One thing that often catches foreigners in France unaware is the tax declaration requirements for bank accounts in their home countries.
Question: I’m living in France and I complete the annual French tax declaration but I’m confused about the section on foreign bank accounts, investments and holdings – I don’t have shares or investments outside France, are they really asking me about my old account back in the UK? It only has £7 in it.
The annual French tax declaration is a comprehensive document, compulsory for almost everyone living in France, in which you’re asked about all your financial affairs.
When looking at exactly what you have to declare, the short answer is – everything. For example;
- If you’re working in France you need to declare your French income – even if you’re an employee and your salary has already been taxed at source.
- If you’re not working you need to declare all your income, even if it comes from outside France eg a UK or US pension.
- If you get any income from outside France – eg rental income on a property in another country – you need to declare that too.
For full details on what to declare – click HERE.
It’s important to note that declaring your income does not necessarily mean you will have to pay tax on it – France has dual taxation agreements with most countries so that if you have already paid tax on your income in another country, you won’t be taxed on it again – but you still have to tell the French taxman about it.
When it comes to bank accounts, you also need to declare any bank account that has your name on it – including joint accounts – that are held outside France.
This is in the section of the form for foreign earnings and investments, so it’s easy to miss but it’s an important one for foreign residents, who are likely to have at least one account in their home country.
The section of the form you need is form 3916.
Ask the expert: How to fill out each section of the French tax declaration
You need to declare each account that that you have – the bank/building society that it is with, the account number and the date you opened the account, so it’s worth getting this information together before you start filling out the form.
You don’t need to declare how much is in each account, but you do need to be careful to declare all accounts that you have – even if they are dormant or only have a tiny amount of cash in them.
If you have cryptocurrency accounts you need to declare them too, although they have their own section.
If you have a PayPal account you might also need to declare that – although only if you use it for business or you have spent more than €10,000 with it in the last year.
Finally if you have insurance policies such as life insurance in another country you need to declare that too.
The tax office says: ” Which accounts are concerned? All bank accounts, capitalisation contracts or similar investments (life insurance contracts) and digital asset accounts opened, held, used or closed abroad during the year.
“These include accounts opened with banks, investment service providers, public administrations or persons such as notaries or stockbrokers who normally receive securities, securities or cash on deposit.
“They also include life insurance policies opened with insurance and similar organisations, as well as digital asset accounts (eg cryptocurrencies).”
If you have internet bank accounts you will need to check that they are French accounts – even if you opened them in France.
In order to check, find the IBAN (international banking number) for the account; if it begins with FR then it is a French account and does not need to be declared. However if it starts with other initials – eg GB for Great Britain or BE for Belgium – then it is a foreign account and you need to declare it.
The good news is that if you declare online, your declaration remembers last year’s information so you don’t need to fill out all this information from scratch every year, but if you have opened a new account in the past year, don’t forget to add it to your declaration.
What happens if you don’t declare them?
You might think that your few pounds or dollars in your foreign account is not very important, in the scheme of things, but not declaring a bank account or investment scheme carries with it hefty penalties.
The standard fine is €1,500, but if the account is in a country that has not signed an anti-fraud agreement with France then it can rise to up to €10,000.
And those fines are per bank account, so if you have several accounts that you haven’t declared the fines can quickly add up.
International money-laundering legislation means that banks and governments share a lot more information these days, so it’s definitely not worth the risk.
What happens if you have already done this year’s declaration?
Don’t panic, you have the legal ‘right to make a mistake’ and declarations can be corrected without penalties until December.
If you declared online, you can update and correct the declaration that you filed. If you declared on paper, you can contact your local tax office to ask for a new form.
Full details here – How to correct your French tax declaration
