Banking - French banks accounts

Do I need a French bank account? If you own or plan to buy a property in France, we would always recommend you open a local bank account to use for mortgage payments, direct debits and to pay occasional bills. Some services such as mobile phones on monthly plans actually require that a direct debit from a French account is set up. If you plan to rent out the property, a local account is also a good way to collect the rent and to pay any management fees or other service charges. Having a French account makes paying for your French property a lot simpler and less time consuming than using your UK account. Most likely you will also save money on transfer costs, and guard yourself against getting caught out by fluctuating exchange rates if you transfer a lump sum regularly rather than a number of smaller amounts between the countries.

I am buying a property in France. Does this automatically mean I am resident in France? You are only considered a resident for tax purposes if you spend more than 182 days per year in the country. Property ownership does not constitute grounds for determining your residence status. If you are an EU or EEA passport holder and only plan to spend holidays and the occasional weekend in France, you are most likely to remain a non-resident in the eyes of the French authorities and banks.

How do I select a bank that is right for me? There is one golden rule that applies to most serious things in life – especially financial matters – never sign anything you don’t understand. So, if you think language could become a problem in understanding your French finances, your first priority should be to find a bank that has information material in English and provides services and statements in English. Apart from communications, as in the UK, choosing the right bank is down to your own requirements and needs. Think about what financial and non-financial services you may need and how you plan to use and service your account. Also look at the charges involved to maintain the account and the services you require such as debit and credit cards, cheques and online and telephone banking.

If you want a personal account manager, it could be worth finding one who fully understands your situation as a newly arrived Brit in France. After all owning a property or living in France is quite different from being a tourist. It is also perhaps worth considering how ‘hands on’ you need your bank to be. If retiring to France, you may want to consider moving at least part of your finances and investments over to ensure your money keeps working for you and to benefit from French non-taxable savings products which can give you a return to spend in France without exposure to currency fluctuations.

What types of accounts are there, and how do they differ from one another and from similar ones in the UK? As in the UK, the main types are current and savings accounts, many of them available to both residents and non-residents. Many banks also offer packaged accounts (forfaits) which can mean a more competitive and transparent pricing on many services. For current accounts the main difference between the UK and France is that most high street banks do not offer interest on smaller deposits. This is a legacy of a law that previously prohibited banks from paying interest on current accounts. Although this law was changed in October 2004, few banks offer this service. So, spend some time shopping around for competitive interest rates. Currently Barclays lead the market offering 3% (November 2006).

As in the UK there are plenty of different savings accounts available and choosing the right one depends on your circumstances. Non-residents should also bear in mind that there are tax benefits on certain savings products, so it pays to check this with your bank. Forfaits are packaged accounts allowing you to choose a package tailored to your needs. These can offer a more competitive pricing as they will charge for services on the basis of your projected activity over a period of time rather than pricing them as one-off actions. Some packages, such as Barclays ‘FranceSolutions’ and ‘FranceSolutions+’, are designed to take care of most of the needs of UK residents setting up in France or moving across permanently, and include financial and non-financial services such as help with finding professional advisors, setting up utilities, paying property taxes and access to translation services.

What do I need to set up a bank account? To open an account as a resident in France, you would be required to present a valid document of identity such as your passport, official photo ID or for non-EU citizens, a residence permit (carte de séjour), plus a recent proof of address (e.g. an EDG/GDF or France Telecom bill in your name and no more than three months old). If you are a non-resident in France, in addition to proof of identity, you can use a recent credit card statement or a bank statement from a recognised bank to confirm your home address (e.g. in the UK), again not more than three months old. If you open your account by post, additional proof of identity and address may be required such as a photo driving licence. There are also different minimum deposits required for opening a current account. Check with each bank to find out what applies to you.

What should I expect to get from the bank? When your account is set up you should receive a welcome letter with your account number and contact details for your account manager. Chequebook and the RIB (rélévés d’identité bancaire) should follow separately or be available for collection at your bank. The RIB is a cheque-sized piece of paper, issued either separately or in your chequebook, detailing your bank details and your address. It is used to set up transactions and operations involving your account.

A word of caution on using cheques in France: always ensure you have the required funds to cover your cheques. Bouncing a cheque is taken very seriously by the French and could severely effect your credit status and disqualify you from obtaining credit or opening an account with another bank for a very long time.

Can I do online banking in English? Most major banks offer online services, although very few offer an English-language equivalent for full transactional banking. If you want to do your online banking in English find a bank with specialised services for international clients as these are likely to offer multilingual services both off and online.

How do I pay my mortgage, taxes and bills? Similar to the UK, to save time and sometimes money, set up direct debits to pay your mortgage, taxes and other reoccurring bills and keep manual payments to a minimum. What is the best way to transfer funds into my account? When transferring money between countries it pays to regularly transfer a lump sum to cover your outgoings. This way you will keep any transfer costs to a minimum and have some assurance against the daily fluctuating exchange rates.

Does opening a bank account in France effect my tax status in the UK? The answer to this is ‘probably not’, as your tax status is determined on where your main financial interest is. For instance, if you work and get paid in the UK, then most likely you will be considered a UK resident for tax purposes. However, if you are retired, and your pension is paid out in France, you may be considered a French tax resident if you reside more than 182 days per year in the country. It is worth bearing in mind you are required by both the UK and French tax authorities to provide details of any accounts held overseas and the interest earned on them, and this also applies to rental income. If in doubt your bank should be able to advise on your situation or refer you to an expert who is able to determine your status.

by Ian McDonald, head of international clients, Barclays France.

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