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Do non residents pay home-country tax on French Livret A interest?

Understanding income tax due can be challenging for those with homes in different countries

The Livret A can net you interest free from French tax Pic: HJBC / Shutterstock

Reader question: As a UK resident with a second home in France I understand that interest on a Livret A savings account is free of French tax but would it be necessary to declare the interest to the UK tax authorities, and if so, would it be liable to tax in the UK?

A Livret A savings account is a bank account with an interest rate that is fixed by the French government after taking inflation into account. Interest earned on a Livret A is not taxable in France. 

Any adult who does not already have one is allowed to open a Livret A, regardless of nationality, tax residence or age and whether their French residence is primary or secondary. 

Only one Livret A is allowed per person and the most you can deposit in the account is €22,950. 

A Livret A can be opened at any French bank. If you do not already have one and have a French current account, it may be simplest to open one at the same bank.

Currently, the annual interest rate is 3% and, as mentioned, there is no French tax (or social charges) on this. 

However, if you are not a resident of France, you are correct that you need to consider whether the income may be declarable, and potentially taxable, in your home country. 

Rules depend on tax treaties

The exact rules on this will often depend on any double tax treaty signed between France and your country of residence, though a common principle is assets such as bank interest are assessable, and potentially taxable, in the country where you live.
If you are a UK resident, you need to declare non-UK income to the UK. This includes savings interest from France.

You can do this by filling in an annual self-assessment tax return and recording your foreign interest and gains in the foreign section. 

Some foreign income, including some dividends, is not declarable in the UK but most do, including savings account interest, such as from a Livret A.    

If in any doubt as to whether you count as a UK tax resident under UK rules, then you can check here

However, in most cases it will be clear where your main home and attachments are, which is usually where you also spend most of the year. This is usually your country of tax residency.

Livret A income may or may not be taxed depending on your UK personal tax allowance and levels of other income.

For further help on how to declare your foreign interest and gains, you can contact HMRC

Related articles: 

France will keep Livret A savings rate the same for next 18 months

How to protect savings if your French bank crashes

Tax-at-source France: How it works and why you still self-declare

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