10 Golden Financial Planning Rules For Expats in France

France is a great place to live and I’ve enjoyed every minute of my 25 years here. It’s not always easy living in a foreign country, especially in light of the Anglo-Franco relationship through the centuries (I had never realised that the French were so upset about what the English did to Jean of Arc until I joined the events committee in my village), but there are things we can do to make it is a little easier.

I always recommend expats learn to speak at least a little French and tell them not to worry about making mistakes. An attempt to communicate is always appreciated even if your grammar isn’t perfect. Always say ‘Bonjour’ upon entering a shop or a lift, ‘Au revoir’ when leaving. We might not always do it in the UK but some French people get really annoyed if you forget. And always look both ways when crossing the street, even if it is one way. French drivers often treat the rules of the road more like guidelines.

Expats coming to live in France should also not assume that the French approach to finances and taxes are similar to where you’ve come from. If we think about how complicated these subjects are even in our home country, then you won’t be surprised to hear that they may not be entirely straightforward in France either. Often there are differences that you might never have considered, some are small but some are so substantial that they could add up to hundreds of thousands of Euros.

That is why I’m going to share a few tips for managing your finances and making life in France smoother and less stressful.

1. Use a Livret A or LDDS for your emergency fund – these are government-regulated bank accounts with a fixed rate of interest that is tax-free. As part of your financial planning, I always recommend you have an easily-accessible emergency fund in case you need it at short notice. These accounts currently pay 2.4% – not much, but better than nothing and always available.
2. Consider transferring UK assets to France – Some Brits living in France may have left savings and investments back in the UK and therefore would be liable for tax on income and capital gains. By holding this money in French-compliant products instead, you could save yourself from paying tax unnecessarily, and still enjoy a very wide range of investment options (with paperwork in English).
3. Ensure your French investments are tax efficient – Assuming you have brought investments or savings to France, are they now in the most tax-efficient vehicles? Some popular investment accounts are subject to taxes that could easily be avoided. Tax-efficient savings and investment vehicles may have limits on how much you can put in, but make sure you maximise the use of these as far as possible to reduce your French tax bill.
4. Think about planning your inheritance as early as possible – France’s inheritance taxes can be onerous and the basic allowances can be swallowed up quickly if you own property or other substantial assets. However, by using the correct structure and planning techniques as early as possible, families can smoothly pass assets to their loved ones and potentially save hundreds of thousands of Euros that would otherwise go in tax.
5. Don’t forget to declare foreign accounts, income and trusts – Foreign bank accounts should be declared with your income tax declaration each year, regardless of whether they are empty or pay much interest. Failure to do so can result in big fines and they are far more common than you might think. Equally, if you have any links to a trust, there are strict reporting requirements in France.
6. Shop around for general insurance – Over the years it has become increasingly simple to cancel your existing car, home, scooter or health insurance in order to switch to another provider. By using the major comparison websites, I’ve found that you can save hundreds, if not thousands, of Euros by regularly checking what the insurance market is offering.
7. Speak to an expert before taking pension benefits – Whilst you can take a tax-free lump sum at retirement in the UK, the situation is different if you are resident in France. Before accessing your pensions or making a transfer, you should speak to someone who can explain the consequences relevant to your personal situation or it could be costly.
8. Understand how your marriage regime is treated – France recognises several different types of marriage regime and they can be treated differently for tax purposes. Before making investments, gifts or any other significant financial transactions between spouses, you should speak to an expert in order to avoid potential tax liabilities down the road.
9. Own your own home if you can – I always include this because for many people the 100% capital gains tax allowance you get on the sale of your main residence could be the biggest tax break you ever get. French house prices have risen 27% during the past decade. In fact, the French stock market has risen even more, 61%, hence why it is important to ensure your financial investments are also rolling up tax-free.
10. Take advice from a regulated professional with cross-border experience – Financial planning can make you money and it can save you money. But understanding the implications of assets and taxes in more than one country is extremely complicated and requires professional assistance. Give yourself an advantage and get in touch! I am here to help.