Opening a Bank Account & Managing Your Taxes in France

How to Open a Bank Account in France

If you have been asking yourself “can I open a bank account in France as an expat,” the answer is yes, you can. Both residents and non-residents can quickly go about setting up a French bank account. It is easier if you are an EU national, but it is still possible for non-EU citizens—just be prepared to provide additional documents—and for there to be some restrictions with your account.

How to Open a Bank Account as a Non-Resident

Some banks will allow you to open a bank account online before you move to France, while others prefer the process to be completed in person. Even if you do manage to open an account remotely, you may be obligated to visit the branch in person once you arrive for your account to be fully operational.

Different banks require different documentation for setting up an account, but in general, these are the requirements:

• a valid form of identification
• proof of address (this can be either a recent utility bill or a copy of the rental agreement)
• an employment contract or proof of income (e.g., recent pay slips)
• sufficient funds for the initial deposit

If you have residency in France, you are entitled to open the same type of account as a French citizen, a compte courant (a current account). To open this sort of account, you will need the paperwork mentioned above, plus your proof of residence (carte de séjour).

Best Banks in France

There are many large banks in France, which tend to be the most popular choices. They have multiple branches across the country, making banking a lot easier. Some even offer no-fee bank accounts for students or youth under 26. The main banks in France are:

• BNP Paribas
• Crédit Agricole
• Société Générale
• Caisse d’Epargne
• Credit Mutuel

Many of France’s top banks charge a fee for you to hold a current account with them. These charges tend to be between 60 and 70 EUR (67–70 USD) annually and includes many different services such as an international debit card, bank transfers, and cash withdrawals.

Best Online Banks in France

Nowadays all banks offer the option of online banking. However, in recent years, Internet-only banks have grown increasingly popular worldwide, and France is no exception. This is becoming a popular choice among expats, as these banks eliminate the need to visit the local branch in person, ideal if you are not a confident French speaker. These accounts also often have lower or no charges plus high-interest rates on savings accounts.

Some of the most popular internet banks in France are:

• Hello Bank
• AXA Banque
• Allianz Banque
• Filbanque
• ING Direct (market leader)

International Banks in France

International banks are another good option for expats because they typically offer French accounts to non-residents. Some of the ones you can find in France include:

• AXA Banque
• Deutsche Bank France
• HSBC France
• JP Morgan France
• Citibank

Best Savings Accounts in France

There are a few comptes à terme (fixed-term savings accounts) worth looking into in France. The deposit and duration of the term will determine your level of return. If you withdraw from your savings account before the end of the term, you will be paid a lower interest rate.

TheBanks.eu breaks down a list of banks in France with their current interest rate for savings accounts and length of their terms. Bear in mind that some of these banks require you to be a French resident to open one of these accounts.

There are also government regulated savings account for some of which you need not be a resident. They are also particularly alluring because they are tax-free. However, interest rates are not the greatest, with the highest being 1.75%.

International Money Transfer

Most expats will, at some point, need or want to transfer money from their home account to their new French bank account, or vice versa. There are a few different methods with costs varying for each.

Online Transfers

As a secure, convenient, and relatively quick process, online bank transfers (virement bancaire) are one of the most common methods of payment nowadays, both domestically and internationally. Banks do charge for this service, though it should be noted that within the EU (for any amounts in euros) a bank should not charge more than they would for a national transfer. Charges vary depending on the bank.

Wire Transfers

Alternatively, if money is needed more quickly, there is the option to do a wire transfer. Money transfer services such as Western Union and MoneyGram allow you to transfer money worldwide online or in person from various “agent” locations globally, either to a bank account or to be collected in cash (from an agent in the destination country). However, as with banks, these services still charge a fee and often have unfavorable exchange rates.

Currency Exchange

If you are from outside the eurozone and looking to transfer money of another currency into euros or vice versa, then one cost-effective way to do so is through “peer-to-peer currency exchange.” These services cut out the middlemen (i.e., banks), allowing for lower fees and also more competitive exchange rates. Many online companies offer this service:

• TransferWise
• Neteller
• CurrencyFair
• PayPal

You should be aware that money exchanged using these sites can only be deposited into a local bank account in the destination country. For example, if you are transferring USD to EUR, the euros can be stored in any euro account in a Single Euro Payments Area (SEPA) country. Therefore, expats moving to France will need to open a French bank account before using one of these services. Each company operates slightly differently and has varying fees, so it is best to compare and decide which service is best for you.

Bank Fees and Minimum Deposit

By law, banks in France are required to provide a list of tariffs and complete summary of charges incurred on a client’s account, at least annually. Written notice of any changes or increases in tariffs must be given to a client at least three months in advance. There can be charges and fees for the following items so make sure you ask for costs before settling on a bank:

• Package service
• Supply of checkbook
• Bankers draft
• Credit/debit card
• Cash withdrawals outside of the bank
• Online transactions
• Statements
• Foreign currency transactions
• Standing orders
• Direct debit
• Overdrawn account
• Stopping a check, card, or direct debit

As a non-resident, you will be able to open a compte non-résident(non-resident account) with some branches. However, you should be aware that these accounts typically tend to have no overdraft facility. They may also require a higher deposit for opening an account. In some cases, this could be as high as 10,500 EUR (11,766 USD).

What is the Tax System in France

The residents of France are often said to suffer from a huge tax burden because of the way the tax system operates. According to the Organization for Economic Cooperation and Development (OECD), France has the highest taxes of any of its 36 member countries. For a single employee with average earnings and no children, the average tax wedge in France is more than 45% — well over the OECD average.

Although there are many exemptions and variations depending on company size, industry, and type of job, employers are also expected to pay their fair share in social security contributions (cotisations sociales). Generally, an employer will pay a total of 50% of the employee’s gross income to social security.

This guide, focusing mainly on income tax, provides you with a handy overview of the French tax system, which as of January 1, 2019, has moved on over to a new pay-as-you-earn (PAYE) system.

Types of Taxes in France

One of the most essential distinctions in taxation concerns direct and indirect taxes. Indirect taxes include general consumption taxes (e.g., value-added tax), and excise duties on specific goods.

VAT

In France, VAT is simply called TVA—short for Taxe sur la Valeur Ajoutée. At 20% of the value, the French VAT rate is above the OECD average, but still below other nations, like the Scandinavian countries. Moreover, quite a few products are sold at reduced VAT rates (e.g., 10% on passenger transport, 5.5% on many groceries and most utilities, and 2.1% on prescription medication covered by public healthcare).

TICPE

The one excise duty you might encounter most often in France hides behind the abbreviation TICPE: Taxe Intérieure de Consummation sur les Produits Énergétiques. It mainly applies to petroleum products for fuel or fuel heating. This attempt to curb the consumption of fossil fuels, as well as energy consumption in general, may affect the price of gas for your car, for instance.

Income tax and wealth tax are direct taxes, though, which you need to pay to the central government. Some other forms of direct taxation or duties in France (property tax or waste management fees) are set by the local level of your municipality, département, or region.

French Taxes

When it comes to paying taxes on your income in France, you will probably ask yourself various questions: Which income sources do I need to take into account? What kind of tax allowances, deductions, and credits can I claim? How do I calculate an estimate of my tax burden? When is my tax return due?

This section answers the most critical questions concerning impôt sur le revenue (income tax) in France, beginning with:

Do You Count as a Fiscal Resident of France?

Your way of doing your tax return in France depends on whether the French authorities consider you a fiscal resident. The concept of domicile fiscal (fiscal resident) is a complicated matter, and it is not necessarily connected to your residency in terms of immigration law (e.g., your residence permit).

Generally speaking, you count as a resident of France for tax purposes if at least one of the conditions listed below applies to you:

• You have a permanent home in France, where you and your family usually reside.
• You spend most of your time—183 days per year—in France.
• Your primary source of income and professional activity is in France, either as an employee or self-employed.
• Your center of economic interests lies in France (e.g., investments or other businesses).

Fiscal residents will typically be taxed on their worldwide income; non-tax residents only need to pay taxes on their income from French sources. There are also other differences between fiscal residents and non-residents when it comes to taxation in France, but further regulations for non-residents are not specified in this article.

If your home country has entered into an international tax treaty (convention fiscale internationale) with France, there may be special provisions — for example, to modify the above definition of fiscal residence or to avoid double taxation (e.g., by offering foreign tax credits).

What Kinds of Income Do You Need to Declare?

For the sake of simplicity, we will be assuming that you are a tax resident and need to file the same tax return as French nationals. To get ready to prepare your taxes, make a list of all your income sources and see if they fit into any of the following categories:

• Income from employment (including wages, salaries, benefits in kind such as a company car, overtime payments, bonuses)
• Income from self-employment
• Income from agricultural activities, a trade or business, or professional services (i.e., from crops, livestock, forestry, fishing, etc.; from regular activities in commerce, industry, skilled trade and crafts, etc.; for members of the liberal professions, such as doctors, lawyers, etc.)
• Income from pensions (including retirement benefits, survivors’ pensions for widows and widowers, disability benefits, annuities, alimony payments from parents or former spouses, etc.)
• Income from investment (e.g., from current accounts, savings accounts, fixed deposits, building society contracts, government bonds, employee stock, dividends in general, etc.)
• Income from properties (including rents for leases or furnished or unfurnished accommodation, real estate, and landed property)
• Income from capital gains (e.g., from private sales of stocks, bonds, and securities; from sales of property, etc.)
• Income from moveable capital
• Income from abroad

Some categories listed above include a variety of income sources that are subject to tax exemptions. This means that income from selected sources will not be added to your taxable income, which reduces your general tax burden.

Tax Deductions

In addition to tax exemptions, there is also a wide range of tax deductions available, mainly linked to expenses paid. They lower the amount of your taxable income.

In the case of employment income, deductions refer to work-related expenses borne by the tax-payer (e.g., expenses for business trips, transportation costs for commuters, fees for meals, costs of work uniforms, etc.). The easiest option for your déduction des frais professionnels would be to opt for the automatic deduction, which amounts to 10% of your salary. However, if you think you have spent more than this, you can list all expenses individually.

Tax Credits

Lastly, you can also claim tax credits (crédits d’impôt) for certain expenses. They will be subtracted directly from your tax burden (not your taxable income).

Credits for individual taxpayers can be claimed for donations to charitable organizations, to French organizations that serve the public interest (e.g., a medical research institute, a school or university, etc.), as well as to political parties or candidates, and trade unions in France.

Expat families will be happy to hear that they get tax credits for children in secondary or tertiary education and for childcare outside the home. Further credits apply to expenses for domestic staff, costs for elderly or disabled dependents in special care, mortgages for homeowners, and more.

A Special Tax Policy for Selected Expatriates

Under certain conditions, expats living in France can benefit from additional advantages. To make France more attractive for highly qualified employees and managers from abroad, the French authorities came up with a so-called régime fiscal des impatriés (a particular tax policy for expats in France).

However, this tax policy applies only to a small group of expatriates moving to France. They must be sent to work for, or recruited by, a French company. Moreover, they can only benefit from this policy if they have not been fiscal residents of France for at least five years before their start date at the French company. They also need to become residents for tax purposes once they arrive.

If they fulfill all these conditions, expatriates in that category will benefit from the privileges listed below:

• Tax exemption on mobility-related allowances (moving and travel costs).
• In case they receive compensation for the transfer to France as part of their new salary (an “impatriation premium” or prime d’impatriation), the premium will be exempt from French income tax.
• Moreover, if they need to work abroad temporarily on behalf of their new employer, this portion of their worldwide employment income is not taxable in France either.
• However, there are certain limits to these tax exemptions. For example, the combined exemptions from the “impatriation premium” and the salary earned abroad cannot amount to more than 50% of the total remuneration.

Self-Employed Taxes in France

For those with an entrepreneurial spirit, France has something called a micro-enterprise tax system which freelancers and people who own their own companies are eligible for. You will have to declare your activities officially at the Centre de Formalité des Entreprises (Business Formality Center).

There is a rather advantageous option which allows you to benefit from a simplified and reduced tax rate: you pay your taxes and contributions once a month or per quarter, based on your earnings. Meaning, if you have not made any money, you do not pay any taxes.

You can also apply for the ACCRE. This is for self-employed workers under 27 who pay lower expenses during the first three years of their business.

With the micro-entrepreneur activity status, there is a cap to how much you can earn: 33,100 EUR per year (37,092 USD). If you think your business will exceed this, you can opt for the status of Entreprise Individuelle. Like the micro-entrepreneur system, the Entreprise Individuelle option only charges depending on what you earn.

Tax Brackets for France

Once you know your taxable income (i.e., total gross income minus deductions and exemptions), you can calculate an estimate of your gross fiscal burden. So, what is the income tax rate in France?

For the fiscal year of 2018, the average income in France was generally taxed at the following rates.

• A net income of up to 9,964 EUR (37,089 USD) is tax-free—this is your personal tax allowance.
• The tax rate is 14% for an income between 9,964 and 27,519 EU (37,089–30,831 USD).
• For an income between 27,519 and 73,779 EUR (30,831–82,659 USD), it is 30%.
• It rises to 41% for all net incomes between 73,779 to 156,224 EUR (82,659–175,041 USD).
• In the last tax bracket (over 156,224 EUR (175,041 USD)), the maximum tax rate of 45% applies.
• Additionally, there are further rates for high-income taxpayers who earn more than 250,000 EUR (280,066 USD) per year.

Non-residents usually pay a rate of 30% on their French income.

Family Quotient

Before you whip out your calculator, you need to consider the quotient familial (family quotient). Since spouses and partners in apacte civile de solidarité (contractual civil union) usually file a joint tax return, the quotient familial takes the taxpayer’s marital status and number of dependents in their household (children, elderly relatives, etc.) into consideration.

The taxable income of all household members is added up and divided by the respective quotient familial. The resulting income is then subject to the tax rates listed above; the amount of taxes due is multiplied by the coefficient again to determine the tax liability for the household.

Introducing Withholding Tax for Employees

As of January 1, 2019, tax residents are subject to a monthly withholding tax or taxation at the source (prélèvement à la source). They still need to do their taxes as per usual in spring 2019, but in autumn, they are to receive a tax assessment based on their 2018 tax situation.

From 1 January 2019 onwards, the tax will be withheld by the French employer and listed on their payslip. The amount of withholding tax will be adapted every year.

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