French personal finance, explained in English

A tax-free allowance applied before the taxable base is computed. France uses abattements everywhere — succession, donations, capital gains, assurance-vie, etc.

Examples worth knowing: €100,000 tax-free per parent per child for lifetime gifts, refreshing every 15 years. €152,500 tax-free per beneficiary on assurance-vie funds invested before age 70. €4,600 annual tax-free allowance on assurance-vie withdrawals after 8 years (€9,200 for a couple).

Abattements are independent and stackable. They are the main reason French succession planning is largely about timing and structure, not avoidance.

Not insurance at all in the anglo-saxon sense. Assurance-vie is a tax-efficient savings and investment wrapper — broadly comparable to a UK ISA or a US 529 plan in spirit, but more flexible than either.

The « life insurance » label is purely historical and contractually trivial: there is a marginal death benefit, but for 99% of users that's irrelevant. The point is the tax treatment.

Inside an assurance-vie, your money can be invested in a guaranteed-capital fund (fonds en euros), in market funds (UC — unités de compte), or both. After 8 years, gains are very lightly taxed — and assurance-vie passes outside the standard succession with €152,500 tax-free per beneficiary.

A comprehensive review of your financial situation: assets, liabilities, income, taxes, retirement entitlements, succession structure, insurance. The French equivalent of a « financial check-up » or « wealth audit ».

A proper bilan patrimonial is structured in three layers: a snapshot of your current situation, an analysis of strengths and gaps relative to your goals, and a written strategy with concrete next steps. It typically takes 4 to 8 hours of advisor work and produces a document of 20 to 40 pages.

It is the natural starting point of any advisory relationship in France. Done well, it pays for itself many times over — by identifying the inefficient products you're holding, the tax optimisations you're missing, and the succession problems waiting to surface.

A standard brokerage account — your default vehicle for holding shares, ETFs, bonds, etc. outside of any tax wrapper. Equivalent to a regular taxable brokerage account in the US or UK.

Income (dividends, interest) and capital gains realised in a CTO are taxed at the PFU flat tax of 30% by default. No annual allowance, no preferential treatment.

For French residents, the CTO is almost always less efficient than the PEA or assurance-vie for the same investments. The CTO has its uses: foreign securities not eligible to the PEA, complex strategies, very high net worth individuals — but it shouldn't be the default.

A lifetime gift, formalised before a notaire when the amount is significant. Donations are taxed in France, but very generous abattements apply: each parent can give up to €100,000 per child every 15 years entirely tax-free. Grandparents can give €31,865 per grandchild every 15 years.

Beyond children: a spouse can give €80,724 tax-free, a sibling €15,932, a niece or nephew €7,967. Anything above the abattement is taxed at progressive rates.

Donations are central to French succession planning: by gifting early and regularly, you can transmit large amounts entirely tax-free over a generation — far more than you ever could on death.

A French (and Roman law) concept that splits ownership of an asset into two distinct rights: the « usufruit » (the right to use and receive income) and the « nue-propriété » (the bare right of ownership). On the usufructuary's death, the bare owner automatically reunites the full ownership without tax.

Used extensively in succession planning. A typical example: parents donate the bare ownership of a property to their children while retaining the usufruct. The children become the bare owners; the parents keep the use and the rental income for life. On the parents' death, the children become full owners — without paying succession tax on what they already legally owned.

The official valuation of usufruct vs bare ownership depends on the usufructuary's age, per a tax schedule. A 50-year-old's usufruct is valued at 50% of the asset; a 70-year-old's at 30%. This makes early dismemberment particularly tax-efficient.

A capital-guaranteed investment fund available inside an assurance-vie (and a few other French wrappers). The insurer guarantees the capital and an annual minimum return; any additional yield is paid as participation.

Returns have been declining for years (typically 1.5–3% net of management fees as of 2026). For decades the standard French long-term saving vehicle, the fonds en euros is now best used for the secured pocket of a portfolio, not the entire portfolio.

Behind the scenes, the fund is mostly invested in government and corporate bonds, with a small real estate and equity portion.

The unit of taxation in France: a household, not an individual. A married couple files one joint return, and any dependent children are included in the same foyer. This is fundamentally different from the UK (individual taxation) or the US (joint or individual choice).

The foyer fiscal determines your « parts fiscales » (tax shares) via the quotient familial: 1 part for an adult, 0.5 for each of the first two children, 1 for each subsequent child. The taxable income is divided by the number of parts before applying the progressive tax brackets — which mechanically lowers the average tax rate of larger households.

Civil partners (PACS) are also taxed as a foyer fiscal. Adult children can in some cases remain attached to the parental foyer fiscal (notably students under 25).

An annual wealth tax applied only to real estate, for households whose net taxable real estate exceeds €1.3 million. Rates run from 0.5% to 1.5% on the portion above the threshold.

Before 2018, France had a broader wealth tax (ISF) covering all assets. Macron's reform restricted it to real estate — financial assets are now exempt.

IFI applies to French tax residents on their worldwide real estate, and to non-residents on their French real estate only. Mortgages and certain professional real estate can reduce the taxable base.

A second tax-free savings account, capped at €12,000 per person. Same interest rate and fiscal treatment as the Livret A. Open one if you already have a full Livret A and want additional liquid tax-free space.

The « sustainable development » label refers to how the bank uses the deposits (theoretically for environmental and social purposes). For the saver, it functions identically to a Livret A.

Combined with the Livret A, a person can shelter up to €34,950 in fully tax-free, immediately accessible savings. A couple, up to €69,900.

A government-regulated savings account, capped at €22,950 per person. Interest is set by the State (recently 3% then 1.7%), is fully tax-free and exempt from social charges. Funds are immediately available, capital guaranteed.

Almost every French resident has one — it's the standard liquid emergency reserve. Children can have one too (capped €22,950 each), making it useful for grandparents' gifts.

Beware: the Livret A is great for liquidity, terrible for long-term growth. Inflation typically eats most or all of the real return. It should hold your 3-to-6-month emergency reserve and nothing more.

A notaire in France is nothing like a US notary public. Notaires are highly-trained legal professionals (7+ years of study, competitive exam) holding a public office: they have the exclusive power to authenticate property transactions, marriage contracts, donations, wills, and successions.

Every real estate purchase in France goes through a notaire — the buyer typically chooses one, and the notaire collects the « droits de mutation » (transfer tax, around 7-8% of the price) on behalf of the State, alongside their own fees.

Notaires also draft and register succession declarations, family donations, and inheritance partitions. Their advice is valuable but limited to legal structuring — they generally don't optimise across the broader patrimonial picture (assurance-vie strategy, investment selection, etc.).

A French wrapper for equity investments with a powerful tax advantage: after 5 years, capital gains are exempt from income tax — only social charges (17.2%) apply. The contribution ceiling is €150,000.

Inside the PEA, you can hold European equities directly or through ETFs (many MSCI World and S&P 500 ETFs are PEA-eligible despite tracking global indices, thanks to synthetic replication).

The PEA is unique to France and doesn't exist elsewhere. It's reserved for French tax residents and one per person (a couple gets two).

A regulated savings plan originally designed to fund a property purchase, with a fixed interest rate guaranteed at opening. Capped at €61,200.

PELs opened since 2018 are no longer tax-free: interest is subject to the PFU (30%). Older PELs (pre-2018) still benefit from favourable taxation in many cases — if you have one, check carefully before closing it.

The associated « housing loan rights » are now economically unattractive compared to market mortgage rates, so the original purpose of the PEL is largely defunct.

France's main private retirement vehicle, introduced in 2019 to replace older schemes (PERP, Madelin, Article 83). Functionally similar to a US Traditional IRA or a UK SIPP: contributions are deductible from taxable income today, the money grows tax-deferred, and you draw funds at retirement age (taxed as income or as capital gains depending on options).

The deduction ceiling is generous — around 10% of professional income with caps, plus unused allowance from the previous three years carried forward.

Money in a PER is generally locked until retirement, with a few exceptions (buying your primary residence, certain hardship cases).

A simplified, flat-rate tax of 30% on most investment income: 12.8% income tax plus 17.2% social charges. Introduced in 2018 to simplify the taxation of dividends, interest, and capital gains.

It applies by default to dividends from shares, interest from bonds and bank accounts, and capital gains on securities held outside a tax wrapper (no PEA, no assurance-vie).

You can opt out and have your investment income taxed at your marginal income tax rate instead — this can be advantageous if your marginal rate is below 12.8%, i.e. low income earners. The choice is made each year on your tax return.

A flat 17.2% levy on most investment income (interest, dividends, capital gains, life-insurance gains, etc.). Despite the name, prélèvements sociaux are not pension or healthcare contributions — they're a tax that funds the social security system.

They're included in the PFU 30% flat tax. They also apply on top of any other tax treatment: even after 8 years in an assurance-vie, even after 5 years in a PEA, you still pay 17.2% on gains.

Foreign nationals affiliated to a non-French social security system (still working under an A1 form, US Social Security, etc.) can sometimes claim a partial exemption.

France imposes by law that a portion of your estate must go to your children, regardless of what your will says. With one child, half your estate is reserved; with two children, two-thirds; with three or more, three-quarters. You can only freely dispose of the remaining « quotité disponible ».

This is fundamentally different from anglo-saxon estate law, where you can normally disinherit your children. Many British and American expats are shocked to discover they cannot leave everything to their spouse.

Since 2015, the EU Succession Regulation allows you to elect the law of your nationality to govern your succession, which can override the French rules — but only if done properly through a French notaire.

A French legal vehicle for jointly owning real estate. Two or more people contribute capital to a SCI, which buys and holds property; the partners own shares (parts sociales) in the SCI rather than directly owning the building.

The SCI is heavily used in France for three reasons: organising the joint ownership of rental property between family members; structuring real estate for succession (transmitting shares is easier than transmitting buildings); and separating the operating use of a building (held by a company) from its ownership (held by a SCI, which leases it back).

SCIs can be taxed either as « IR » (income tax, default) or « IS » (corporate tax, by election). The choice has significant implications and is irreversible. SCIs require annual accounting and a general assembly — they're not free of administrative burden.

A pooled real estate investment vehicle — broadly comparable to a US REIT in spirit, but with French peculiarities. You buy shares in a SCPI, which uses the pooled money to buy commercial properties (offices, retail, healthcare). The SCPI distributes the rental income to shareholders.

Yields are typically 4-6% gross. But entry costs are high: most SCPI charge 8-12% subscription fees, which means you start with an immediate paper loss. Liquidity is also limited — you can only sell when there are buyers on the secondary market.

SCPI income is taxed as French real estate income, which can be heavy if you're already in a high tax bracket. Some structures (SCPI inside an assurance-vie) soften this, but with their own trade-offs.

Your marginal tax rate on the next euro of income — the bracket your highest taxable euro falls into. France has 5 brackets: 0%, 11%, 30%, 41%, 45% (as of 2026).

TMI is the central number for tax planning. A €1,000 PER contribution saves you €450 if you're in the 45% bracket — but only €110 if you're in the 11% bracket. Many tax-saving decisions are profitable for one TMI and unprofitable for another.

Note: brackets are applied per « part fiscale » (see foyer fiscal). The taxable income is divided by the number of parts before the bracket lookup.

The non-guaranteed investment options available inside an assurance-vie: ETFs, mutual funds, real estate funds (SCPI), structured products. UC investments fluctuate with the markets — there is no capital guarantee.

Choosing low-fee UCs (ETFs, in particular) is the single most important decision in assurance-vie design. Bank contracts often push expensive in-house funds with retrocession fees built in. Low-fee contracts offer access to broad-market ETFs (Amundi, iShares, Vanguard) with marginal extra cost.

The « UC fees » (frais sur encours) of your contract apply on top of the ETF's own fees and compound silently over time. Aim for UC fees under 0.5% per year — the bank versions typically run at 1% or more.