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France passes law to make foreign students pay ‘deposit’ to study

The French parliament has passed a new immigration law that will bring about big changes - including for those wishing to study in France. Here's how the changes will affect current and future students in France.

Published: 20 December 2023 14:04 CET

France passes law to make foreign students pay 'deposit' to study

A student walks by the entrance of the Sciences-Po Grenoble's campus, in Saint-Martin-d'Heres, near Grenoble, south eastern France (AFP / JEAN-PHILIPPE KSIAZEK)

Late on Tuesday night, France’s parliament passed the long-contested immigration bill, with the adopted version being notably further to the right than the original that was first sent to the Assemblée Nationale last week.

You can find a full breakdown of the text HERE.

The original bill contained no specific changes for foreign students, but the revised bill contains a clause that tightens up the rules on getting a student visa.

As a result, non-EU citizens looking to study in France will now be required to submit a deposit – amount to be specified later by France’s Conseil d’État – when applying for the first time for a student visa.

The bill states that “the first issue of a temporary residency permit bearing the mention ‘student’ is conditional upon the foreign national submitting a deposit”

The foreign student would be able to get the deposit back “if he/she leaves France on the expiration of the ‘student’ residency permit, if he/she renews the permit, or if he/she obtains a new French residency permit with a different title/ status.”

However, the new law states that “the deposit [will be] definitively withheld if the foreign national has evaded enforcement of a removal order.”

The law will also require that those with multi-year student residency permits prove annually that they are enrolled in a ‘real and serious’ educational programme.

Additionally, the legislation seeks to produce more information about the student residency permits granted, by introducing the requirement of a yearly report detailing how many applications were rejected, with information on the applicants’ country of origins and personal qualifications, as well as the time taken to process paperwork and the number of students who drop out of their courses.

In terms of when these changes will come into effect, the law will first need to be looked over and approved by France’s constitutional council and then several requirements will need to be given further detail by the Conseil d’État, which ought to be specified in the days and weeks to come.

Ultimately, it will be up to the French government to decide when it will be put into effect, so there was not a clear timeline for enforcement as of December 2023.

Why the changes?

These weren’t part of the original immigration bill – which was more focused on better integration of immigrants and filling skills gaps in certain sectors – but were added at a later stage by senators.

Senator Roger Karoutchi, from the right-wing Les Républicains party, in an interview with Les Echos, said that student residency permits “have clearly become a means of immigration”.

“A number of university presidents have told us that many students registered under this scheme do not turn up for their exams or even go to lectures. This residence permit does not allow illegal immigration, but rather a diversion from its original purpose.”

However, the proposal has been slammed by higher education leaders.

The leaders of renowned French business schools ESSEC, ESCP, and HEC together spoke out against the changes, saying that the “bill will threaten France’s international competitiveness.”

They added that the new deposit requirement “goes against the principles of republican equality and (…) will reduce the proportion of international students in our schools and universities.”

The leaders also added that the new law would “destroy the government objective of doubling the number of international students by 2027,” referencing a goal of French President Emmanuel Macron’s administration to increase the country’s international competitiveness, particularly in the field of research.

What is not changing?

Students will continue to have access to housing aid (CAF). They were listed as an exception to the new rules laid out by parliament for foreigners benefiting from government benefits.

The law also does not change the right of students to work up to 964 hours per year (60 percent of the annual working year).

Similarly students will still be able to travel freely in the Schengen zone during their studies.

The changes also will not affect pre-existing requirements for most foreigners to initially apply for their visa using the Campus France (Etudes en France) system.

As for those who obtained a degree in France, the law does not change the ability to apply for the ‘job-seekers’ permit afterwards, nor does it change the shortened residency requirement students benefit from when applying for citizenship.

The deposit scheme does not affect people already studying in France – it is only required for a first-time student visa.

What about the details?

Key details of the scheme – such as the amount required for the deposit, how it will be paid and exactly what proof is required of ‘serious study’ are still to be confirmed.

Speaking on Wednesday, government spokesman Olivier Véran said that each article of the bill would now need to be “studied and clarified”.

The bill also needs to be approved by the Conseil Constitutionnel, which can require sections to be altered or removed.

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6 pension questions British people should ask before retiring to France

Retiring to France is a dream for many, but before turning that dream into reality there are some serious financial questions that you need to ask yourself to ensure that your retirement is a financially comfortable one.

For most retirees, their main or only income will be a UK pension, so it’s important that you understand how your pension will work once you make the move.

There are some specific rules and restrictions on taking pensions out of the UK, while there is also the question of how UK pensions interact with the French tax system.

Financial adviser, Maeve Hoffman, from Spectrum IFA Group, emphasised that people should not take these decisions lightly, telling The Local: “Figuring out what to do with your pension should be part of your wider financial plans for your life.

“This may be your most important asset, besides your home, and the best answer for what to do with your pension is highly individual. There are no sweeping generalisations when it comes to advice on private pensions. Everyone’s situation is different,” she said.

This article is intended as an overview of how the system works for UK pensioners and is not intended as a substitute for individual financial advice. The article is aimed at people who have worked most or all of their career in the UK and then intend to retire in France – the situation is slightly different for people who work in France and then retire here.

You can find an overview on French tax rules for pensions HERE.

Long-term or short-term

The first thing you need to carefully consider is whether or not your move to France will be for the long-term or short-term.

When it comes to your UK pension, there are some options that may be advantageous for French residents looking to stay here permanently, but they could make your life very complicated if you end up returning to the UK in the future.

Do not be afraid to ask yourself the tough questions – is there any chance you will have grandchildren in the future that you will want to be geographically close to? Have you ever spent a significant time in France, aside from short holidays? Do you have roots in France, such as friends, family or a home? If your health deteriorates, will you want to be cared for in France or the UK?

If are unsure about the answers to these questions, then take some time to really think about them. There are alternatives to permanently moving to France if you are unsure – for example, you could spend a few months a year here on a short-term visitor’s visa.

Understanding the different tax rules

British retirees should be aware that the UK and France have very different tax systems.

Once you become a tax resident in France, you have to file a yearly declaration, including your global income. The country that gets to tax that income is determined based on the tax treaty between the UK and France, which seeks to eliminate double-taxation.

As for your UK-based pension, the treaty states that if you have a UK government or civil service pension (eg a state school teachers’ pension), then this will remain taxable only in the UK. Some old NHS pensions were considered ‘government pensions’, but modern ones might not be. You can check if your pension is classified as ‘government’ here.

You still have to declare this income to the French tax authorities, but you will not be subject to tax in France on it. That being said, it will count towards your total household income, and could end up pushing you into a higher tax bracket which is something you should carefully consider, particularly if you want to take a large sum at once.

The same is not true of private pensions: these are taxed in France, not the UK, as soon as you become a tax resident here. Confusingly, the UK state pension is also considered a private pension, even though it is paid by the government.

You can find a complete guide to how UK pensions are taxed in France HERE.

As a result, you will want to think about whether your previous plans for your private pension were only advantageous to you as a UK resident. Once you become a French tax resident, they could have unforeseen implications.

You can find more information about tax rates in our tax guide.

Get reliable, expert financial advice before doing anything

If you have decided you want to be in France permanently, then you will need some expert tax and pension advice – but you need to be careful who you take advice from, this is a highly specialist area and it’s unlikely that high street financial advisers will have the knowledge that you need.

Brexit has also made getting financial advice more complicated, with fewer experts available.

Maeve told us: “Because of Brexit, you cannot use a UK-based financial adviser anymore – you have to use an EU-registered one. This has made things more complicated. When picking an adviser, seek out someone who has expertise on the local taxation rules in France. They should also be regulated with the financial regulator where you live and where they work.”

It can be especially complicated to parse out who you can and cannot take advice from – for example, some UK-based advisers have continued to give advice to EU-based clients, even though this can be particularly risky if the investments they recommend do not follow EU regulations.

There are also expat-oriented financial advice services that are located outside of France, but seek to offer tax advice to people in France.

She added: “Be smart and sensible. If you choose an adviser in Dubai or Spain for example, you will now be adding another regulatory organisation into the mix, plus another language.

“There are free, government-based services in the UK that can help you understand your private pension – Pension Wise and Money Helper. Before doing anything, you should consult the free services. Any financial adviser worth their salt would recommend this too.

“These services have begun to have longer wait times, so be sure to book well in advance of when you plan to draw from your pension.”

Deciding whether to transfer your pension

Another question that is important for Brits to think about is whether or not to transfer their pension into either a UK-based SIPP for non-residents, or a QROPS (Qualifying Recognised Overseas Pension Schemes).

The SIPP will keep your pension in the UK, while the QROPS moves it out of the UK, to Malta specifically.

These options can be helpful for French residents, but you need to familiarise yourself with their benefits and drawbacks.

“The QROPS is not for someone who is unsure of their future in France, as if you return to the UK within five years of the pension transfer HMRC will seek their tax back as if it was a full encashment,” Maeve said.

In France, a QROPS is considered a trust, you may also have additional reporting requirements to fill out along with your annual declaration (more info here).

You should beware of scams on this subject, as the post-Brexit period saw many scammers seeking to persuade Brits that it was now mandatory to transfer their UK pension – always be wary of any cold-calling or unsolicited financial advice.

Determining how you will want to draw from your pension

The next question is how you want to receive your pension – either as regular income or as a lump sum. The option that you chose will have tax implications in France.

If you receive it as a regular income, when doing your yearly French tax declaration, you will add up your pension income for that year and you will be taxed at the normal marginal rates for income (the barème). These rates go up to 45 percent (for the highest earners only) plus social charges if they apply (more on this below).

Pension income can also benefit from a 10 percent tax deduction, as long as it does not exceed €4,123 or fall below €422 per household.

Lump-sums are more complicated. Technically, French tax authorities would allow a return of once off pension capital to be taxed at a flat rate of 7.5 percent.

But in reality, Hoffman explained that anyone seeking to do this would need the express, written confirmation from French tax authorities that this rate will be applied.

She also explained that the type of private pension matters when seeking to get the lump-sum flat rate.

“There are plenty of different types of private pensions in the UK, but the old ‘defined benefit schemes’ have been the gold-plated standard. These are the types of pensions that give you a portion of your salary for the rest of your life.

“In principle, you should be able to take out lump-sum of 25 percent of your ‘defined benefit scheme’ pension and be taxed at the 7.5 percent flat-rate. That being said, some people get refused, so you cannot make any assumptions and you need clarification from the French tax office.

“As for all of the other types of private pensions in the UK, like the money purchase or personal pension schemes, these are considered to be ‘funds’. If you want to benefit from the lump-sum then you would have to take out the entire pension. You would not be able to just take out 25 percent and get the lump-sum rate.

“For anyone considering taking their whole pension and seeking to use the 7.5 percent rate there are conditions to be met, so I advise people to write to their French tax office and explain their own situation in detail. Be sure to clarify the tax rate you are seeking to have applied and ask what documents they would need from your UK pension company to confirm that the contributions to this pension have been tax deductible.”

Healthcare and social charges

Deductions in France come in two types – impôts (income taxes) and prélèvements sociaux (social charges).

People who retire to France (and have never worked in France) and have already reached the state pension age can apply for the S1 – this means that the UK continues to pay for their healthcare costs and they would not be charged prélèvements sociaux. Non-working spouses of an S1 holder can also benefit from this.

People who take early retirement and make the move before they reach state pension age may have to pay social charges in addition to taxes until they reach the state pension age and can apply for their S1. However, there are several exemptions to social charges, so even if you expect a bill, you may not end up being charged. More information in our guide.

Social charges help pay for a lot of services from the French government, including access to healthcare. In France, you can access the state healthcare system (and get a carte vitale) after three months of residency.

READ MORE: Why you might get an unexpected French health bill

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