Four Dimensional Topics

This Nouvellettre® is divided into four parts so that you can take it all in, in bits, and digest some of the very important information that lies within…

1. THREESOME IN PARIS

Set your VPN to the US if you’re in France or outside the US to watch our latest House Hunters International episode:

“Threesome in Paris,” Season 191, Episode 9

“An international couple and their giant dog grapple with finding an affordable place in Paris. With high expectations, a low budget and an airtight rental market, finding a home that fits all three of them will be a challenge.”

AIR DATES/TIMES: Thursday, January 18th at 10:01p.m. EST and 9:01p.m. CST and Friday January 19th at 1:01 a.m. EST and 12:01 a.m. CST (in France on January 19th at 4:01 a.m. and 7:01 a.m.)

This episode was filmed last September. I’ll be seeing it for the first time, just like you will be! We will try to find a link, even if temporary, when you can watch it at any time.

2. MONEY MATTERS FOR THE CARLSON SCHOOL OF MANAGEMENT

The University of Minnesota Carlson School of Management hosted a field trip to France again this year for which we had the privilege of making a presentation to their global finance graduate students of about 30.

I agreed once again to do the talk at the request of one of my daughter’s high-school friends, Bastien Gueit, who was recruited by the school to manage the on-the-ground logistics. Financial colleagues, Brian Dunhill of Dunhill Financial and Jonathan Hadida of Hadida Tax Advisors agreed to participate and make their own presentations. We also recorded the event in its entirety. It was three hours of our talks plus a lively Q & A.

In advance of the talk, I spent some time thinking about what global finance students might want to hear from someone like me. Then, it came easy…because I realized that they might like hearing the perspective of an Expatriate, and how we are affected by living our lives in another currency. There is actually tons to talk about!

You can watch all three hours on our Youtube channel, but here are some of the excerpts you might find of interest:

The most important lesson you will learn today is that France, and most of Europe, does not view money the same way as the US. There is a long history that explains their aversion to money that dates back to the French Revolution! But, understand that France is a Socialist Democracy, and is not a Capitalist culture. The word “Capitalism” in France is as misunderstood and disliked as the word “Socialism” in the US.

As a result, France has a big safety net—there is a larger middle class, fewer poor and fewer rich than in the US. Both lower and higher education is provided free of charge. Up to 70% of all medical care is paid for by the State. Your employment in France is secure.

Money is a very private matter. Money is almost never spoken about. The subject of money is taboo. And wealth is not something to show off …those who do are labeled as the “nouveau riche.” Showing you are wealthy is not considered classy. Aspiring to make money is not classy. Ex-president Nicolas Sarkozy, a man who enjoyed wealth and luxury, was nicknamed the “bling-bling president“ by French people who considered his enthusiasm for money unsophisticated. Emmanuel Macron has been labeled the “president of the rich” because of his policies to try to bring the wealthy back to France. However, the younger generation seems more open to discussing money and income— perhaps due to contact with other cultures and foreign people.

An exchange rate is a rate at which one currency will be exchanged for another currency and affects trade and the movement of money between countries. Exchange rates are impacted by both the domestic currency value and the foreign currency value. Reported rates differ bank-by-bank and minute-by-minute. Rates for buying a currency differ from rates for selling a currency. The difference is called “the spread.”

On January 1st of this year, 1.00 US dollar equaled 0.90486162 Euros and 1 Euro equaled 1.10514 US dollars.

The best way to exchange currency: for large amounts, work with currency brokers who specialize in currency conversion. They are regulated like a bank, but that is all they do. Their fees are normally about 1% compared to the banks at about 3%. In essence, one’s money is sent to the broker in one’s own currency and the broker converts it and forwards it to a recipient in a different currency. For small amounts, an ATM using a debit card is normally the least expensive and easiest way to convert currency when traveling. There are limits to how much can be extracted in any given day, usually about a $500 value.

(We recommend these currency brokers)

France does not live on credit and does not have a credit card culture. The French banks will call them “cartes de credit,” but they are almost always debit cards. The money is extracted from your account either immediately or at the end of the month, as you choose. When a credit card is used to extract cash, the bank will charge interest on the amount advanced until it is paid, while a debit card extracts cash directly from your account. Also, credit cards can have foreign transaction fees which vary from 1% to 4%.

Expats are used to doing online banking. Within 48 hours a foreign transaction will appear on your account so you’ll know what rate of exchange you’re getting. We can pay bills and transfer funds between accounts within the same bank. The French banks provide online service, but at a small monthly cost while U.S. banks provide it free of charge.

The Foreign Account Tax Compliance Act (FATCA), which was passed as part of the HIRE Act (2010), generally requires that foreign financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to withholding on withholdable payments. The HIRE Act also contained legislation requiring U.S. persons to report, depending on the value, their foreign financial accounts and foreign assets. (FBAR reports)

Getting a bank account in France is not as simple as it is Stateside, where friendly account managers sit waiting at their desks to welcome you. To make an appointment, you must call or stop into the branch and request to see an account manager. It is best to have a “sponsor” call for you or make the referral. (We provide this service for our clients.)

Banks in France prefer to establish a solid relationship with a customer that will lead to the provision of more services and can make subjective decisions on whom they want as customers. They claim they don’t make money from holding your money, but from the services they offer: insurance, phone service, etc. Getting an account first depends on if the bank welcomes American customers. Then, one must be introduced to the bank by another customer or respected introducer.

The banks watch every penny that goes in and out of your account. Cash transactions are suspicious as tax evasion. It is very important to establish a proper relationship with a bank. Money is NOT what talks in France…but trusting and honorable relationships do. If you attempt to show your clout by how much money you will deposit in their bank . . . you are likely to fail! Accounts are opened without a single centime.

Depending on the bank’s policies, checking accounts and checkbooks can be free or charged. The banks charge monthly fees for the privilege of having an account and charge for providing a debit card and access to their online banking platform. The Carte Bleue is a debit card, as the funds are extracted from your checking account automatically. There are no outstanding balances and no interest is charged. It can be used to make purchases or extract cash from your account at any ATM—with a four-digit Personal Identification Number (PIN) rather than a signature. Bouncing a check is illegal in France and is subject to fines. Your account could be frozen and drastic measures could be taken which could deny you the right to a checking account for years…regulated by the Banque de France.

To wire funds from a U.S. dollar account, you will be asked for your account number along with a “Routing Number,” or “ABA Number.” A European bank uses a different set of numbers—an International Bank Account Number (IBAN)—an internationally agreed system of identifying bank accounts across international borders. Each bank also has a unique SWIFT code. It usually consists of 11 characters divided into four groups.

In France, their system of banking numbers is recorded on a Relevé d’Identité Bancaire (RIB)—a system for automatic debit from your account. Utility and phone companies prefer that your bills be paid automatically in this way. The RIB consists of the “Code Banque,” “Code Guichet,” “Numéro de Compte” and “Clé RIB.” In effect, the numbers equal an IBAN. When you provide this number, you can authorize the debtor to extract the funds from your account.

The good news is that obtaining a mortgage here is possible…but very difficult for Americans, thanks to FATCA. Going directly to a commercial French bank as a non-resident is useless. Unless you have a regular salary going into a French account, they tend not to be as interested in dealing with foreign clients, but there are a few banks set up particularly to work with non-residents.

Loans in France are based on your income, not your assets, and the monthly amount of the mortgage cannot be more than one-third of your monthly income. The banks prefer salaried individuals over self-employed. And age is a factor—rarely will a French bank finance someone over the age of 60. You can obtain financing for 10, 15, 20 or 25 years (not often for 25!) at variable or fixed rates (depending on your age up to 75) and interest-only loans are being made available.

Lenders base their rates on the Euro Interbank Offered Rate (Euribor)—the rate at which euro interbank term deposits within the euro zone are offered by one prime bank to another prime bank. Bank Lending Rate in France decreased to 4.24% in November from 4.53% in October of 2023. Bank Lending Rate in France averaged 2.79 percent from 2003 until 2023, reaching an all time high of 6.29% in September of 2008 and a record low of 0.38% in April of 2020. (Source: European Central Bank)

There is normally a small origination fee of approximately 1% or less and a life insurance policy attached to the loan is mandatory to insure completion of payment. There are no pre-approved loans—it is not until a property is committed to (having signed a “Promesse de Vente” or “Compromis de Vente”) that the lender will formally submit your application for approval by the committee.

The US has citizenship-based taxation—one of only two countries in the world. As a US citizen, you will always be liable to Uncle Sam. Some Americans are considered “Accidental Americans”—someone whom US law deems to be an American citizen, but who has only a tenuous connection with that country. Americans must always submit a tax return even if having earned nothing in the US. France has residency-based taxation. The tax treaty with the US is designed to minimize inconsistent and double taxation, however it’s not foolproof.

French income tax has several income brackets, each of which has a different tax rate, which varies from 0% to 45%. French social security contributions are shared between employer and employee; on average the employer’s share of contributions represents 45% of the gross salary. For 2022, the employee’s share of French social contributions represents approximately 20% to 23% of the remuneration. (I am self-employed and therefore my social charges are 45%!)

Property taxes are about 1/10th of what they are in the US—about .001% of the value of the property…but closing costs on a property are considerably higher—7 to 7.5% of the price of the property. Property has a built-in negotiation of about 5%. The seller is morally obligated to accept the asking price. Therefore there are no bidding wars and prices do not become inflated. Agency commissions are about 5%. There is no MLS in France, so real estate agents have only their own listings to sell. (It’s why I have a job!) Agencies do not normally share their commissions with other agencies.

Of course, what you just read were my notes and I was able to expand on each of the ideas. That’s when I stopped and opened the floor to questions. The students had a lot of very intelligent questions to ask—it seems they were legitimately interested in the topic and not just there half-listening because they were expected to attend.

My driving point, throughout the presentation, was that “life is not about money!” Which is a funny thing to tell finance students…but I really wanted them to understand that we have a better life here because of it. I wanted to drive home this point to compare the benefits of a capitalist society vs our socialist democracy. I later learned that the group, politically, was estimated to be about 60% on the left and 40% on the right.

Brian and Jonathan took over after one hour with me. Their perspectives added a much higher level to the talk as professionals in global finance.

If you wish to watch any or all of the recording, it’s just a click away.

Thanks to the Carlson School of Management for the opportunity to speak to their graduate students again this year!

3. DOES THE NEW LEGISLATION IN FRANCE AFFECT US IMMIGRANTS?

The French Parliament adopted new laws on immigration in December that was described as an “ideological victory” by far-right leader Marine Le Pen, shifting the policies to the right.

The new laws introduce a distinction between foreigners “in a situation of employment” and those who are not, impacting the social benefits they are entitled to and the waiting periods. This impacts many of our own clients who are not coming to France specifically for work.

For non-working immigrants, the eligibility for family allowances is delayed to five years, compared to 30 months for those employed. The main housing aid (APL) imposes a residency requirement of five years for unemployed foreigners and three months for others. Exceptions are granted to foreign students, refugees, and holders of resident permits.

Prefects now have discretion to regularize undocumented workers in understaffed professions. This entails a one-year residence permit, issued case by case, requiring at least three years of residency and 12 months of gainful employment in the last 24 months. Undocumented workers can apply for this permit without their employer’s approval. The provision is valid until the end of 2026.

Parliament is empowered to set quotas for the next three years, capping the number of foreigners admitted to the country, excluding asylum seekers. Despite being considered unconstitutional by the governing coalition, it was included in the compromise bill to meet Les Républicains’ demands, with hopes that the Constitutional Council may overturn it.

The law introduces the possibility of stripping dual nationals of their French citizenship if convicted of intentional homicide against individuals in a “position of public authority.” This includes police officers, soldiers, judges, and administrative officials.

The right to obtain French citizenship by birth in France has been limited. Those born in France to foreign parents must now apply for citizenship between the ages of 16 and 18, rather than being automatically granted it upon reaching majority. Additionally, foreigners born in France convicted of a crime are ineligible for French citizenship.

The law reinstates an “offense of illegal residence,” punishable by a fine, which was abolished in 2012. And a ban is introduced on detaining foreign minors in administrative detention centers, where those ordered for deportation are typically held.

Conditions for family reunification are tougher, requiring applicants to have resided in France for 24 months, demonstrate stable resources, health insurance, and a spouse aged at least 21.

Foreign students, with some exceptions, will be required to pay a deposit when applying for a student residence permit to cover potential removal costs.

Access to the “sick foreign national” residence permit is restricted, with exceptions granted only when appropriate treatment is unavailable in the country of origin. Public health insurance coverage is excluded if the applicant has sufficient resources. The law does not include the abolition of the only healthcare coverage for undocumented people, a demand made by Les Républicains, but the government pledged to reform the program in 2024.

The passage of Macron’s immigration law is seen as a political and moral departure, marking a significant shift in policy.

Here’s where it may affect us North Americans most: Individuals hailing from non-European Union member states engaged in employment within France will be required to demonstrate a residency of 30 months before becoming eligible for welfare benefits, including childcare support. Non-working foreigners in France, on the other hand, will face an extended waiting period of five years before qualifying for such benefits.

Throughout the year 2024, the government is set to undertake a comprehensive review of existing legislation that presently grants unrestricted access to government-funded medical care for illegal residents in the country.

The good news: Individuals from non-European Union countries lacking residency or work permits, yet actively engaged in sectors experiencing difficulties in recruiting staff—such as restaurants, the construction industry, and agriculture—now have the opportunity to apply for a combined residency and work permit.

To qualify for this program, the foreign worker must have resided in France for a minimum of three years and accumulated at least 12 months of work (not necessarily consecutively) within the last two years. Authorities will assess the applicant’s integration into French society and adherence to Republican values in considering their request. It’s important to note that individuals with a police record will be ineligible for this exception.

Foreign students applying for a residency permit will be required to provide a refundable deposit to ensure coverage for potential repatriation costs. Exceptions may be granted for students facing financial constraints or those with exceptional academic achievements.

Don’t let any of this concern you, if you are a retiree moving to France with a US or Canadian passport, you are still considered “Golden Passport” holders and will be treated with respect.

Meanwhile, the authorities have it all wrong. Immigrants are a strength, not a burden. According to a 2018 Pew Research Center survey covering 18 countries that host half of the world’s migrants reveals that majorities in many top migrant destination countries perceive immigrants as a strength rather than a burden.

Noteworthy findings include: In 10 surveyed countries, including the United States, Germany, the United Kingdom, France, Canada, and Australia, majorities view immigrants as a strength. Five countries, namely Hungary, Greece, South Africa, Russia, and Israel, lean towards perceiving immigrants as a burden. Public opinion in the Netherlands is divided, while Italy and Poland have mixed views.

These 18 nations encompass more than half (51%) of the world’s migrant population, totaling approximately 127 million people. The surveyed countries include traditional immigrant destinations like the United States, Canada, and Australia, as well as European Union nations that experienced immigration waves post-World War II.

In the United States, the country with the highest immigrant population, 59% believe immigrants strengthen the nation, a significant shift from the 1990s when most Americans viewed immigrants as a burden.

Additionally: Public opinion in six European Union countries has shifted since 2014, with declines in positive perceptions in Greece, Germany, and Italy, but increases in France, the UK, and Spain. Immigrants are generally viewed more favorably by those on the ideological left across the surveyed countries.

The survey explored attitudes towards immigrants’ willingness to adopt host countries’ customs.

Overall: A median of 49% believe immigrants want to be distinct from the host country’s society, while 45% think immigrants want to adopt the host country’s customs. Views vary across countries, with Japan, Mexico, South Africa, the U.S., France, and Sweden leaning towards immigrants adopting the host country’s customs.

Security concerns about immigration, particularly crime and terrorism, are analyzed: Large majorities in Canada, the U.S., France, and the UK do not blame immigrants for crime. Views on immigrants’ impact on terrorism are divided, with some countries, including Hungary, Greece, Italy, Sweden, Russia, Germany, and the Netherlands, believing immigrants increase the risk.
Support for Deportation of Illegal Immigrants

Majorities in most surveyed countries, including seven EU nations, Russia, South Africa, Australia, and Japan, support the deportation of illegal immigrants. In the U.S., opinions are evenly divided, while Mexico sees less than half in favor of deportation.

If you’re reading this, you’re likely an immigrant, just like I am. What do you think?

4. YOU ARE WHAT YOU EAT

I have spent the weekend in bed nursing a cold and flu and watching a ton of TV. I’m almost sorry that I watched all four episodes of “You Are What You Eat: A Twin Experiment.” “Identical twins change their diets and lifestyles for eight weeks in a unique scientific experiment designed to explore how certain foods impact the body.”

We do all know this to be true…that we are what we eat. But do we know how what we eat is doing so much harm to ourselves and our planet? Probably not. If you are a cheese-lover (especially in France) and think that eating all that red meat is going to build strong muscles, then think again. If you watch this documentary, you may never touch meat products or even a lot of seafood ever again. You will clearly see the benefit so going vegan, which is not so easy in France!

And after watching “Live to 100: Secrets of the Blue Zones,” I’ve decided that I can definitely be a centenarian, like my mother who almost made it to 98, because I’m already doing what mostly contributes to a long and healthy lifestyle…and living in France is a big part of that.

Here, we do have a healthier diet, especially in the South where the Mediterranean diet is prevalent, and because I’m getting a lot more natural exercise going up my three flights of stairs many times a day (when I am not sick in bed with the flu!) plus living in an urban and therefore pedestrian lifestyle.

If you want to live longer, and healthier, then consider making the move!

A la prochaine…