# Q: "Assurance vie" in France? "Compte épargne" in France? Savings in the US? etc.



## calin-m

Being a newbie in the French financial area, thus in need for some expert longer term expat in France advice: is there any advantage of opening/using an assurance vie or compte épargne or other method of savings (not talking markets investments and the likes), in France, vs leaving such in the US? And how do these work? Looking at the present interest rates, the US savings are a joke, by comparison to inflation, and the only good news are lower $US to € exchange rates, thus an opportunity to change the former to latter, but once moving money in €, what option(s) does one have, other than in non-interest regular bank accounts? I've seen quite a few categories of different type of accounts mentioned by various financial institutions, but failed to find a comparison chart which could clarify functions, timing, availability on short notice, etc., etc. TIA.


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## Bevdeforges

If you are a US citizen or even just a "US person" subject to having to file US taxes from abroad, it's probably safest to keep your savings/investments in the US.

Assurance vie is generally considered to be a PFIC or a "foreign trust" or some other form of foreign investment instrument that requires elaborate reporting resulting in double taxation - and to boot the forms themselves claim they only take "about 80 hours" to fill in each year. For smaller accounts, I know some folks simply report them as if they were simple savings accounts - but even that means that each year's income (gains) needs to be reported and will be taxed as earned. You can't take advantage of the FTC (Foreign Tax Credit) because the year to year earnings on an assurance vie aren't taxed in France, so there is nothing to deduct as a tax credit.

A plain old compte épargne is OK and can be handled like any old savings account - except that you may or may not be able to benefit from the FTC for taxes paid in France, depending on your income level. There are also the various "livrets" (Livret A, Livret Developpement Durable, etc.) that are tax-free in France - and specifically not reportable to the US by the French banks.

Or, you can simply do like many do - just don't report earnings on your French accounts to the IRS. As long as it's not a significant amount that would affect the US taxes you owe, it's unlikely you'll ever hear any repercussions. Just remember that you do need to report your foreign bank accounts on your French tax declarations (though only the banks and account numbers, no balance information) and you should declare the earnings from those accounts on your declarations (and don't forget to include those earnings on your 2047 form - for foreign sourced income). 

You probably should set up the tax-free livrets for those you are eligible for. (The accounts pay an interest rate set by the government and there is a limit to how much you can put into these accounts - but it's tax-free money.) Other than that, savings accounts in a regular old bank will cost you 30% tax - though net you may well get quite a bit more than the feeble interest rates in the US. The other huge advantage is that your money is immediately available and already in euro, so no exchange rate concerns.


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