France's Tax-Free Livret A Remains Popular For Savers
24 May 2013
Posted by: Author: Ulrika Lomas
Source: Ulrika Lomas (Tax-News.com, Brussels)
Latest figures released by the French state-owned financial institution Caisse des Dépôts show that the state-regulated tax-free savings account, the Livret A (LA), remains a highly popular and attractive proposition for savers in France, despite the fact that the interest rate was lowered from 2.25 percent to 1.75 percent on February 1.
In the first four months of 2013, the net Livret A amount collected was EUR14.59bn (USD18.9bn), while the total amount of capital held in this type of savings account stood at EUR264.6bn, as at the end of April. The figures mark an increase compared to last year, when the net amount collected reached EUR9.69bn at the end of April, 2012, and deposits totalled EUR226.6bn.
The Caisse des Dépôts figures also show the increased popularity of the Livret de Développement Durable (LDD), the tax-free sustainable development savings account. The net LDD collected in the first four months of the year amounted to EUR6.07bn, against EUR1.77bn the year before, and deposits totalled EUR98.6bn at the end of April, compared to EUR71.7bn the same time in 2012.
According to the statistics, the net amount of LA and LDD combined totalled EUR4.6bn in April alone, and amounted to EUR20.66bn after the first four months of 2013. The total invested in the two products stood at EUR363.3bn as at the end of April 2013.
All interest earned in these savings accounts is exempt from both French income tax and social charges. The maximum amount that can be held on deposit in the Livret A account is EUR22,950 per person, plus accrued interest. The ceiling applicable to the LDD is currently EUR12,000.
The Government aims to reform state-regulated savings accounts and their use, to finance social housing projects and local authorities at a reasonable cost, while at the same time guaranteeing the purchasing power of public savings.
A report submitted by Pierre Duquesne back in September 2012, commissioned by the French Finance Ministry, and drafted following extensive consultation with the various stakeholders, notably those affected by the collection and use of the financial resources for social housing products, recommended that the Government increase the Livret A ceiling by 25 percent in 2015 and by a further 25 percent in 2016. The Livret A ceiling has already been raised twice in quick succession recently, by 25 percent on October 1, 2012, and by 25 percent on January 1, 2013.