How European Countries Tax a US Annuity (2026 Guide for Americans)

Written by Hans Goldstein, licensed insurance agent · CA 4273294
Updated October 2026

When my mom (Norwegian) and dad (American) started planning their move from the US to Norway, the first tax question was simple: if they live on a US annuity, who taxes it, and how much? The answer turned out to depend almost entirely on the country. Some European countries treat a purchased life annuity as mostly your own money coming back and tax only a small slice. Others tax the whole check. A few have special flat-rate regimes for incoming retirees.

This page sorts out the regimes I could verify against the statute or a primary tax summary. Where a rule is still unsettled, I say so and point you to a local adviser.

The two-country picture in one minute

• Your new country taxes first. Almost every US income tax treaty says a private annuity paid to a resident of the other country is taxable only in that country of residence.
• The US still taxes its citizens. Each of these treaties has a "saving clause" that lets the US tax citizens as if the treaty did not exist. On your US return the annuity is taxed under the exclusion ratio, so a large part of each check from a non-qualified annuity is a non-taxable return of your premium.
• The treaty fixes the overlap. Most modern treaties re-source the income so the US can credit the foreign tax. The older US-Norway and US-Greece treaties have no re-sourcing rule; there the host country credits the US tax instead. The usual net result: you pay roughly the higher of the two bills, not the sum.

So a country that taxes only a slice of each payment often ends up costing you nothing extra beyond your US tax. That is why the partial-taxation regimes below matter.

Countries that tax only part of each annuity payment

A worked example with Germany: a $22,500 a year annuity that starts at 65 has an 18% yield share, so about $4,050 a year is taxable in Germany. That German tax is small, and as a US citizen you credit it against the US tax on the same income.

Example: a 62-year-old American living on a US annuity in Europe

$300,000 of after-tax savings into a life-only SPIA at 62. Payouts are survey averages per $100,000 from the September 9, 2026 ImmediateAnnuities.com survey (man $603 a month, woman $582). Illustrative, not quotes.

For a couple, a joint and survivor annuity pays less per dollar than single life (get a quote), and on the US side the excluded part is spread over the two-life multiple (27.8 when both are 62, IRS Table VI), about $10,790 a year on $300,000. Social Security can start at 62; who taxes it depends on the treaty (under the Sweden and Denmark treaties, for example, only the US does).

Single or married: what changes for a couple

• US return: if your spouse is not a US citizen, you can choose to treat them as a US resident and file jointly, but then both of you report worldwide income every year until the choice ends (IRS, nonresident spouse). Run the numbers both ways with a cross-border preparer.
• Switzerland: the income and wealth of spouses living together are added together for Swiss tax.
• Gifts to a non-citizen spouse: if you move money to a spouse who is not a US citizen so the annuity is in their name, only $194,000 a year is excluded in 2026 (IRC §2523(i), Rev. Proc. 2025-32); above that you file Form 709, and tax is generally due only after the lifetime exemption is used.
• Elsewhere: joint versus individual assessment differs by country; confirm with a local adviser before you decide whose name the annuity goes in.

Special regimes for incoming retirees

Where a US annuity costs more

• Norway. A US-issued annuity is taxed on the gross payment at the 22% rate on general income, including the part that is your own premium coming back. The trade is worth knowing: the same annuity is not taxable wealth in Norway because the insurer has never been licensed there (Skatte-ABC F-24-2.1, skatteloven § 4-2(2)). See Norway wealth tax and the US annuity exception.
• Netherlands. A purchased annuity bought with after-tax money is treated as a Box 3 asset at its economic value. Box 3 taxes a deemed return at 36% (2026), every year, on that declining value.

France: a treaty rule worth asking about

The US-France treaty text contains a special rule (Article 24(1)(b)(v) as renumbered by the 2004 and 2009 protocols; older texts cite 24(2)(b)(vi)) for US-source annuities received by US citizens living in France: France grants a credit equal to the French income tax on them. Read literally, that leaves the US as the country that actually collects income tax on the annuity. The treaty credit does not remove French social charges (18.6% in 2026 on the age-based taxable share, about 7.4% of each payment for an annuity bought at 62), and what proof of US filing France expects is a question for a French tax adviser. Green-card holders do not get this rule.

Why the net is usually "the higher of the two"

Here is the mechanism in plain English. The host country taxes the annuity first. The US then taxes it again because you are a citizen, but the treaty treats the income as foreign-source to the extent needed to avoid double tax, so a foreign tax credit (Form 1116) offsets the US tax. If the host tax is smaller than the US tax, you pay the US amount in total. If the host tax is larger, the US tax is wiped out and you pay the host amount. Under the older Norway and Greece treaties the order is reversed: the US taxes the US-source annuity and the host country credits the US tax, with roughly the same end result. The exception is Greece’s 7% regime, which allows no credit and stacks.

For the full mechanics, including reporting forms, see FBAR, FATCA and double taxation on a US annuity.

Practical points before you buy

• Buy the annuity while you still have a US address. US insurers sell where they are licensed, so lock it in before the move.
• Expect federal withholding once you move. Under IRC §3405(e)(13) and Treasury regulation §31.3405(e)-1 (T.D. 10008, which applies to payments from January 1, 2026), a US citizen whose residence address on file with the insurer is outside the US cannot opt out of federal income tax withholding, even if the payments go to a US bank account. Only the taxable part of each payment is withheld on, and the withholding is a prepayment credited on your US return, not an extra tax. A US bank account is still the simplest place to receive the payments.
• Non-qualified versus IRA money. The partial-taxation rules above are for privately purchased annuities. An IRA-funded annuity is usually taxed as a pension in full, but some regimes (Cyprus 5%) are built for pensions.
• Your new country may want the contract reported. To Spain, France or Italy a US annuity is a foreign asset, with its own local reporting.

The tax piece is only half the picture. The reason most people in my parents’ situation look at an annuity at all is the income requirement for the residence permit. If you are in the same boat, run your numbers with the calculator on this page.

Frequently asked questions

Related reading

• Moving abroad on a fixed income: hub
• Why a US annuity is tax-favored: the exclusion ratio
• FBAR, FATCA and double taxation on a US annuity
• Countries with a wealth tax and whether an annuity helps
• Norway wealth tax and the US annuity exception
• Spain non-lucrative visa income requirement
• Switzerland: retiree permit, wealth tax and annuities

Sources

• German Income Tax Act (EStG) section 22: Ertragsanteil table
• UK ITTOIA 2005 section 717: purchased life annuities, capital element exempt
• Skatteetaten, Skatte-ABC F-24 Livrenteforsikring
• PwC Worldwide Tax Summaries: Greece incentives (7% regime)
• PwC Worldwide Tax Summaries: Cyprus foreign pensions
• PwC Worldwide Tax Summaries: Italy 7% regime
• PwC Worldwide Tax Summaries: Ireland remittance basis
• PwC Worldwide Tax Summaries: Portugal NHR and IFICI
• US-France income tax treaty (IRS text), Article 24(1)(b)(v) (formerly 24(2)(b)(vi))
• BOFiP: rentes viageres a titre onereux, taxable fraction by age
• US-Norway income tax treaty (IRS text), Articles 18, 23, 24
• US-Greece income tax treaty (IRS text), Articles XI and XIV
• T.D. 10008: final regulations on withholding for payees outside the US (applies from January 1, 2026)
• IRS Rev. Proc. 2025-32: 2026 inflation adjustments ($194,000 non-citizen spouse gift exclusion)
• IRS: Nonresident spouse (choice to file jointly)
• IRS Publication 939: Tables V and VI
• ImmediateAnnuities.com: immediate annuity rates by age (survey of September 9, 2026)