What are the tax-free bank accounts in France?
There are some special bank accounts in France that are regulated and are not subject to tax or social charges or fees. They have low interest but you see them in all banks. We explain.
The main French bank accounts on which tax, social charges or fees are not levied are called livrets.
Their interest is exempt from tax and French CSG, CRDS or Prélèvement de solidarité social charges.
They also do not have bank fees for opening or closing them or for making deposits / taking withdrawals.
The downside is that for many of them, levels of interest are low and they do not necessarily keep up with inflation.
The 4 tax-free livret savings accounts
This offers 0.5% interest. You can deposit and withdraw freely, above a minimum of €10, but a deposit cannot result in the total savings exceeding €22,950.
Once this ceiling has been reached, however, a Livret A account will continue to earn tax and social charges-free interest.
This means that overall, the total saved can therefore exceed the €22,950 cap, by an unlimited amount.
The LDDS (Livret de Développement Durable et Solidaire)
This requires an initial deposit of €15. Deposits and withdrawals are free, but the amount deposited cannot exceed €12,000.
Beyond this deposit ceiling, the balance continues to earn interest. This is exempt from income tax and social charges.
The return is fixed at 0.5%. You can access the account via a card from the bank but the card can normally only be used at ATMs within the same banking network.
By the end of February 2021, the public in France had placed €91 million in LDDS accounts nationwide, bringing the total saved within them to €123.5 billion.
The LEP (Livret d'Epargne Populaire)
Since February 1, 2020, LEPs have paid 1% interest.
Opening an LEP is subject to income limits and it is therefore only available for people on modest incomes. For example if you are in a couple your household income limit is €30,706.
The minimum initial deposit is €30, and deposits cannot exceed €7,700.
Once this limit is reached, interest continues to accrue on the balance.
The holder may only carry out transactions (withdrawals, payments and transfers) with the bank that issued the account.
At the end of January 2021, €39.5 billion was saved in LEPs in mainland France including Corsica.
The Livret Jeune
A tax-free savings account aimed at people aged 12 to 25 living in France.
Its rate of return is set by the banks, but must not fall below 0.75%.
Individuals aged under 16 need permission from their legal representative (e.g. parent or registered guardian) to make withdrawals.
The maximum amount is limited to €1,600. Only the owner of the account can make deposits.
Other tax-free accounts in France
Le Plan d’épargne retraite populaire (Perp)
Intended to be a long-held product, designed to help holders build up extra pension funds. Once the holder reaches retirement age, he or she receives the capital accumulated in the form of a life annuity (a fixed sum paid regularly for the rest of your life).
The sums saved are deductible from declarable income in the corresponding year, up to a maximum of €4,014, or 10% of professional income up to a maximum of a total deduction of €32,909 (whichever of the two is higher).
However, the life annuity paid by the Perp is taxed as a retirement pension.
The holder may request payment of the capital in a lump sum, which will be taxed either under the exceptional income system, or at the 7.5% rate.
CEL (Compte Epargne Logement)
An account designed to help the holder save up enough to obtain a government housing bonus and a home loan.
The CEL yield is 0.25%. After an initial deposit of €300, the holder is free to make subsequent deposits of at least €75, with the total savings not exceeding €15,300.
Beware: CELs opened before January 1, 2018 are not taxed on interest, but are subject to social charges of 17.2%.
CELs opened from January 1, 2018 are taxed at a combined rate of 30% for interest and CSG.
At the end of January 2021, households in mainland France had a combined CEL saving amount of €31.2 billion.
Note that there is another savings plan called the PEL (Plan Epargne Logement) which has more favourable terms, but the savings are not available for you to draw until it is closed.