Offshore Savings Interest/ESD

[Cat]

I've been reading up on the European Savings Directive, and am a bit confused.

I'll be selling my house in the UK soon, and putting the money into savings until I need it (around a year).  Looking at the interest rates that my UK bank would offer (not great) I scouted around some comparison sites.

Seems that as I am a French resident I can't open a savings account with another UK bank, and that my best bet is to either put it in a French bank or an offshore account in the Channel Islands.

I understand that if I choose an offshore account, I can choose either the withholding option, where the interest will be subject to 15% tax at source (for the first 3 years) or the automatic exchange of information option, where details of interest gained will be sent to the French tax authorites, to be calculated on my next tax return.

So, would I be better off going for;

1/ the offshore account with the withholding option,

2/ the offshore acccount with the exchange of information option,

3/ a French savings account

4/ a lengthy chat with a specialist tax adviser?

Don't get me wrong, I'm not trying to dodge paying tax, I just want to do whatever is the most tax efficient.

 

[Apero]

Hi Cat 46,

Your option four is step one.

We were recommended Gibraltar.

[LesLauriers]

The EUSTD allows for a withholding tax to be retained where the account holder is not willing to inform their tax authority, however the French tax return demands that you list all worldwide income and states that you will be fined for failing to declare any accounts held outside of France.

I suggest that you pay for an informed decision, in writing, before going offshore as eventually you will have to bring the money onshore, which is when the questions could start.

I thought that Gibraltar had now agreed to retain the withholding tax.

[Cat]

Thanks for your replies.

I've now looked into it a bit further, and have found that the cheapest option is to put the money into an offshore savings account (for the highest interest rate) and declare the interest for tax here in France.

Due to French tax allowance and bands, this works out cheaper for me than the withholding tax rate of 15%, even when I apply French social and health charges.  This is using the standard tax bands and rates, not the flat 27%.

And I get to feel good about everything being completely above board too [:)]

 

 

 

[Apero]

A rolling stone gathers no moss/tax bill! Get a good accountant who knows where and how. I did.[geek]