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French property: What are the best banks for second-home owners?

If you have property in France you will have bills to pay (utilities, tax, tradespeople etc) and all of that will likely be easier if you have a French bank account - here are the options for second-home owners.

Published: 3 April 2024 11:37 CEST

French property: What are the best banks for second-home owners?

(Photo by LOIC VENANCE / AFP)

Do you have to have a French account?

Anyone who is resident in a country that is part of the Single Euro Payments Area (SEPA) can set up payments and settle any utility bills for properties in another country.

Paying any French tax bill online or by direct debit – such as property taxes, or income tax on any rental income – requires “a bank domiciled in the SEPA [area]”, according to the tax office website.

That includes all EU and EEA countries and the UK, which maintains (for now) its membership of the SEPA zone even after leaving the EU. However, it seems that paying French bills from UK bank accounts is slower and more drawn out these days.

US citizens and foreign nationals domiciled in the US, however, should be aware that the Foreign Account Tax Compliance Act (FATCA) often means that their account applications in France may well be refused.

If you’re paying individuals then you can send transfers from a foreign bank, but bear in mind that they will probably charge extra fees for transfers to another country.

So which are best?

Banking choices depend on a range of individual financial factors that it’s impossible to generalise. But there are things you need to consider regardless of your personal situation.

French high street banks – It’s standard practice for banks in France to charge fees, known as frais de tenue de compte, to keep your account open, but the fees can vary and those who are not resident in France can face higher charges.

For France residents, the average frais de tenue de compte is between €10 and €30 per account per year for traditional banks. For no-fee banking, it’s best to look online.

Inactive accounts, which have not had money go in or out for a period of 12 months, are charged at a higher rate up to a maximum fee of €30 per year. Under French banking law, banks can keep inactive accounts open for a maximum 10 years. Then, the account is closed and any credit deposited with the Caisse des Dépôts (CDC).

High-street banks in France tend to charge higher frais de tenue de compte to non-residents. HSBC was widely regarded as one of the best high street banks for non-French residents – it no longer operates individual banking in France but was sold to CCF and operates a broadly similar service under that name.

BNP Paribas charges the same sum, while SG has an international banking option for €2 per month. HSBC and SG both offer banking services in English, which may also be a consideration.

The tabac-based Nickel bank also offers English-language banking services, which may be useful for any second home-owner who lives in a smaller town or village in France that does not have a bank.

Be aware, too, that you may have to maintain a minimum balance that will vary based on the bank you choose. If there is a limit, it may be higher for anyone not resident in France.

Not all high-street banks will accept applications from non-residents, although those in areas that have a lot of second homes are more likely to do so.

You’ll need numerous documents in order to open an account; your passport, proof of address and proof of income. Plus, as a non-resident you may need two recent bank statements. The best advice is to check with the bank first to find out what documents you will need. If you’ve already bought a French property but you don’t yet have a utility bill to show your proof of address, a certificate of purchase from your notaire will suffice.

Although areas with a lot of second-homes may have English-speakers in branch, the information and communication from your bank will be in French.

Among traditional banks, SG (Société Générale), Crédit Mutuel, Caisse d’Epargne and BNP Paribas offer international services dedicated to non-residents in France.

BNP Paribas allows you to open a bank account for a non-resident remotely, with the benefit of a dedicated multilingual advisoe.

Société Générale allows you to manage your bank account remotely. However, it requires a physical presence in the agency to open an account – which is when you can choose ‘international banking’, which cuts costs of commissions on certain payments, withdrawals and international transfers outside the euro zone.

You could also open accounts with Crédit Mutuel and Caisse d’Epargne, before coming to France, under certain conditions.

Online and neobanks – Many foreign residents in France use neobanks such as Wise, Revolut or N26 – the former two can be opened in your home country but used in France while the latter is built to be opened in France (including by non-residents).

The advantage is that you can get an account in both euros and dollars/pounds, and there are no restrictions on opening one depending on whether you are resident in France or not. Internet banks typically offer better conversion rates and often charge lower international transfer fees than high-street banks.

The disadvantage is that these banks are regarded as less secure than traditional ones, and while day-to-day banking may run smoothly, you may find it difficult to find a ‘real’ person to speak to if you encounter any issues.

France-based online bank Boursorama Banque does accept applications from customers with non-resident status in France, with the routine exception of US residents. And, according to reports, it is not uncommon to see applications from non-EU residents refused.

However a number of France-based online banks, including BforBank and Monabanq for example, specify that clients must be a tax resident in France.

Some online banks also don’t deal with cheques, which are still issued by certain French public administration bodies.

Internet banks will usually communicate with clients in the language of the country where they set up the account.

International banks or specialist services – the hybrid option is opening an account with a bank’s international division or setting up a specialist account such as an ‘expat account’ or a service aimed directly at second-home owners such as Crédit Agricole’s BritLine service.

The advantage to these is that they are tailored towards your needs and will offer English-language advisers, plus they don’t demand proof of residency in France.

The disadvantage is that they are usually more expensive with the frais de tenue de compte normally higher than high-street banks.

Some international or ‘expat’ services are really designed for high net-worth individuals and demand a minimum deposit to open an account or a minimum balance maintained in your account.

If you’ve had experience with banking for second home owners, feel free to leave your recommendations in the comments section below

Member comments

Anonymous - 3 April 2024 at 11:54 CEST

HSBC has sold off its French retail bank with its customers transferred to CCF, a newly created entity using a brand name from the past.
Anonymous - 3 April 2024 at 12:47 CEST

Brit line with Credit Agricole is very good.
Anonymous - 3 April 2024 at 14:59 CEST

I now pay taxes and utility bills by monthly direct debits under SEPA arrangement from my Uk bank , and it works ok …I realise I may lose a small amount on exchange , but at least it’s easier to control !
I also have opened a Revolut account which is excellent in exchange rates when you spend ..
Anonymous - 3 April 2024 at 16:36 CEST

We set up an account with Credit Agricole when we moved here five years ago. Since then we have set up two further business accounts with them.
We have found them to be excellent, and their presence in almost every small town also makes dealing with them very easy.
Anonymous - 3 April 2024 at 16:45 CEST

As Americans, we went with BNP Paribas, as that seemed to be the only bank that would take American customers. They required a recommendation letter from our bank (and fortunately sent us a template to use) and also required that we get our home insurance through them. I’ve never gotten any documentation about what the monthly fees are. Setting up the account took a good six weeks of work, more involved than buying our Paris apartment!
Anonymous - 3 April 2024 at 16:46 CEST

Please note that as of January 1st, 2024 HSBC no longer has retail banking in France. It has been sold to CCF: https://www.hsbc.fr/en-fr/cession/
LRR
Anonymous - 3 April 2024 at 23:35 CEST

I echo the comments about Britline/Credit Agricole. Had an account with them for over 7 years now. Their fees may be slightly higher than others but this is compensated by excellent customer service with a prompt personal service messaging service (not a chat bot as is prevalent with UK banks) The online web services work well and we use their debit / credit cards across the Eurozone with no problem. CA ATM’s are commonplace.
Anonymous - 4 April 2024 at 10:50 CEST

Have also used CA / britline for the last 3 years. Service has been excellent and whilst they may be a little more expensive than others they were extremely helpful in helping me set up House and Car insurance. I have used their Debit card all over Europe.
Stephen

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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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