Being taxable and being taxed are two different scenarios.
Most Americans living overseas have to do a Tax return, however, after the income exclusion and the use of form 1115,(foreign tax credit) the taxes are virtually zero. You can take the foreign taxes paid to another Government as a direct credit against US taxes.
Since most European countries have higher taxes than the US, you have (in most cases)tax payments as excess. You can, as I have done, apply those overpayments as a credit in future years. That means after you return to the US and have to pay taxes, you can apply that towards your liability.
RE: . You can take the foreign taxes paid to another Government as a direct credit against US taxes.
What about interest on deposits in foreign banks? Are they credited against US taxes?
Say I have a the equivalent of millions of dollars deposited in a bank in Singapore earning interest ( this, plus the appreciation of the Singapore currency, say amounts to $40,000 interest ). Singaporeans tell me that foreign bank account holders are not taxed in Singapore.
If I declared that interest as income in the USA, wouldn’t the ENTIRE $40,000 be taxable in the US?