LEP 2020: rate, ceiling, date … All you need to know

 

September 15, 2020

Created in 1982, the Livret d’Epargne Populaire (LEP) is a guaranteed investment reserved for people living in France with limited resources. Its opening is thus subject to a ceiling of income (see below). The LEP is distributed in all banking networks and can be subscribed in any bank. The popular savings account rate, which stood at 1.25%, has been lowered to 1% since February 1, 2020.

What is the LEP rate?
The LEP rate is equal to the interest rate of the Livret A, increased by a surcharge. It used to be 1.25%. The LEP rate remained fixed for two years. However, it was lowered to 1% on February 1, 2020, a decision that resulted from the decline in the yield on Livret A passbook savings accounts.

See the file
The Livret A passbook rate is falling, what are the alternatives?
LEP interest is calculated bi-weekly, on the 1st and 16th of each month. The date of the value taken into account for the calculation of interest varies according to the date of deposit or withdrawal. Deposits bear interest on your passbook during the following period. Concretely, if you make a deposit on your SEP between the 1st and the 15th of the month, interest will be calculated on the 16th of the same month. Conversely, the interest calculation following a withdrawal is made on the current period. A withdrawal cancels your interest for the period, for the amount withdrawn from the passbook. The total accumulated interest is added to the capital at the end of the year.

What is the LEP limit?
It is possible to invest up to 7,700 euros on a LEP, excluding capitalized interest. It is therefore possible to continue capitalizing interest once the ceiling has been reached. It should also be noted that no transaction can have the effect of making the account debit.

What is the taxation of the LEP?
The taxation of the LEP is modelled on that of the Livret A passbook. Also, the interests produced on the LEP are totally tax-free. They are therefore exempt from tax and social security contributions.

What are the conditions for opening the LEP?
Only persons whose tax residence is located in France can apply for the opening of a LEP. Only one LEP can be subscribed per person, within the limit of 2 booklets per tax household. The opening of a LEP is then conditioned on the subscriber’s level of income. In order to open a LEP, your 2018 reference tax income for an opening in 2020 must not exceed certain limits, which depend on the composition of your household. Here are the ceilings that apply:

1 share: €19,977
1.5 share: €25,311
2 shares : 30 645 €.
2.5 shares: €35,979
3 shares : 41 313 €.
3.5 shares: €46,647
4 shares: €51,981
Per additional half share: 5 334 €.
Note that if your income exceeds these ceilings during the year, you may keep your SARA as long as your income for the following year falls below them. In order to facilitate access to this savings product, Bruno Le Maire has announced a simplification of the opening conditions. “The presentation to his bank of a tax notice at the opening of a LEP will no longer be mandatory”, he explained. “Same thing for the annual audits. It will be up to the bank to verify the eligibility of the saver with the tax authorities.
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