Best place to save?

[Crevette]

I am pondering if it is better to save in either France or the UK; Hope I understand everything OK - here goes (!) ; If you save in the UK + work in France (pay taxes in France) then your bank account in the UK should be declared as a Not Tax account - this means that all interest income is paid in gross. What happens is that you have to then consider this as foreign income for your tax declaration in France where you will pay tax on it depending on your circumstances such as your actual income and fiscal "parts" (if married/with children).  up to €5515: 0%   - from €5,515 to EUR 10846: 5.5%   - from €10,486 to EUR 24 432: 14% - from €24,432, to €65,559: 30% - above €65,559: 40% . I would imagine most people fall into the 14 to 30% category. Now, if you save in France, then you have a choice to pay 27% tax straight away (taken from source) or to declare this as income and pay tax on that ; "Le régime fiscal Les intérêts du Livret B et du Compte sur Livret Bancaire sont fiscalisés et soumis aux prélèvements sociaux. Vous avez alors le choix entre les deux options suivantes : - Le prélèvement libératoire fixé à 27 %, prélèvements sociaux compris - La déclaration du montant de vos intérêts à l'impôt sur le revenu" (thanks to whoever posted that!) So, next thing to look at is saving schemes (for this purpose I am looking at guaranteed income savings accounts). In the UK, you have a lot of "base interest rate" linkes savings accounts which pay around the 5% mark - you can't get an "ISA" unfortunately as you need to be resident in France. Look out as well for "Regular Saving Account" - for instance the HSBC give "8% gross/AER", and Barclays give 12.5% gross/AER for deposits of up to £250 a month. I havn't seen anythng like this return in France so far! In France you seem to have the "assurance vie"'s which give around 4% net (I always find it strange that "life insurance" has  the best returns!) or an "eparne" or livret which gives around 3% net. Hope I have summed this up OK. My "inkling" is that it is better to save in the UK (money transfer costs are also a consideration but have come down a lot with companies like moneybookers).  Any thoughts?! -Rob-

[Barrym]

don't forget to consider the exchange rate risk in the future which can more than eliminate any interest increases if it goes the wrong way

[Lou]

It's also worth noting that if you have an address in France a lot of UK banks won't let you open new accounts, and some existing savings accounts won't let you change to a foreign address nor register for no tax as a non-resident (I know because we have one of these!). You do have the option of off-shore savings accounts too. 

Lou

Edit: also bear in mind that you would need to declare savings interest as a French tax payer and therefore more interest earned could equal more tax paid - thus potentially wiping out the extra percentage rate.

[Will]

As Lou says, if you are not UK resident it can be very difficult to open a UK savings account with high interest, most banks will direct you towards offshore accounts. As a French resident you also have to pay CSG/CRDS at 11% on most bank interest. The best option for French tax residents is probably currently something like the PEA, Codevi or Livret A accounts, which are tax free.

Don't be too envious of those high-interest accounts like the Barclays 12% one. You can only have it for 12 months, paying in £250 maximum per month (so you certainly won't see 12% of 12 x £250), and you have to pay in, I think £1000 per month to a Barclays current account. As I am currently a UK taxpayer, I have just opened the equivalent from Lloyds TSB which is recommended by several experts. This requires you to have a Lloyds current account, but without stipulations, you can pay in £500 initially and up to £250 per month, and it pays 8% for two years maximum, so overall is a much better deal. I have also just opened an online savings account with HSBC which pays 5.75%, there are similar ones with Alliance & Leicester, Icesave and ICICI - see www.moneysavingexpert.com. All of these special deals require UK residence. UK taxpayers should also make use of their cash ISA allowance, ours is with National Savings at 5.8% tax free.

[powerdesal]

The Barclays one specifically states that to qualify you must be a UK resident for tax purposes. plus the 1000 pounds per month mandated to your current account.

[Will]

Yes - in fact all of the special deals I mentioned are available only to UK residents (which appears to mean both fiscally and physically resident). I did say so, but probably not prominently enough [:)]