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ASK THE EXPERTS - FRENCH SAVINGS

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Saving money in France: What’s the best option?

Ever wondered what's the best thing to do with your savings in France? As part of our "Ask The Experts" series we've invited expat financial adviser Jonathan Cooper to tell you what to do with your hard-earned euros.

Saving money in France: What's the best option?
What's the best thing to do with your savings in France? Photo: Shutterstock

With the interest rates on Livret A Savings Accounts dropping as low as one percent in August and set to go even lower in the coming months, the prospects of making your savings pay, do not appear rosy. At least at first glance.

But there are other options for where to invest your hard-earned euros.

We asked Jonathan Cooper from the Paris office of independent financial advisers, The Spectrum IFA Group, to tell us, in his opinion, what the best option is.

Cooper: “If you have anywhere from €20,000 to multi-millions in savings then you should think about opening a life insurance policy (Assurance Vie).

"Around €3.2 trillion is invested in Assurance Vie and every French bank will offer it, as well as international providers like Prudential and SEB Life, who provide French compliant Assurance Vie’s with English written contracts.

"For English speakers, I would recommend going through an international insurance company rather than a French bank or French insurance company.

“It is basically a long term savings plan which allows you to invest in funds of your choice. 

“You are able to withdraw your money at will and, although some policies have early redemption penalties, most have set limits where no penalty is incurred – usually between 5 and 75% for the first 5 years and then no penalty at all. However, why would you set up a lump sum policy and then withdraw it a few months later?

“The French Assurance Vie is like having a UK unlimited ISA (interest free savings account). It grows tax-free from day one and you will only pay tax on the gain element of what you withdraw, when you withdraw it.

"There is a part of the French tax return which asks if you have set up any Assurance Vie policies during the year, and if you have received any income from the policies.

“Personally, I am not a fan of monthly savings plans, they tend to be expensive and inflexible. Signing up to a plan for between 10 and 20 years where you are committing to a monthly amount which, while affordable now, may not be in 5 years time, is not a wise decision.

"I would urge you to build up your savings in a Livret A.  When you have between €20,000 and €30,000, invest it as a lump sum in an Assurance Vie and then top up when you have sums of around €7,000 to €10,000.

 “Assurance Vie policies are also a great way of Estate Planning.

“In short, Assurance Vie is the most tax efficient, flexible, client-friendly investment model available in France.

It is, however, just a model. What makes the money grow is the choice of underlying investments, which we take very seriously. Every client is given a full financial review and evaluated on their attitude to risk – because funds, like property and all types of investment, can go down as well as up.

"Every client is different and we, as a group, work with our clients on the investment strategy that suits them.”

Jonathan Cooper is with The Spectrum IFA Group, which specialises in assisting expatriates moving to France or already living here with tax efficient solutions for savings, investments and pensions. For more information visit their website by CLICKING HERE. If you are living in or around the Ile-de-France or northern France you can email Jon direct on [email protected] or call on 07 50 87 59 69.

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PROPERTY

Explained: France’s new property renovation grant

Ma Prime Logement Décent, which came into effect on January 1st, offers financial assistance to property owners for major home improvements.

Explained: France’s new property renovation grant

The French government has several financial assistance schemes that are open to property owners to help finance renovation projects, especially those aimed at making homes more energy efficient.

GUIDE: French property grants you might be eligible for

Now a new one has been launched, aimed at property that is in a dilapidated and run-down state. The idea is both the ease the housing shortage that is a problem in several French cities and ensure that people are living in decent conditions. 

Launched on January 1, 2024, Ma Prime Logement Décent (My Decent Housing Bonus) has enabled property owners to obtain financial assistance for renovation work on run-down housing. 

Homeowners on a modest income can apply for the Ma Prime Logement Décent financial aid, which is – in certain cases – up to 80 percent of the total spent, up to a maximum of €70,000.

The scheme is open to people who own their own home and people who own a property that they rent out, but is not available to second home owners. You do not need to be a French national to apply, but you must be resident in France, have a French tax number and complete the annual French income tax declaration.

The aid can only be used for work to remedy a proven health or safety risk at a property, such as:

  • unsanitary conditions;
  • a risk of lead exposure;
  • significant deterioration to a property’s fabric.

Work may include :

  • renovating an electrical or gas network;
  • replacing a roof;
  • reinforcing the foundations.

Who’s eligible?

Owner-occupiers on ‘modest’ or ‘very modest’ incomes whose main residence requires renovation can apply for the Ma Prime Logement Décent aid, if:

  • the property was built more than 15 years ago;
  • the work is carried out by qualified professionals (except very particular cases);
  • your home has been assessed by a qualified assessor.

After work has been completed, it must achieve a minimum energy efficiency rating of E.

READ ALSO What do energy ratings mean for French property owners?

Owners renting out their property can apply for this aid in the following circumstances.

  • The unfurnished property must be rented to a low-income tenant, who cannot be a family member, or a member of the landlord’s household for tax purposes;
  • The property has a capped rent – ceilings are defined annually by commune or arrondissement;
  • It has at least a level D energy efficiency rating after the work has been carried out.

READ ALSO GUIDE: French property grants you might be eligible for

How much is the help worth?

When you use Ma Prime Logement Décent as an owner-occupier, you’ll be reimbursed for :

  • 80 percent of the cost of the work if you’re part of a ‘very low income’ household (rising to 90 percent if the work also means that your home is no longer a so-called heat sieve);
  • 60 percent of the cost of the work if you are part of a ‘low-income’ household ( rising to 70 percent if the work also prevents the home from becoming a so-called heat sieve).

In both cases, the total cost of the work must not exceed €70,000.

Owners renting out their property can benefit from 35 percent of the cost of your renovation work.

An online simulator can help property owners check whether the work qualifies for the Ma Prime Logement Décent scheme.

You use terms like ‘very low income’ and ‘low income’. What does that mean?

Your revenus fiscaux de référence (RFR) are important. You’ll see the figure on your annual tax assessment – it’s basically an amount calculated by the tax administration from the total income of a tax household intended to reflect the financial resources of that household.

It helps decide what social assistance you may be entitled to.

READ ALSO MaPrimeRenov: How France’s property renovation grants will change in 2024

In the greater Paris Île-de-France region, a single person living on their own is considered to be ‘very low income’ if their RFR is €23,541 or less (€17,009 for the rest of the country), and low income if it’s €28,657 or less (€21,805 outside Île-de-France).

The scale rises to €55,427 for a very low income household of five in Île-de-France (€40,002 elsewhere); and €67,473 for a low income household of five (€51,281 elsewhere).

Okay, I think I qualify. How do I apply?

The first thing to do is create an personal account on the Agence nationale de l’habitat website

You will be directed to an information point, where you can choose an adviser for your renovation project, who will help put together your application.

Once the application has been approved and the work completed, funds will be released to cover the cost.

READ ALSO French home renovations: What grants are available to the elderly and the disabled?

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