Banking, Money and Taxes in France

The banking and tax systems in France are well managed and easily navigable for expats. The largest difficulty foreign nationals may encounter is negotiating the language barrier.

Opening a bank account in France is simple, provided that you have a residence permit or are an EU citizen. Most banks will expect a passport copy, a resident’s permit, a proof of residency (a utilities bill should suffice), a reference from a bank in which another account is held, and an amount to deposit into the account. Non-residents will also have to provide a signature witnessed by a solicitor. There are minor differences between a non-resident’s and resident’s account, with the non-residents account subject to more restrictions.

Standard bank accounts in France pay no interest, so it is worth opening a specific deposit account for any significant savings. By law, banks have to tell you the full extent of the charges they levy in an annual statement. Some banks will charge for different transactions and it is worth shopping around to find out which bank is most suitable for your lifestyle.

Once the account has been approved, a cheque book and debit card (carte bleu) will be issued. The carte bleu is accepted almost everywhere in France. A cheque in France is considered as cash, so a bounced check will result in a fraud report to the Bank of France. Post dated and open dated cheques are considered illegal.

‘Compulsory deductions’ is the combined term for income tax and social security deductions. Taxes are imposed on those who, work, reside and invest in France. There exists a small tax on wealth applicable to a heritage of over €750,000.

Roughly 25 % of a residents gross income will go into social security deductions; there is however, a further income tax of between 5 and 40 percent on net income. This progressive system is tiered, which means those with a high income will pay significantly more tax than a middle or low income worker. Those who own property or are self employed will be subject to additional taxes, making starting a business in France a slightly unattractive proposition.

It is important to remember that income tax must be declared separately from social security contributions. It is advisable to set aside the expected amount every month so that when tax comes due there is enough cash available to pay the collector.

All EU member states will pay VAT for goods one take out of the region when a person leaves the EU. For expats who only intend to stay a few years, it is worth contacting a VAT expert to discover what one will be entitled to claim, especially as this can translate into a hefty sum.