I’m a British expat living in France, what should I do with my ISA?

Many expats don’t realise that UK ISAs only function as a tax-wrapper in the UK.

Once you live overseas their tax treatment becomes much more complex.

Whilst your ISA protects your savings and investments from UK taxes, it won’t protect them from taxes in France, where they aren’t recognised.

This means you’ll need to report and pay French taxes on:

Interest received within your ISA.
Dividends received within your ISA.
Capital gains from fund switches with in your ISA.

So even if you never take the money out, you will owe taxes in France.

What are your alternatives to an ISA?

If you’re no longer living in the UK and don’t plan to return there, there’s little benefit in hanging on to your ISA.

Instead locally complaint tax-wrappers in France, are a better solution.

There’s two key options:

Livret A – For tax protected cash savings.
Assurance Vie – For tax protected investments.

What is a Livret A account?

The Livret A is a tax-free savings account in France. It is available to both French residents and non-residents. And is offered by all major French banks.

Livret A is suitable for short-term savings, like and emergency fund, or money you may need in the next 1-2 years.

Interest is compounded and paid annually on December 31. The current interest rate is 2.4%, effective from February 1, 2025.

The maximum deposit limit is €22,950 per person. Interest earned above this limit does not count towards the cap.

Funds can be withdrawn at any time without penalty.

But the interest you receive won’t be sufficient to ensure your savings grow beyond inflation.

For long-term savings and investments, Assurance Vie can be a better option (more below).

What is an Assurance Vie account?

Assurance Vie is a French investment-linked life insurance product. It offers tax-efficient savings and estate planning benefits.

Funds can be invested in various assets like stocks, bonds, and funds. Interest and capital gains grow tax-free within the policy. Withdrawals are taxed only on the growth portion.

For policies held less than 8 years, a flat tax rate of 30% applies. This includes 12.8% income tax and 17.2% social charges.

After 8 years, the income tax rate drops to 7.5%. For French residents social charges (17.2%) still apply.

An annual tax-free allowance of €4,600 (€9,200 for couples) is available, which applies to gains withdrawn after 8 years.

Non-residents are exempt from social charges on withdrawals.

Assurance Vie is a popular solution for expats looking to tax-efficiently invest in France, and the cash in their policy once living overseas at a lower tax rate. You may also be exempt from French income tax, depending on tax treaties.

Estate Planning – Beneficiaries can receive up to €152,500 tax-free per person paid from Assurance Vie policies. This applies to all premiums paid before the policyholder turns 70.

How does an Assurance Vie compare to a normal Investment Account?

Both an Assurance Vie and an Investment Account can allow you to invest in a wide range mutual funds, ETFs, stocks and bonds.

But an Investment Account won’t offer any tax protection.

This means you’ll pay tax on an ongoing basis, instead allowing your funds to grow free of tax until they are withdrawn, which will impact your investment growth over time.

French Flat Taxes (inducing social charges):

Type of Tax	Assurance Vie	Investment Account
Dividends	No tax within the policy	30%
Interest	No tax within the policy	30%
Capital Gains	No tax within the policy	30%
Assurance Vie Withdrawals	30% if held for less than 8 years. 24.7% after 8 years	N/A

If the you chooses to be taxed under progressive rates, instead of the flat rates above, the personal income tax progressive scale will apply to all income and capital gains. This option is applicable to all of the income subject to the PFU without a possibility of a partial option.

Can anyone invest in an Assurance Vie?

Assurance Vie policies are best suited to expats looking to invest for more than 8 years.

Most Assurance Vie providers require you to be already resident in France. So if you have an investment-linked life assurance bond that was set up before moving to France, there is a high chance it won’t be complaint with local Assurance Vie rules.

There are specialist Assurance Vie providers that work with British expats, providing documentation in English, and with products also compliant in the UK should you return.

The minimum initial investment for most Assurance Vie providers that work with expats is €100,000. With the costs reducing the higher the amount invested.