Having savings stashed away for a rainy day or investment purposes is an essential part of your wealth-building journey. But you need to ask if your savings are in the best place for you now. Helen Booth, Senior Financial Adviser at deVere France, explains how important it is to manage your investments for tax-efficient income when living in France.
Tax efficient savings plans in France
With inflation running as high as it is and the poor lack of returns on savings accounts, you could, in fact, be losing money if you leave it to stagnate in a savings account. Inflation could be higher than the interest earned, and your money will depreciate over time.
But when it comes to good support and advice, a few things need to be kept in mind. Since Brexit, financial advisers who live in and are regulated in the UK, will not be authorised to provide you with ongoing advice. Also, any tax-efficient savings schemes in the UK, such as I.S. As, are not tax-efficient in France.
If you live in France, there are better options depending on your attitude to risk.
Instead of leaving money depreciating in your bank account, you can earn better returns by investing in various currencies or different investment funds.
There are tax-efficient plans that could earn you better returns without having to pay capital gains or income tax on the income received. There are also inheritance tax benefits when you want to pass on your money to your beneficiaries.
Assurance vie
This is not a life insurance policy, though it sounds like it may be for English speakers. An Assurance Vie is an insurance investment policy that offers permanent residents in France a tax-efficient way of investing and withdrawing money with an added inheritance tax advantage.
- Funds remaining within an Assurance Vie are free of French income and capital gains tax.
- There is a choice of funds that could provide much higher returns than a low-interest savings account from a bank.
- There is no limit on the amount that can be invested.
- After eight years, €4600 can be withdrawn annually free of tax (€9200 for a married couple).
- It falls outside your estate and can be left directly to beneficiaries.
- If the policy is established before your 70th birthday, you can name as many beneficiaries on the plan as you like, each receiving up to €152,000 tax-free on the death of the assured (anything over this amount is taxed at 20%. If any premiums are paid or the policy is started after your 70th birthday, the amount goes down to €30,500 in total.)
- The Assurance Vie may also help reduce your wealth tax liability as there is a cap on the percentage of wealth tax you pay based on your taxable income.
It is essential that you review your savings to ensure they are in a product that will give you tax-efficient maximum returns. A financial adviser who lives and works in France and is appropriately regulated and authorised to advise you, can help you choose the most suitable way to manage your money.
Contact Helen Booth at deVere France for a free, no-obligation consultation at helen.booth@devere-france.fr
deVere is one of the world’s leading independent financial advisories; deVere France provides trusted, independent financial advice to expatriates and international investors based in France: deVere-france.fr
Please note, the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.
