10. Savings Accounts in France

The term most generally used for a bank savings account in France is compte d'épargne.

It may also be called compte sur livret, although, this is just an interest earning deposit account, rather than a savings scheme.

We do not review investment based savings schemes here, but we hope to be able to do so in the future. These schemes generally require that you tie up your cash for a specific period, and their returns are related to the performance of the stock market.

Nevertheless, take a look at our short review of life insurance policies, as they can operate as tax efficient savings schemes in France. Particularly useful for those arriving in France with a lump sum to invest.

1. 10.1. European Tax Directive
2. 10.2. Regulated Savings Accounts
3. 10.3. Standard Savings Accounts

10.1. European Tax Directive

In July 2005 the European Tax Directive came into force, under which the 39 signatories have agreed to exchange information about customers who earn interest in one country, but live in another.

All countries within the EU are signatories to the agreement, as well as Andorra, Anguilla, Aruba, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Liechtenstein, Monaco, Montserrat, Netherlands Antilles, San Marino, Switzerland, Turks & Caicos.

Likewise, if you are non-resident, and you hold savings in a bank account in France, the amount of interest earned on the account will be reported to the tax authority of your home country if they are a signatory to the agreement.

There are legitimate steps you can take to get around these reporting procedures, either by moving funds outside of the area of jurisdiction, or the creation of certain types of trust or company structures in places such as Jersey, about which your financial advisors should be able to provide more information. The tax directive only applies to individuals.

Some banks also offer the option of a 'deferred interest' account, so that, whilst interest is still accrued on your capital, it is not paid into your account until you elect to do so. However, you may still be liable for payment of a withholding or 'retention' tax when, ultimately, you do credit the funds to the account.

Another option is to have an EU account held jointly with someone who lives outside the area of jurisdiction of the rules, and choose for the other account holder to receive the benefit of the interest. In these circumstances, the account is outside of the scope of the tax directive.

There are also certain types of financial instruments that are exempt from the regulations, notably certain types of securities, equities and life insurance products.

Finally, if you are exempt from paying income tax in France, then you can seek exemption from the directive. You should discuss with your bank, who may require an appropriate certificate from the tax authority.

Whichever option you choose, you should take professional advise before you make a final decison.