What's a Livret A in France?
Originally posted on & updated on 19th February, 2024
Livret A is a simple savings account with instant withdrawal access that’s historically been very popular in France, a kind of on demand tax free savers account, it is similar to an ISA account in the UK.
In May 2022, there were 55 million accounts holding a total amount of 358,8 billion euros between them. French families felt confident in these government backed accounts that are easy to open while making a difference for the country. They are a great idea for kids and grand kids; for the first car or a deposit on a house later.
Livrets A Are Popular Savings Accounts
Why is this Big News in France?
There were important news last month when the French Finance Minister, Bruno Le Maire, announced that the interest rate for the Livret A will be raised to 3% (from 2%), after the National Central Bank (La Banque de France) suggested the hike. And it’s proving to be a huge success with savers, more than 9Bn euros were deposited in Livret A saving accounts in January, the highest for 14 years (source le Figaro). The latest figures for 2023 indicate that French savers have placed €28.6Bn euros in Livret A, it’s a record amount driven by the cost of living crisis.
The Highest Rate for 15 Years
The annual interest rate has been going down steadily in the last decade. In 2010, the Livret A had an annual rate of return of 4%. Two years later it had fallen to 2,25%, by 2015 to just 1%, by 2016, it had fallen to 0,75% and by 2020, the annual return rate was down to 0,5%.
Due the inflationary pressures at the start of 2022, the rate was increased to 1% in February 2022, which then doubled to 2% in August, the highest rate in nearly 10 years. Today at 3%, the rate is the highest it’s been for 15 years (source Service-Public).
Is the Livret A a New Saving Product?
Non, the Livret A was established in 1818 by King Louis XVIII to pay for debts incurred by Napoléon during his conquests. The funds were held and re-invested through the Caisse des Dépôts.
In the 19th century the funds were used to build railroad tracks and canals throughout the country. Between World War I and World War II, to install electricity in rural France. Since then, it has mostly been used to build social housing.
How is the Interest Rate Calculated?
The Livret A rate is calculated twice a year (January and July) by taking the average between the average inflation rate from the last six months and, the average of the interbank short term rates. The new rate of 3% was applied on the 1st of February, the month following the decision from the Ministere des Finances taken in January.
Interest is calculated on the 1st and 16th of each month and paid in one instalment on December 31st. They are simply added to your capital.
Can Anyone Open an Account?
Any adult or child can open and hold a Livret A, it’s common for every member of a family to have one. The account is limited to a maximum amount of €22,950 per person/account. Any interest earned is exempt from French income tax as well social charges. And there is no residence qualification for a Livret A savings account.
How and Where Can you Get a Livret A?
Until 2008, La Poste and the Caisse d’Epargne had the monopoly for all Livret A accounts, not any more. All French banks now offer this saving account at the same rate as it’s regulated by the state.
If you already have a bank account in France visit your account online and search for ‘épargne’, or talk to someone at your local branch. You could also walk to the village post office which may be easier or visit La Poste website, their minimum payment amount is just 1,5€.
Do I Get a Bank Card? How to Close my Account?
You will not be issued a cheque book or bank card. Note that as with any saving account, the Livret A cannot go in the red. To close your account, you need to pay a visit to your bank in person to inform them of your decision or you can post a simple letter by post. For more information here’s the link to the French governments’ website, but hopefully we covered most of your questions above.
How to Deposit or Withdraw Money?
Money in a Livret A is available at any time; from the age of 16, anyone can withdraw money, unless parents or a legal tutor has decided otherwise. The minimum for a deposit or a payment is 10€ (1.5€ for La Poste), most transactions are made online or at the bank or post office in person.
New Rules for Savers in 2024
End of Duplicate Accounts
The Monetary and Financial Code in France prohibits holding two similar regulated savings accounts. To fight the opening of duplicate accounts, a decree published in March 2021 requires bank verification. This new measure came into force on January 1, 2024.
Many savers hold several accounts or regulated savings plans of the same type, sometimes without even knowing it (long-time opening of a young savings account by grandparents, change of bank, for example), even though this is forbidden.
Which Livrets and Accounts are Concerned?
The new regulation requires banks to verify that a customer doesn’t already have a similar savings account with another institution before opening a regulated savings product. The scheme concerns all accounts, schemes and regulated savings books:
- Livret A
- Popular savings booklet (SMP)
- Sustainable and inclusive development booklet (LDDS)
- Housing Savings Plan (PEL)
- Home Savings Accounts (CEL)
- Youth Savings Accounts
Since 1st January 2024, banks must comply with this new verification obligation and “question the tax authority to verify whether the person already holds a regulated savings product of the same class.”
What are the Controls?
From this year, French banks will be required to:
- inquire of the tax authorities about information on other similar savings products
- refuse to open the account if the customer objects to communicating with tax authorities
- refuse to open the account if the French tax office confirms that the customer already holds one or more similar savings accounts. Until the holder has regularised the situation
If a person holds multiple identical savings books, they are given a grace period of two months to re-organise their accounts. After this period, the savings product(s) will be cleared, and the money transferred to another non-interest-bearing account.
One of the easiest way to save money regularly is to commit to an amount and set up a monthly direct debit. If you earn income abroad, you could set up a regular monthly or quarterly payments with our currency experts, either direct to your bank account or to your savers account or both, they are usually much cheaper than high street banks or the post office.
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