Banking, Money and Taxes in France

The banking and tax systems in France are well managed, easily navigable for expats and highly sophisticated. The biggest difficulty foreign nationals may encounter is negotiating the language barrier but even so, English speakers are widespread in the financial sector.

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Money in France

As is the case in all EU member states, the official currency in France is the euro (€). One euro is divided into 100 cents.

• Notes: 5 EUR, 10 EUR, 20 EUR, 50 EUR, 100 EUR, 200 EUR and 500 EUR

• Coins: 1 EUR and 2 EUR, and 1, 2, 5, 10, 20, and 50 cents

Large numbers are written with full stops (.), and decimal places are denoted with a comma (,). For example, five million would be written 5.000.000, while 20 euros and ten cents would be written 20,10 EUR.

Most debit and credit cards are accepted in France. ATMs can be found nearly everywhere and generally offer the best exchange rates (transaction charges for international card use can quickly add up).

Otherwise, expats and travellers can exchange cash at bank branches, bureaux de change, and even in post offices, which surprisingly offer highly competitive rates.

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Banking in France

Expats will have access to a fair selection of local and international banks in France. All banks in France uphold high service standards and offer modern conveniences like internet and telephone banking. Most have multilingual support staff and, in popular expat areas such as the French Riviera, foreigners will even find local banks that cater specifically to English speakers.

Whether an expat prefers to use a local or an international bank is a decision that depends on their priorities.

Local French banks pay no interest, but there is usually a small monthly charge for maintaining an account. Expats living in France can open either a resident or non-resident account (compte non-résident).

Non-resident accounts are best suited to those living in the country for less than three months, or those who cannot provide proof of employment or a residence permit. These accounts are generally more restrictive than resident accounts and tend to have no overdraft facility. They also often demand a higher initial opening deposit.

Not all bank branches can grant non-resident accounts, so expats will need to find an international branch to do this.

There are three primary types of bank accounts in France:

• Private current accounts (compte courant, compte à vue or compte de depôt) are equivalent to an individually held, standard cheque account. The holder can receive payments, make deposits and authorise withdrawals. No interest is paid on this account.

• Deposit accounts primarily function as savings accounts to store funds not required immediately.

• Joint accounts are an option for couples or those who prefer to manage their finances as a unit.

Banking hours in the urban centres are generally from 8.30am or 9am until 4pm to 5.30pm, Monday to Friday. Banking hours in rural areas may differ.

Chequebooks and debit cards are standard features that come with most French bank accounts and both are readily accepted in France. Post-dated cheques are technically illegal, and bouncing a cheque is also taken very seriously in France, often being equated to fraud.

In France, it is possible to pay recurring bills via automated cheque transfers. To do this, expats simply need the banking details of the party they are paying, known as the RIB (Relevé d'Identité Bancaire – this includes the account number, bank code and sort code). If they would like to have a payment automatically deducted from their account regularly, expats can issue a once-off authorisation for a TIP (Titre Interbancaire de Paiement).

Opening a bank account in France

Opening a bank account in France is simple, but the requirements vary slightly depending on the type of account and which bank is involved.

Opening a non-resident’s bank account in France may require the following documents:

• Proof of identity in the form of a passport or birth certificate

• Proof of residence. Expats can use a utility bill for this.

• An initial deposit which in some cases may be as high as 10,500 EUR

Opening a resident’s bank account in France may require the following:

• Proof of identity. Expats should be able to use their passport or EU identification card.

• Proof of earnings or status. This usually means a work contract, proof of earnings, or student card. If retired, expats may need to provide proof that they can sustain themselves in France.

• Resident status or carte de sejour

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Taxes in France

Compulsory deductions for income tax and social security are the norm in the French tax system. Taxes are imposed on those who work, reside and invest in France.

Roughly 20 to 23 percent of a resident's gross income will go into social security deductions. And a further income tax of between five and 45 percent may be imposed on net income. This progressive system is tiered, which means those with a high income will pay significantly more tax than lower-income workers. Those who own property or are self-employed are subject to additional taxes, making starting a business in France an unattractive proposition for most foreigners. Expats must also remember that income tax must be declared separately from social security contributions. It is wise to set aside the expected amount every month so that there is enough cash available to pay the collector when tax is due.

Recovering Value Added Tax (VAT) upon leaving France

All EU member states will pay VAT for goods taken 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 determine what one will be entitled to claim, as this can often translate to a hefty sum.