration route suited to the project, with a specialist lawyer and the Consulate General in Miami.
• Have the taxation of the pension estimated by a Franco-American adviser, without presuming that the treaty applies.
• Notify the departure to the pension fund, Assurance Maladie, the CAF and the tax administration.
• Arrange health cover from the day of arrival: CFE, private insurance, then Medicare if the conditions are met.
• Organise medical follow-up: medical file, current treatments and care stays in France.
• Register on the roll of French nationals living abroad and keep proof of residence.

The United States page recalls the rules common to the federal territory, and Expavy compares international health cover suited to retirees.