Expat savings account suggestions?

caliston

I'm trying to advise a friend who has £120K he wants to put in a savings account. The trouble is he has dual British/French nationality, lives in France, and he doesn't have a UK address. This, presumably, is going to trip up the address checks applied by the usual savings account providers. He wants to keep the money in the UK to keep it away from French inheritance law.

Any suggestions for avenues to look? There are 'offshore' accounts offered by various banks - are they any good (many seem to charge)? And presumably he'd have to be careful about the inheritance laws of Jersey or Bermuda or whatever? Or are there any standard savings institutions which will cope with expats? In particular it'd be helpful if he could withdraw cash from a French ATM - I know some savings accounts provide ATM cards but do they work abroad? A provider who has a reliable rate rather than having to switch frequently would be good.

Also, as he lives abroad, do any of the non-domicile rules for tax apply in this case? Presumably he'd have to pay tax on any earnings in the UK so any interest over his personal allowance would be tax, but none of his French earnings would count? Is there a way for savings to be more tax efficient - would trickling them into an ISA be possible, or is that not available to a non-resident UK national?

Cheers,

seven-day-weekend

I doubt very much if he will be able to open a UK bank account if he has no UK address. Certainly not an ISA. My husband and I opened one each of these several years before we went to live in Spain, plus we have a UK house still, and we are not allowed to add to our ISAs whilst we are non-UK resident. I have opened a couple of UK bank accounts since we've been abroad, but these have been with banks where we already have an account.

AFAIK, any tax will have to be paid in the country where he is resident (i.e France), whichever country the income is generated in.

I don't know anything about offshore accounts, sorry.

British ATM cards do work abroad, but as he will probably not be able to open a bank account, it is not particularly relevant.

Hope someone comes along soon who might know a bit more.

droopsnout

I agree with sdw.

From the last paragraph, this seems to be a case of wanting the best of both worlds, and paying tax in neither, inheritance laws or not. If he wishes to avoid French inheritance laws, he should live outside France. (Though inheritance laws are said to be changing). Every country has some inconveniences, and every choice we make is a compromise. Better bite the bullet, methinks!

I object strongly to paying tax on any savings account, as I've already paid tax earning it! But in reality, they'll get us all one way or the other.

I did try to add more cash to an existing cash mini ISA a while back, and they wouldn't even let me do that, despite the account being associated with a UK address.

martyn4764

caliston wrote: »

He wants to keep the money in the UK to keep it away from French inheritance law.

Impossible; as a French resident, it's subject to French inheritance tax regardless of where it's 'kept'.

Jonbvn

All of the big banks & BS's offer offshore savings and current accounts. Since your friend has an EU address, he will be subject to the EU savings directive. This means all interest will be taxed at 15%, rising to 35% in 2009 (I think), unless the interest is declared to the tax authorities in France.

There is no escape!

caliston

Thanks. I wasn't suggesting tax dodging, but primarily somewhere that can get a good rate that works given the situation. This is not the sort of thing covered by the usual best-buy tables. But then, as the situation is complex, somewhere that's tax efficient is important too (given ISAs and the like aren't available). And I don't know anything about the French savings environment so wouldn't know where to start there.

Impossible; as a French resident, it's subject to French inheritance tax regardless of where it's 'kept'.

Are you sure? The 2007 book I have on the subject (actually mainly for Greece) says:

In France and the United Kingdom, it is the location of the property and not the nationality of permanent residence of the owner which determines how property will be distributed after the owner's death. As is the case in Greece, Spanish law states that succession of all property, whether movable or immovable and whereever situated, is determined by the law of the deceased's nationality.

The situation seems to vary from European country to country: the EU is trying to harmonise the situation to avoid conflicts (if you're British having property in Spain, the UK says it's for Spanish law to decide and Spain says it's for British law). It could be the book is wrong (Greece is its main focus after all), but do you have any references I could look up?

Cook_County

And for my 1,000s post!!

It sounds as if your friend is domiciled within the UK (albeit non-UK resident) so there will be UK IHT on worldwide assets on death, subject to credit for French tax.

He may be trying to avoid French forced heirship rules by holding assets outside of France, but I do not know if that would work.

As other posters have rightly said he would need to declare the interest on his French tax returns in any case so the real questions are:

1. does he want it in Euros, Sterling or some other currency
2. who offers the best interest rates in whichever currency, and
3. what do French residents do to reduce tax on savings income?

caliston

It sounds as if your friend is domiciled within the UK (albeit non-UK resident) so there will be UK IHT on worldwide assets on death, subject to credit for French tax.

What would be the criteria for domicility? He has British parents but has lived in France for the past 15+ years, has a French wife, owns property in France but not in the UK, and hasn't been to the UK for more than 2-3 weeks a year. He has a UK pension. IHT at the current thresholds wouldn't be a problem (AFAIK). and his wife would be exempt as surviving spouse under UK rules.

I should read the Inland Revenue booklet on the subject, but at first glance it's a bit confusing.

He may be trying to avoid French forced heirship rules by holding assets outside of France, but I do not know if that would work.

Yes, that's the point. As things stand were he to die his wife gets almost nothing. (Without creating trust companies or similar such things). The section I quoted seemed to suggest it was feasible (he has taken UK legal advice on this matter, but I don't know what the outcome was - the solicitor specialised in wills not tax AFAIK)

Those questions are the sorts of things I was getting at, yes. There's no problem with declaring things to the tax authorities. He wants to keep it in Sterling (hence my enquiry here).