Whether you’re saving towards a property purchase or deposit, hoping to minimise tax liabilities, or just want to ensure the best rates on your savings—let’s take a look at the main options for savings accounts in France.
Choosing a Savings Account
There are a number of options for savings accounts or ‘comptes d’épargne’ in France for both residents and non-residents. If you already hold a current account with a French bank, you should find it easy to set up a savings account with the same bank—simply book an appointment at your local branch to discuss your options.
Some banks, including HSBC and CA Britline, also offer savings accounts in France for UK residents, although certain savings accounts (such as the Assurance Vie) are only available for French tax residents.
For high-net-worth individuals or those with substantial amounts to save or invest, it’s recommended to consult an international finance or tax advisor who can advise on the most beneficial options for saving or investing your money.
Instant-Access vs. Fixed-Term
While there are many different types of savings accounts in France, there are two main types of short-term saving plans.
Instant-access accounts or ‘Comptes sur Livret’ have no set term and you can add or withdraw money whenever you like. These accounts typically have regulated interest rates and maximum deposit amounts. Interest rates are not always competitive, but there are often other benefits, especially when it comes to tax (more about that in a moment).
Fixed-term accounts are known as ‘Comptes à Terme’, and typically require minimum deposit amounts or savings to be accumulated over a set period. These accounts are not regulated and as such often offer much higher interest rates with no maximum deposit amount. However, there are sometimes set-up fees and charges if you choose to close the account before the term, and some promotional high-interest rates may only be available for a short term before returning to a standard rate.
Tax and Social Charges on Savings Accounts
When choosing a savings account, it’s important to not only consider the interest rates and terms, but also the tax implications. In France, as in other countries, you will be liable to pay tax and social security contributions on your savings interest and investment income. Since January 2018, this tax is deducted by your bank (known as a prélèvement fiscal) and is taxed at a flat, fixed rate of 30% (12.8% income tax and 17.2% social charges). There are income tax exemptions available for low-income earners, but no exemptions are made on social charges.
France also offers several government-regulated savings accounts (livrets) that are exempt from tax. All interest earned from these accounts is exempt from both income tax and social charges, but there is a maximum limit on the savings you can place in these accounts.
For non-residents, it’s important to note that if you are not resident for tax purposes in France, you will not be liable to pay taxes on your savings in France. However, you may still be liable to declare and pay tax on these earnings in your country of residence. Accordingly, the tax exemptions on French livret accounts are only applicable in France—non-residents may still be liable to pay taxes on these accounts in their home country, making them a far less beneficial option.
Similarly, expats living in France with savings and investments in another country may be liable to pay interest on these earnings in France. Visit our French Tax zone to learn more about your tax liabilities.
Types of Savings Accounts in France
You will likely find that your French bank offers a wide range of savings accounts and investment options, and the best one for you will depend upon several factors, including the amount you have to save, the purpose of your savings, and your tax situation. Here’s a run-down of the most common options.
Livret A, LDD or LEP
Livret savings accounts are tax-free government-regulated accounts. These accounts typically offer quite low-interest rates (0.50% in 2021) and there is a maximum deposit amount (currently set at €22,950 for a Livret A and €12,000 for an LDD account). However, the interest earned on these accounts is all tax-free and exempt from social charges. You do not have to declare these earnings on your French income tax declaration.
The conditions of these accounts are regulated by the government and the interest rate is normally modified twice a year (although it may be modified more often, in the case of major shifts in the market). Interest is earned for every 15-day period on the balance of your account, but is only applied once a year – either at the beginning of the following year or on the closure of the account if you take out your money during the year.
Additional benefits include low set-up deposits (you can start a livret with an initial deposit of just €1.50 with some banks) and you can add to or withdraw money from your account whenever you like.*
*Be aware that if you withdraw money during an interest period, you may lose the full 15 days interest—the most strategic time to take out money is on the 2nd or the 16th of each month, while the best time to pay in money is just before the 1st or the 15th.
The most common Livret is a Livret A account, available at most French banks. These accounts are available to both residents and non-residents, and allow you to save up to €22,950 (not including accrued interest). Only one Livret A account is permitted per person and there are no set up fees. Livret A accounts can also be set up for children, so a family of four could benefit from four tax-free savings accounts.
Livret de Développement Durable (LDD)
A Livret de Développement Durable (LDD) has a maximum deposit amount of €12,000 (not including accrued interest). You must be tax resident in France to have an LDD account and only two LDD accounts are permitted per household. There are no set-up fees.
Livret d’Epargne Populaire (LEP)
For low-taxpayers, there is a further account called the Livret d’Epargne Populaire (LEP). Offered by most banks, this account offers a more favourable interest rate (1% in 2021) for savings limited to €7,700. You must be resident in France and have to prove, via a tax certificate, that you pay less than a specific amount of income tax in France, in order to qualify. In 2021, the threshold is set at €20, 016 for a single person, or €30,706 for a couple with no dependents.
Plan Epargne Logement (PEL)
Another deposit account is the Plan d’Epargne Logement (sometimes called a Compte Epargne Logement (CEL)) a widely-used four-year savings plan, aimed at saving for house purchase and home improvement. Taking out a PEL with your bank will often give you access to a subsidised mortgage at the end of the term.
Prior to 2018, there was no tax payable on the interest during the saving period. However, accounts opened after 2018 are now applicable for the fixed rate of 30% (income tax and social charges combined) as previously outlined.
PELs are available for both French and non-French residents, and there are some conditions, including a minimum initial deposit of €225 to open the account and a minimum annual deposit of €540. Typically these savings plans include a contract in which you will elect the monthly, quarterly, or biannual amounts paid to your account. You can save a maximum of €61,200 in a PEL.
Share Accounts/Plan d’Epargne en Actions (PEA)
Another way to save in France is to hold a share dealing account at your bank, with a stockbroker, or another financial institution. The normal safe-custody account is called a Compte Titres. In French, a share is an action and a Government or Corporate Bond is an obligation.
Most people deal in shares through a specific form of investment called a Plan d’Epargne en Actions or PEA. This account allows you to hold and deal in French and European shares and provides considerable tax advantages on the condition that no withdrawals are made for the first five years.
In that case, no tax is payable on dividends or gains during the five year period of saving, and the withdrawal of the sum is then free of Capital Gains Tax, with only the inevitable ‘social taxes’ being payable of the total gain. Withdrawals before the five year period must be made in one lump sum and this typically results in the closure of the account. However, if the account is not touched for five years, it can then be left open and partial withdrawals can be made indefinitely. You can save up to €150,000 in a PEA.
For longer-term regular savings and ‘lump sum’ investments, the most common forms of investment in France are French-based Life Assurance Investment Bonds or Contrats d’Assurance Vie. These investments basically ensure that there is no tax on any income or growth that you do not need and that part of all withdrawals is considered to be a withdrawal of capital, keeping your taxable income, and therefore your tax bills, to a minimum.
There is no limit as to the amount you can invest in these investments. They offer various funds in which you can place your capital, ranging from funds that guarantee your capital and pay an annual interest rate through to ‘equity funds’ where your capital is placed on the stock market. Assurance Vie investments are only available to French residents.
For more on the Assurance Vie, visit our Wealth Management Zone.
Personal Pension Plans
The ‘Personal Pension’ scheme that used to be called a Plan d’Epargne Retraite Populaire or PERP has, since October 2019, been replaced with the Plan d’épargne retraite (PER). These accounts are available for all French residents and you do not have to be working to qualify. For employees, there are also two types of business PER (PER d’entreprise) which replace the previous Perp, Perco, and contrat Madelin schemes.
Up to annual limits, tax relief is available on savings into these schemes. The amount that can be deducted from taxable income is calculated each year on your annual tax declaration and is based on your taxable income.
Managing Your Finances in France
Managing your finances in a foreign country can feel like a constant challenge, but FrenchEntrée is here to help! Whether you need advice on paying French taxes, taking out insurance, or managing your wealth, our handy Essential Reading guides, expert FAQs, and up-to-date news reports will answer all your questions. And if we don’t have the answers, we can connect you with our trusted financial advisors.