Reader question: If you have a win on NS&I premium bonds but the money is automatically reinvested into buying more bonds, is it subject to tax in France if you are resident here?
Unfortunately, yes, it does not matter if you take the cash amount or if it goes into purchasing new bonds. It is still seen as a declarable and potentially taxable gain.
Premium bond winnings are not seen by France as having any specific tax-free arrangement, as in the UK, as this is a UK advantage.
As a general rule, winnings from lotteries and games of chance are not taxable in France and, on the face of it, you would think this could apply also in the case of a premium bond win, as it could be seen as similar to a lottery.
This is the case, for example, if you win on the French Loto (national lottery), in a tombola organised by an association, or in a casino or a horse race.
It is seen as a one-off amount, rather than revenue in the normal sense.
However, French tax offices have in the past stated that UK premium bond winnings do not benefit under this heading.
Some financial professionals say this is because it is not an ordinary ‘lottery’ win as your initial stake is not at risk.
Your bonds retain their cash-in value for the amount they were bought for, though no interest accrues on this – it is replaced by the chance of winning in the regular draws that are held.
If in doubt, you could double-check with your own tax office, as to its stance.
The simplest way to do this is by a direct message in your personal space on the tax website.
French residents with UK premium bonds warned of bank charge risk
Clinging to UK assets while living in France might not make tax sense