Off shore accounts

[Benjamin]

Does anyone know what the French tax man's attitude is to gross interest paying deposit accounts based in the Channel Islands?

Benjamin

[Miki]

From this year, I believe if that if you want it paid gross, the banks are now to disclose the interest to your local tax office in France (or wherever). But you do have the choice for the bank to stop you the set amount of tax at source. This years tax deduction is so much and will increase as the years go by. Your choice as they say !

I am sure one of the better than I, money experts on here, might elaborate further.

[LesLauriers]

Plus, of course, the fine for failing to declare the account and the back taxes and the fine for failing to declare the interest!

Do a google search on (EUSTD) European Union Savings Tax Directive.

You could always invest in a French Government approved tax free (or tax advantageous) savings scheme.

[Benjamin]

No, no. Our intention is not to attempt to avoid paying tax and is actually exactly the opposite. Let me explain a little more. From this year we become tax resident in France and as we are off on a Far East touring holiday for most of the first quarter of 2006 (when I think the French tax forms are issued), I decided to start looking at what information we will need to provide for the French tax authorities.

Browsing the site of our current UK bank (former building society) I came across one of their terms and conditions which basically says you cannot have a savings account with them unless you are resident in the UK. Clearly therefore we need to move our money as we are no longer eligible for this account and, I suspect, there are possibly many others on this forum in the same position.

The point of the original question was to ask if anyone knew if the French authorities would not allow someone resident here to have an off shore account when, for instance, there are comparable savins accounts available in France. Having now read about EUSTD (thanks Leslauriers) I know that,yes, we can have such an account and have the interest paid gross so long as we agree to an exchange of information between the new savings provider and the French tax man.

One further point. Does anyone know of a French based savings scheme that will pay 4.85% gross and give instant access/closure without any requirements for minimum balances?

 

Benjamin

[LesLauriers]

www.ingdirect.fr seem to be the best for instant access but only pay 2.75% although they currently have an offer of 7%, but only for 1 month.

Tax & social charge free accounts, such as Livret A (max 15300€) or Codevi (max 4600€) pay 2%, both are 1 acount per person.

There is also a higher rate savings account available to very low income families with a tax demand below 660€ paying 3% free of tax or social charges.

A capital safe investment in an Assurance Vie will pay around 4% (4.5 avg 2004) and is social charge and tax free until you make a withdrawal.

Unearned interest is subject to 11% social charges, income tax at your appropriate rate and if applicable 8% health charges.

If you go offshore you will be subject to the deductions above and you will be exposed to currency fluctuations which could go either way of course.