Working in the U.S. Virgin Islands as a French National: Visa, Minimum Wage, Tax and Contributions

As the U.S. Virgin Islands are a US territory, immigration and work authorisation fall under federal law. France Diplomatie (the French foreign ministry) reminds us that the visa waiver programme (ESTA, 90 days at most) does not allow professional activity, paid or unpaid, and that a visa is required for any activity, including an internship; work in exchange for accommodation (wwoofing), babysitting or au pair work are considered employment and require a work visa. A medical examination is compulsory for long-stay visas, and overstaying the authorised period leads to removal and, generally, an entry ban of several years.

For a business project, the USCIS E-2 investor visa requires the nationality of a treaty country, an investment in a real business that the applicant directs (at least 50% ownership or operational control) and an activity that generates more than a marginal income. The initial stay is two years, with extensions in two-year periods with no limit on number; the spouse of an E-2 holder is generally authorised to work. The list of treaty countries is published by the State Department. The other categories (employee of a US employer, intra-company transfer, study, family) depend on the project and should be checked with USCIS before any application.

The US Department of Labor indicates an hourly basic minimum wage in the Virgin Islands, revised periodically. Overtime gives rise to a premium beyond 8 hours a day and 40 hours a week, as well as for any hour worked on the sixth or seventh consecutive day. No pay scale by occupation was read for this page: job offers and contracts proposed by local employers serve as a basis for negotiation.

A French employee seconded by their employer generally keeps their French pay, with any expatriation supplement set by the secondment contract. An employee recruited locally negotiates their salary in dollars with a territory employer, and benefits (health insurance, leave) are part of the offer. Comparing the whole pay package, health insurance included, avoids focusing on gross salary alone: the page healthcare system in the U.S. Virgin Islands details the schemes to which the employer gives access.

The territory has its own tax administration, the Bureau of Internal Revenue (BIR). According to the IRS, the Virgin Islands have their tax system based on the same laws and rates as those of the United States; the BIR brochure explains that the federal tax code applies there under a “mirror system”, in which the Virgin Islands replace the United States whenever necessary, and that the tax proceeds go to the territory. Bona fide residents file their return with the BIR and generally pay tax only to the territory, on their worldwide income; if they have income from sources outside the Virgin Islands, they attach form 1040INFO. Filing with the territory generally starts the limitation period for federal tax.

Bona fide resident status requires three conditions: the presence test (at least 183 days in the year, or 90 days at most in the United States, or at most $3,000 of US-source earned income with more days in the Virgin Islands than in the United States, or no significant connection with the United States), the absence of a tax home elsewhere and the absence of a closer connection to the United States or a foreign country. Anyone who works in the territory receives local-source income and pays the territory’s tax on that income. A non-resident alien files form 1040NR with the BIR for local income, with a foreign tax credit where it applies. A change of residence to or from the Virgin Islands is notified to the IRS by form 8898. The scale of bands is not reproduced here: it can be read in the federal code tables and from the BIR.

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). The residence and tax-allocation rules provided for the United States therefore cannot be taken for granted for a person settled in the Virgin Islands. French tax residence falls under domestic law: a single criterion is enough (home or main place of stay, professional activity, centre of economic interests), and the administration recommends systematically contacting the local tax administration. A check with the French tax administration, the BIR and a tax adviser should precede departure.

According to the BIR brochure, the employer withholds income tax from wages paid for services performed in the Virgin Islands, wherever it is established, and remits it to the BIR (forms 501VI and 941VI), which gives each employee a W-2VI statement before 31 January. Federal Social Security and Medicare contributions (FICA) and the federal unemployment tax (FUTA) are applied there under the same procedures as in the United States but remitted to the IRS. The rates are 6.2% for Social Security and 1.45% for Medicare borne by the employee, with the same rates for the employer; the Social Security ceiling is revised every year (IRS). IRS instructions specify that references to federal income tax withholding do not apply to territory employers, except for employees subject to that withholding.

The France-US social security agreement, signed on 2 March 1987 and in force since 1 July 1988, names the Virgin Islands in its territorial scope. It coordinates disability, old age and survivors; sickness and maternity do not feature in it. An employee seconded by their French employer can remain on the French scheme: the CLEISS summary table mentions form SE 404-02 for 5 years for an initial secondment, with no extension; for a self-employed worker, the initial duration is two years, with an exceptional derogation possible beyond that (article 9). An expatriate on a local contract falls under US social security legislation and leaves the French scheme (see seconded or expatriate and the glossary entry on the local contract).

A self-employed worker seconded from France requests form SE 404-02 from Urssaf (the French social security contributions collection body, international mobility department) and keeps it; the competent US body is the Social Security Administration. A self-employed resident of the territory declares their earned income and pays self-employment contribution to the IRS through form 1040-SS. The agreement provides no coordination for sickness and maternity insurance: care received in the Virgin Islands is not coordinated, and private insurance or the CFE (the voluntary scheme for French expatriates) completes the arrangement (CLEISS).

Businesses established in the territory also declare a local tax on their turnover. According to the BIR brochure (undated edition), its rate is 5%, with an allowance of $9,000 a month for businesses whose annual turnover is below $225,000; beneficiaries of the territory’s economic development programme may be exempt from it. Rates, thresholds and forms should be confirmed with the BIR before setting up any activity.

For remote work, France Diplomatie specifies that ESTA does not allow professional activity, paid or unpaid; the situation of an employee who works remotely for a French employer should be confirmed with USCIS before departure. Our page digital nomad insurance presents cover suited to mobile professionals.

The currency is the US dollar: the US Department of Labor, the BIR and the IRS all publish their amounts in dollars. The territory’s tax documents bring out several sectors: tourist accommodation (hotel room tax, duty exemptions on certain items intended for tourists), construction (similar exemptions), rum production (molasses exempt from excise tax) and businesses in the economic development programme.

For a professional project, these benchmarks suggest checking with the BIR the conditions of each incentive scheme. Updated macroeconomic indicators (growth, inflation, unemployment) appear in the block above; the page living in the U.S. Virgin Islands completes this picture with benchmarks on the cost of living, hurricanes and dengue.