French expats are exempt from paying tax in France on capital gains they make on financial investments they make in their host country. This tax advantage, which can be coupled with a lower cost of living than in France and/or higher levels of income means they have a significant savings capacity, which brings them to invest their money. Overview of the investments preferred by French expats. Discover which investments expats make.
1. Real Estate
Investing in real estate in France is the main source of investment by expats. The attractive rental yields, currently low rates and low levels of rental void periods make France a breeding ground for opportunities in terms of rental properties. Paris, Bordeaux and Lyon are very profitable target cities for investment. 45% of French people living abroad consider buy-to-rent property to be a “reassuring” investment, according to a survey conducted by Crédit Foncier.
Also, thanks to the digitalisation of real estate, the whole process is getting easier all the time. With that in mind, My Expat helps expats successfully complete their real estate project, remotely, by organising virtual visits to properties, putting powers of attorney in place and digitalising the entire administrative process.
2. Life Assurance
Many expats opt for life assurance, which is one way of preparing for retirement or for ensuring loved ones receive an inheritance. For non-residents, taking out a life assurance policy is a judicious move, essential even. The first reason is that expats are not affected by social security contributions: the status confers exemption from social taxes (CSG, CRDS, etc.). Furthermore, it enables them to benefit from significant liquidity, with yields far superior to savings accounts, but without financial risks.
Taking out life assurance is also worthwhile because you can make regular withdrawals. You can, therefore, dispose of your savings freely, which is not the case with all other financial investments. Taking out a life assurance policy also offers:
- A risk-free way of saving money
- Simplicity – taking out a policy is straightforward
- The possibility of withdrawing and transferring funds freely
- No cap on the amount you can save
- Savings Accounts
3. Livret A Savings Account
Expats can hold other French accounts/savings accounts, such as:
- Savings accounts,
- Share accounts,
- Livret A savings accounts,
- Housing savings plan (PEL),
- Personal equity plan (PEA) providing you are not an expat living in an NCCT (Non-Cooperative Countries or Territories).
Livret A savings accounts are especially popular amongst non-residents. Indeed, their use is very straightforward, they offer liquidity (you are free to pay in and withdraw money as you wish). There is a limit of €22,950 on the amount you can save, but all you need to open an account is a deposit of €10. There are no bank fees and there is a fixed annual rate of 0.75%.
Finally, this form of investment is exempt from tax: interest earned is subject neither to income tax nor social security contributions. Depending on any tax agreements established between France and your country of residence, tax may be payable on interest earned in that country however.
To buy and sell shares on the stock market, you will need to open an account with a financial intermediary (bank, stockbroker, online broker, etc.). The account may be:
- A personal equity plan (PEA), providing you are not an expat living in an NCCT (Non-Cooperative Countries or Territories).
- A share account
You may then place orders for stocks and shares
A share account is an account that recaps your portfolio of shares (and bonds) in detail and records the different transactions (purchases, sales) you effect. Flexibility and exemption from tax in France makes it easy for you to hold a share account wherever you are in the world, but you do need to be careful in terms of taxation of the account when your expatriation comes to an end. French taxation on capital gains on real estate is higher than in many other countries.
Investing on the stock exchange by opening a share account can, therefore, be an interesting way of saving over the period during which you are an expat, assuming this period is a long one (at least 5 years, share accounts being long-term savings options).