Bet­ter save than sorry

Rob Kay throws the spot­light on sav­ings and in­vest­ments and ex­plains how they will be taxed when you move to France

Living France - - Les Pratiques -

If you are plan­ning a move to France, you need to find out about all the tax im­pli­ca­tions as early as pos­si­ble. Tax in France, in­clud­ing on your sav­ings, can be rather high if you do not use tax-ef­fi­cient struc­tures. There have been a num­ber of tax re­forms in re­cent years, par­tic­u­larly on how in­vest­ment in­come is taxed, so you need to make sure you are up to date on the rules and rates be­fore mov­ing. Seek ad­vice and know all the facts.


In­vest­ment in­come (this in­cludes bank in­ter­est, div­i­dends and cap­i­tal gains on the sale of shares) is added to your other in­come for the year and taxed at the pro­gres­sive rates of in­come tax of up to 45%.

There is cur­rently an ad­di­tional ex­cep­tional tax of 3% or 4% for in­come over €250,000 and €500,000 re­spec­tively; the thresh­olds are higher for fam­i­lies.

So­cial charges on in­vest­ment in­come at 15.5% are added on top of in­come tax. This makes for a com­bined top rate of tax of 64.5%. This may change fol­low­ing a Euro­pean Court of Jus­tice (ECJ) rul­ing that the 15.5% French so­cial charges should not be as­sessed on in­vest­ment and pas­sive in­come if the tax­payer is af­fil­i­ated with a so­cial se­cu­rity regime of a Euro­pean coun­try other than France. It may be that res­i­dents who have Form S1 (the EU-wide cer­tifi­cate that en­ti­tles you to health care in an­other EU coun­try) will be ex­empt from so­cial charges in the fu­ture. We are wait­ing to see how the French au­thor­i­ties re­spond to the rul­ing.

Be­sides in­come tax, your sav­ings and in­vest­ments will also be as­sessed for wealth tax. This is an an­nual tax charged on the value of a house­hold’s to­tal world­wide as­sets as at 1 Jan­uary. You are li­able if your as­sets add up to over €1.3 mil­lion; if so, you will start pay­ing tax on as­sets over €800,000, at rates of be­tween 0.5% and 1.5%.


When you move from the UK, it is very im­por­tant to re­view your tax plan­ning be­cause what is tax ef­fi­cient in the UK is gen­er­ally not tax ef­fi­cient in France.


In­di­vid­ual Sav­ings Ac­counts (ISAs) are com­monly used for tax-free sav­ings. UK res­i­dents and Crown employees (for ex­am­ple, diplo­matic or over­seas civil ser­vice) work­ing abroad, or their spouse or civil part­ner, can save tax-free with an ISA. You can save up to £15,240 for the 2015/16 tax year, ei­ther in one cash ISA or one stocks-and-shares ISA, or you can split it be­tween the two types.

You can keep your ISA once you leave the UK, and con­tinue to get UK tax re­lief on it, but you can­not pay any more into it while you are a non-UK res­i­dent.

ISAs are not tax-free in France. They are taxed at your mar­ginal rate of tax, so you may be bet­ter off making ar­range­ments that are tax ef­fi­cient in France.


There are var­i­ous op­por­tu­ni­ties to save tax in France. For ex­am­ple, com­bined French in­come tax, wealth tax and so­cial charges can­not ex­ceed 75% of your to­tal in­come for the pre­vi­ous year. Al­though 75% sounds high, this ‘tax cap’ ac­tu­ally presents tax-plan­ning op­por­tu­ni­ties with spe­cial­ist ad­vice.

When it comes to tax on cap­i­tal gains, there is a form of re­lief of 50% for in­vest­ments held for be­tween two and eight years and 65% there­after. If you have held shares for a num­ber of years, you can take ad­van­tage of this re­lief by sell­ing the shares and rein­vest­ing the cap­i­tal more tax-ef­fi­ciently.

There are also a num­ber of tax-ef­fi­cient sav­ings ve­hi­cles in France, such as the Livret A, a tax-free sav­ings ac­count guar­an­teed by the gov­ern­ment. In­ter­est rates are set by the Banque de France and are cur­rently 0.75%. You can only have one and there is a limit to how much cap­i­tal you can hold in it – cur­rently €22,950.

The ceil­ing on the sim­i­lar, but smaller, sav­ings ac­count, the Livret de Développe­ment Durable (LDD), is €12,000. In­ter­est earned on this type of bank ac­count is free from in­come tax and so­cial charges.

For amounts up to €150,000 there is the Plan d’Épargne en Ac­tions (PEA). This is a share sav­ings plan that en­cour­ages long-term sav­ings through in­vest­ment in Euro­pean and Euro­pean Eco­nomic Area eq­ui­ties. It is only open to French res­i­dents and is lim­ited to one per house­hold (ex­cept for PACS or mar­ried cou­ples who can open one PEA for each per­son).

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