Savings play a crucial role in financial planning, and in France, there’s a diverse range of saving products catering to different needs and preferences. Whether you’re an expat living in France or considering a move, understanding these savings options is essential. Let’s delve into the key characteristics of popular saving products, helping you make informed decisions based on your financial goals.Â
Table of contents
Livret A
Payment and deposit limits
Livret A offers a straightforward entry with a minimum payment of 10 € upon opening, but interestingly, La Banque Postale sets this minimum at 1.5 €. For individual account holders, the maximum savings limit is 22,950 €, excluding interest capitalisation. However, legal entities face a higher ceiling of 76,500 €, rising to 100,000 € for co-owners’ syndicates with over 100 lots.
Special considerations for entities
Certain entities, like Low-rent housing organisations (HLM), enjoy the perk of limitless deposits into their Livret A, making it an attractive choice for organisations contributing to housing initiatives.
Interest rate and taxation
The pay rate stands at an enticing 3% from August 1, 2023, until January 2025. Moreover, the earned interest enjoys a tax-free status, exempt from both income tax and social security contributions.
Holding and accessibility
Livret A adheres to simplicity, allowing a single booklet per taxpayer or one per spouse or civil partnership partner for joint taxation. This savings option provides flexibility with funds accessible at any time, offering liquidity when needed.
Utilisation of funds
What sets Livret A apart is its societal impact. The funds collected contribute to the savings fund managed by Caisse des Dépôts et Consignations, primarily directed towards financing social housing and urban renewal projects.
Livret de développement durable et solidaire (LDDS)
Opening and deposits
LDDS, with its sustainable focus, allows a flexible entry with no legally stipulated minimum initial payment. However, most institutions prefer an initial deposit of 15 €. The deposit limit is capped at 12,000 €, excluding interest capitalisation, making it an accessible choice for a broad range of savers.
Interest compensation and taxation
The LDDS entices savers with an annual interest rate of 3%, applicable until January 2025. The attractiveness extends further with interest being completely exempt from income tax and social security contributions, providing a tax-friendly savings avenue.
Ownership and accessibility
Simplicity prevails with LDDS, permitting only one account per taxpayer or a maximum of two booklets per tax household. This constraint streamlines the ownership structure, ensuring clarity. Accessibility is a notable feature, allowing funds to be withdrawn at any time, aligning with the unpredictable nature of life’s financial demands.
Utilisation of funds
The collected funds in LDDS follow a noble cause. Mirroring Livret A, these funds are centralised in the savings fund managed by the Caisse des Dépôts et Consignations. This ensures that the funds are channeled towards initiatives that promote sustainable development and societal well-being, creating a positive impact beyond individual savings.
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Livret d’épargne populaire (LEP)
Initiation and deposits
Commencing your savings journey with LEP demands an initial payment of a modest 30 €. Subsequent contributions can be made flexibly, allowing savers the freedom to deposit any amount, with a minimum of 10 €. The deposit limits, capped at 10,000 € (excluding interest capitalisation), provide a structured yet accommodating savings environment.
Attractive interest rate and revision
A distinctive feature of LEP lies in its compelling annual interest rate of 6%, offering savers an opportunity for accelerated growth. However, it’s essential to note that the LEP interest rate is subject to revision, and from February 1, 2024, it will experience a downward adjustment. This underlines the importance of staying informed about changes that might impact your savings strategy.
Tax friendly nature
LEP emerges as a tax-efficient savings avenue, with interest enjoying complete exemption from income tax and social security contributions. This makes it an appealing choice for those seeking a tax-friendly environment to foster their savings.
Ownership and accessibility
Simplicity is key with LEP ownership. Opening an LEP is contingent upon meeting specific income criteria. Each taxpayer is permitted to hold only one LEP, while tax households can possess a maximum of two. Notably, LEPs cannot be opened for children, ensuring a clear and straightforward ownership structure. Accessibility is a strong suit, allowing funds to be accessed at any time, although maintaining a positive balance in the booklet is a prerequisite.
Livret jeune
Commencement and transaction dynamics
Embark on your journey of financial prudence with Livret Jeune by initiating your account with a minimal 10 € deposit. Subsequent transactions maintain a user-friendly minimum amount of 10 €, fostering a convenient and accessible savings experience. The flexibility of transaction dynamics ensures that young savers can manage their funds with ease.
Strategic deposit limits and remuneration rates
Livret Jeune encourages disciplined savings with capped deposit limits standing at 1,600 €, excluding interest capitalisation. The rate of remuneration is a strategic aspect, offering banks the freedom to set rates while ensuring they remain equal to or above the benchmark set by Livret A, currently standing at an attractive 3%. This ensures that young savers enjoy competitive returns on their deposits.
Tax advantages and ownership structure
A notable feature of Livret Jeune is its tax-friendly nature. Interest earned enjoys complete exemption from income tax and social security contributions, enhancing the overall yield for young savers. This aligns with the goal of fostering a financially supportive environment for the younger demographic.
Exclusive ownership criteria and accessibility
Livret Jeune is exclusively designed for individuals aged 12 to 25, catering to the unique financial needs of the youth demographic. Ownership is streamlined, allowing each individual to hold only one booklet, simplifying the savings process. Withdrawals are subject to specific conditions aligned with age brackets: before 16, minors need parental authorisation; between 16 and 18, withdrawals are contingent on the legal representative’s stance, and post-18, individuals gain autonomy over their withdrawals.
Compte épargne logement (CEL)
Initiating savings with strategic payments
Embark on your financial journey with Compte Épargne Logement (CEL) by initiating an account with a prudent minimum deposit of 300 €. Subsequent payments must exceed 75 €, aligning with a strategic approach to encourage consistent and substantial savings.
Withdrawal freedom and balance maintenance
CEL accords account holders the freedom to withdraw funds at their discretion, provided the balance remains above 300 €. This flexibility ensures that individuals can access their savings when needed, fostering a dynamic and user-centric savings experience.
Strategic deposit limits and remuneration rates
CEL features a capped deposit limit set at 15,300 €, excluding interest capitalisation. The interest rate for CEL stands at a competitive 2%, offering an attractive yield on deposited funds. This aligns with the goal of fostering a savings culture while providing tangible returns for savers.
Tax implications based on opening year
Tax implications for CEL are contingent on the year of opening. For CELs initiated before 2018, interest enjoys exemption from income tax but remains subject to social security contributions. In contrast, CELs opened from 2018 onwards face income tax and social security contributions. Notably, the banking establishment applies a flat-rate deduction of 30% during interest payments, encompassing income tax (up to 12.8%) and social security contributions (up to 17.20%).
Sole ownership dynamics and accessibility
CEL adheres to a simplified ownership structure, allowing individuals to hold only one CEL account. This streamlines the savings process and ensures clarity in ownership. The accessibility of funds is a key feature, allowing withdrawals at any time, providing account balance remains positive.
Strategic utilisation for property endeavours
CEL, particularly those initiated after 2018, opens avenues for property financing with preferred rates. To unlock this benefit, the CEL must be operational for a minimum of 18 months, accompanied by a requisite amount of earned interest. This amount varies based on the purpose of financing, standing at 75 €, 37 €, or 22.5 €.
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Plan épargne logement (PEL)
Initiating financial growth with strategic payments
Embark on a journey of financial growth and property aspirations with the Plan Épargne Logement (PEL), commencing with a modest minimum payment of 225 € at the account’s inception. Subsequently, a minimum annual commitment of 540 € ensures a disciplined approach to savings. The flexibility to opt for a single annual payment or periodic contributions (monthly, quarterly, or semi-annual) adds a layer of convenience specified in the contract.
Strategic deposit limits and fixed remuneration rate
PEL introduces a deposit limit of 61,200 €, excluding interest capitalisation, allowing individuals to accumulate substantial savings over time. The remuneration rate, fixed at the account’s opening, offers transparency and predictability in terms of returns.
Taxation dynamics based on opening year
Tax implications for PEL are contingent on the year of initiation. PELs opened before 2018 enjoy an exemption from income tax until the day preceding the 12th anniversary of the plan. In contrast, PELs initiated from 2018 onwards face income tax and social security contributions. This levy encompasses income tax (at 12.8%) and social security contributions (at 17.20%).
Sole ownership structure and accessibility of funds
Simplicity defines the ownership structure of PEL, allowing individuals to maintain only one account. This clarity ensures ease of management and understanding. Accessibility of funds after four years provides flexibility, allowing individuals to leverage their savings when needed.
Strategic utilisation for property investment
PEL introduces a pivotal feature, enabling savers to take advantage of a home loan at a favourable rate of 3.45% from January 1, 2024, provided the account remains open for at least three years. This strategic benefit aligns with the broader goal of supporting individuals in realising their property ownership dreams.
Dynamic use of funds and account closure conditions
While PEL serves as a conduit for home loans, savers retain the right to recover their funds without being obligated to make a real estate purchase. This dynamic feature provides flexibility and ensures that individuals can align their financial decisions with their evolving needs.
Plan d'épargne en actions (PEA)
Flexible payment dynamics
The Plan d’Épargne en Actions (PEA) offers flexibility in payment dynamics, with a free rate of payments and no minimum amount requirement. This adaptability ensures that individuals can tailor their investment strategy to their financial capacity and goals.
Strategic deposit limits and consideration for PEA-PME holders
PEA introduces a deposit limit of 150,000 €, with calculations excluding gains since the plan’s inception. Notably, individuals holding both a PEA and a PEA-PME should be mindful that the sum of payments on both plans cannot surpass 225,000 €. This cautious approach aims to balance investments and diversify portfolios effectively.
Un-guaranteed capital and performance-based remuneration
PEA operates with un-guaranteed capital, considering its investments in stocks and stock funds. The remuneration is intricately linked to the performance of the securities within the plan. This dynamic approach aligns the returns with market fluctuations and stock performance.
Tax advantages unveiled after five years
One of the key attractions of PEA is the favourable tax treatment. After five years, dividends and capital gains generated within the PEA are exempt from income tax, providing a significant advantage to long-term investors. However, it’s crucial to note that social security contributions are still applicable. To fully harness the tax benefits, investors should refrain from making withdrawals before the five-year threshold.
Sole ownership structure and family considerations
PEA follows a streamlined ownership structure, allowing only one plan per taxpayer. However, individuals can extend the benefits to their immediate family. Spouses, PACS partners, or tax-dependent adult children can open a PEA, with a cap of two plans per tax household. This inclusive approach enables families to collectively leverage the advantages of PEA.
Dynamic fund availability and partial withdrawals
In alignment with the PACTE law, PEA introduces dynamic fund availability. After five years of existence, investors can make partial withdrawals without initiating closure or payment blockage. This flexibility serves as a strategic tool, offering options such as business takeovers, creation, or responding to specific life events like dismissal, disability, or early retirement.
Strategic use of funds in European securities
The funds collected through PEA empower investors to engage in the stock market by purchasing securities of listed European Union companies. Additionally, shares of collective investments, including funds and Sicavs, must be invested at least 75% in shares of European companies. This targeted investment strategy ensures alignment with the economic landscape of the European Union.
Plan d’épargne retraite (PER)
PACTE Law's innovation unveiled
The Plan d’Épargne Retraite (PER) is a result of the PACTE law, introducing a revolutionary retirement savings product since October 1, 2019. Crafted to gradually supersede existing retirement savings plans, PER unfolds in three distinct forms: an individual PER and two corporate PERs.
Individual PER characteristics
Voluntary payments and transfer flexibility: PER’s financial sustenance relies on voluntary payments. For those transitioning from a company PER to an individual PER, contributions from various employee savings schemes are permissible, enhancing flexibility and optimising fund utilisation.
Managed management operation: Fund management within the PER adheres to the principles of managed management. This dynamic approach tailors investment strategies based on temporal proximity to retirement, starting with riskier assets for distant retirements and gradually shifting towards more stable investments as retirement approaches.
Inclusive detention policy: Irrespective of age or professional situation, the individual PER is open to all. This inclusive feature empowers a diverse demographic to embark on a tailored retirement savings journey.
Tax benefits on voluntary payments: Contributions made to the individual PER within a year are deductible from taxable income, subject to an overall ceiling defined for each member of the tax household. This tax advantage encourages proactive retirement planning.
Strategic fund availability and utilisation: Funds within the PER become available, with exceptions, at the time of reaching retirement age. The accumulated savings offer versatile payout options, including receiving the savings as capital, as an annuity, or a combination of both.
Taxation dynamics on annuity or capital withdrawal: Tax implications on annuity or capital withdrawals are contingent on whether the contributions were deducted from taxable income. For those who availed the deduction, annuities are subject to income tax, akin to retirement pensions. In the case of capital outflows, voluntary payments are taxed based on the progressive scale of income tax, exempt from social security contributions.
Long-term focus and retirement flexibility: Positioned as a long-term savings product, the PER envisions a secure future by facilitating the accumulation of savings during the working years. Beyond providing a life annuity, it also offers the flexibility to include a capital component in retirement, ensuring a comprehensive retirement strategy.
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L'assurance vie - Life Insurance
Versatile payment options
Life insurance offers a flexible approach to payments, allowing policyholders the freedom to make free or scheduled payments without any imposed minimum amount. This adaptability ensures that individuals can tailor their premium contributions based on their financial circumstances and goals.
Unlimited deposit caps
With no deposit cap constraints, life insurance provides a limitless canvas for policyholders to shape their financial future. This freedom from deposit restrictions empowers individuals to invest and accumulate wealth without predefined limits, fostering a dynamic and scalable financial strategy.
Varied remuneration rates
Life insurance introduces a spectrum of remuneration rates, dependent on the chosen contract type. Whether opting for a euro contract, unit-linked contract, or a multi-support contract, policyholders have the autonomy to align their investment preferences with their risk tolerance and financial objectives.
Tax regimes tailored to duration and payments
Income generated from life insurance contracts operates under diverse tax regimes, intricately tied to the contract’s duration and payment schedule. This nuanced approach ensures that taxation aligns with the individual circumstances and financial timeline of the policyholder.
Inclusive policyholder eligibility
Life insurance extends its financial protection to any natural person possessing the legal capacity to initiate a contract. However, minors or adults under guardianship are required to engage in joint underwriting, allowing them to benefit from life insurance coverage under the guidance and support of others.
Joint underwriting for collective coverage
Multiple individuals can collaboratively embark on a life insurance journey through joint underwriting. This collective approach enables families, partners, or groups with shared financial interests to leverage the advantages of life insurance collectively, fostering a sense of financial security within a community.
Final notes
Navigating the array of savings products in France allows you to align your financial strategy with your unique objectives. Whether you opt for Livret A’s simplicity, LEP’s high-interest returns, or the diverse options of life insurance, understanding these products empowers you to make choices that suit your financial journey.
Final resources
Financial Times – Guide to French Savings
Banque de France – Consumer Information
