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Non-residents, residents: what savings solutions are available to you?

Do you have a savings plan? If you are resident for tax purposes in France, you have access to a wide range of solutions, some of which are available in a different form in the United Kingdom. This is particularly the case for “Assurance Vie”.
And, if you are a non-resident, you can also choose between a number of short-term and medium-term savings products. So, what savings solutions are available to someone in your fiscal situation?

Non-residents: which savings products?

You are not a fiscal resident in France? Certain savings products are still available to you.

The “Livret A” savings account is available to all individuals, regardless of their age, nationality and whether or not they are resident for tax purposes in France. Funds deposited in a “Livret A” savings account bear interest and are available at all times. 
You may also open a regular savings plan, which allows you to regularly save money in an attractive and regulated environment. The “Plan Epargne Logement” (PEL) and the “Compte Epargne Logement” (CEL) are both available to non-residents. These two products can also be used to build up regular savings at the same time as accruing borrowing rights which, once vested, will allow you to obtain a mortgage at a pre-determined rate.

Useful information

Are you thinking about opening a PEL? You must deposit a minimum of €225 when opening the account. The amount of the annual payments into the account must then be at least €540. However, you can spread this minimum amount as you choose, with monthly, quarterly or half-yearly payments. In addition, any withdrawal in the first 4 years automatically results in the account being closed.

At the same time, you may invest your savings in France in a number of unregulated banking products: fixed-term deposits (DAT) and non-regulated instant access savings accounts (“Compte Sur Livret”) etc.

In all cases, it is important that you obtain information about the way in which these investments and, more generally, all your assets, are taxed. To find out more, please contact your banking adviser and ask for assistance.

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The United Kingdom and France have entered into a tax treaty to avoid double taxation of income and prevent tax evasion. As non-residents, you must declare interest income in the country where you are fiscally resident.

Savings solutions for residents

French residents have access to the full range of usual investments. Instant access accounts: “Livret A”, “Livret Développement Durable et Solidaire” (LDDs) and “Livret d’Epargne Populaire” (LEP – subject to certain income-related conditions) bear interest and are available at all times. What is special about these savings accounts? 
They are called “regulated” accounts because their rate is set by the State and payments into the accounts are capped. Another benefit is that interest income is exempt from income tax and social security contributions. 
Some banks also offer unregulated savings accounts, which can be used in addition to regulated products. In general, this solution is particularly suitable for precautionary or short-term savings. 

Useful information

In France, the tax liability on savings products is capped at the flat tax. It cannot exceed 30% (12.8% in respect of income tax and 17.2% in respect of social security contributions).

Like non-residents, residents can deposit a proportion of their cash in regular savings products such as CELs, PELs and also fixed-term deposits.

An “Assurance Vie” policy can also be used to diversify a portfolio. Once again, this solution offers tax benefits. After 8 years, gains benefit from an allowance capped at €4,600 (for a single person) or €9,200 (for couples subject to joint taxation). “Assurance Vie” has the advantage of offering a wide range of investment vehicles: euro funds (with guaranteed capital) or diversified (on which there is a risk of capital loss). You can therefore invest in the secure euro-fund and boost your savings by allocating part of the contract to equity, bond and real estate funds, etc. 
“Assurance Vie” has many advantages in terms of inheritance planning. You can name your beneficiaries and benefit from tax free allowance of €152,500 per beneficiary. Inheritance tax is then charged at the rate of 20% on amounts up to €700,000 and 31.25% above that amount.

Useful information

An “Assurance Vie” policy may offer a guarantee on diversified funds. In return for the payment of an annual premium, the policyholder is given certainty that their named beneficiaries will receive no less than the capital invested. The insurer will bear the cost of any losses associated with investments in volatile vehicles.

Finally, with a view to accumulating long-term savings, investments can be made on the stock market. A standard share account (“Compte Titre”) allows investments of all types. With a standard “Plan d’Epargne en Actions” (PEA) or a small or medium-sized business “Plan d’Epargne en Actions” (PEA-PMEs), investments can only be made in French or European equities. In return, the saver benefits from an income tax exemption on any gains made in the event of a withdrawal provided that the investment has been held for 5 years. PEAs and PEA-PMEs are therefore very attractive.

 

In short, who can invest in which products? 

 

Non-résidents

Résidents

Livret A

Yes

Yes

LDDs, LEP

No

Yes

Non-regulated instant access savings accounts ("Compte Sur Livret")

Yes

Yes

PEL, CEL

Yes

Yes

Assurance Vie

No

Yes

Standard share accounts (“Compte Titre”)

No

Yes

PEA, PEA-PMEs

No

Yes

Fixed-term deposits (DAT)

Yes

Yes