Regulated Savings, a Euro Fund or a Fixed-Term Deposit: the Ranking Inverts Twice

Three rates, three different days, three different authorities

Before comparing anything, notice that these three numbers are not measurements of the same thing at the same moment, and treating them as if they were is the first mistake. The Livret A rate is an administered price: revised twice a year on 1 February and 1 August from a formula based on inflation excluding tobacco and short-term euro rates, proposed by the governor of the Banque de France and set by the minister. It went from 1.5 % to 1.7 % on 1 August 2026, and the LEP was held at 2.5 %, per the ministry's press release of 15 July 2026. The deposit rate is a market price, published monthly: the European Central Bank's release of 31 July 2026 put euro-area new household deposits with a maturity of up to one year at 2.03 %. The euro-fund figure is neither — it is a backward-looking average of what insurers actually credited for a completed year, 2.6 % for 2025 in France Assureurs' annual review published on 27 January 2026.

That difference matters for how much weight each number can carry. The Livret A rate is the only one of the three you are certain to receive: it is the same in every bank, it is guaranteed until the next revision, and there is no negotiation. The deposit rate is an average around which individual offers scatter widely, and a promotional rate for new money is a common and perfectly real exception. The euro-fund figure is a past average across the whole market, and the dispersion around it is enormous — some contracts paid well under 2 % for 2025 and some mutual insurers paid over 3.5 %. Nobody is promised the average, and the number on your own statement is the only one that applies to you.

The first inversion: a tax change dated 1 January 2026

Interest on a fixed-term deposit is taxed in France at a flat rate that has two parts: 12.8 % of income tax and a block of social contributions. That block used to be 17.2 % — a CSG of 9.2 %, a CRDS of 0.5 % and a solidarity levy of 7.5 % — which is where the familiar figure of 30 % came from. The social-security financing act for 2026, loi n° 2025-1403 of 30 December 2025, raised the CSG on investment and capital income to 10.6 %, taking the block to 18.6 % and the flat rate to 31.4 %. The current text of Article L136-8 of the code de la sécurité sociale, in the version in force on 27 June 2026, sets 10.6 % as the rate on the contributions of Articles L136-6 and L136-7, which is where deposits sit.

The detail that produces the inversion is the exception. Paragraph IV of the same article keeps the rate at 9,2 % for a closed list of incomes, and one item on that list is the product of capitalisation bonds and contracts and comparable investments referred to in Article 125-0 A of the general tax code — that is, life assurance and the euro fund inside it. So from 2026 a euro fund carries social contributions of 17,2 % while a term deposit carries 18,6 %, and the gap between them widened by 1,4 points overnight without either headline rate changing. On the 2,03 % deposit that is worth 2,84 euros a year on 10,000 euros, which sounds like nothing and is nothing — but it moved the bar a taxed deposit must clear to beat a tax-free Livret A from 2,429 % to 2,478 %, and the market rate is nowhere near either.

The second inversion: what inflation does to all four

French annual inflation was 2.4 % in July 2026 on Eurostat's flash estimate of 31 July 2026, against 2.9 % for the euro area as a whole. Apply it properly — divide one plus the net rate by one plus inflation rather than subtracting, which is an approximation that drifts by roughly one year's inflation times the real rate and is a subject of its own — and the four real returns are: LEP +0.10 %, euro fund -0.24 %, Livret A -0.68 %, fixed-term deposit -0.98 %. On 10,000 euros held for five years at those rates, and assuming both the rate and inflation stayed put, the Livret A leaves you with 10,879 euros that buy what 9,663 euros buy today, the euro fund 11,124 that buy 9,880, and the deposit 10,716 that buy 9,518. Only the LEP finishes ahead, at 11,314 nominal for 10,049 of purchasing power.

Two things follow that are worth separating carefully. The first is that a negative real return is not an argument for doing nothing: cash left in a current account earns zero and loses the full 2.4 %, so a Livret A losing 0.68 % is still nearly two points better than the alternative most people default to. The second is that the ranking above is a snapshot of one month's inflation reading, and inflation is the most volatile term in the whole calculation. At an inflation rate below 1.7 % the Livret A returns to positive real territory on its own, without the rate changing at all; at inflation above 2.153 % the euro fund goes negative. The break-even inflation rate for each product is simply its net rate, which makes it the easiest sensitivity in personal finance to compute and the one most rarely stated.

The constraints the rates do not show

Ceilings decide more of this than rates do, and they are the reason most households end up holding all three. The Livret A takes 22,950 euros for an individual, the LDDS 12,000 and the LEP 10,000, all three exempt from income tax and social contributions and all three withdrawable on demand — but the LEP additionally requires a tax reference income below a threshold set annually, 23,028 euros for a single share in metropolitan France for 2026. Once those envelopes are full, the exemption is not available at any price and the question genuinely becomes euro fund against term deposit, which is where the tax comparison above starts to matter.

Access differs in kind, not just in degree, and it is worth reading the small print of the two that are not passbooks. A fixed-term deposit is contractually locked for its term; breaking it early is usually possible but at a reduced rate written into the contract, which can wipe out the yield advantage that motivated the deposit in the first place. Life assurance is redeemable at any time under the insurance code, but two things qualify that: the eight-year clock, after which withdrawals within the annual allowance of 4,600 euros for a single person or 9,200 for a couple escape income tax and the rate on the rest drops to 7.5 % for premiums up to 150,000 euros; and Article L631-2-1 of the code monétaire et financier, which lets the Haut Conseil de stabilité financière temporarily limit the payment of surrender values for up to three months, renewable, with a hard stop at six consecutive months. That power has never been used, and it is still the reason life assurance is not a substitute for an emergency fund.

What the same question looks like outside France

The structure of the French comparison is unusual in one specific way: it has an instrument exempt from both income tax and social contributions, which is what makes a 1.7 % passbook competitive with a 2.03 % deposit. Most neighbours have no such thing, and their version of this question is simply a race between gross rates minus one withholding. In Germany, savings income is taxed at 25 % Abgeltungsteuer plus a solidarity surcharge of 5.5 % of that tax, so about 26.375 % in total, but the first 1,000 euros of investment income a year — 2,000 for a jointly assessed couple — is covered by the Sparer-Pauschbetrag and escapes entirely, which for small balances functions like an exemption and for large ones does not.

Spain taxes savings income on a progressive savings base rather than at a single flat rate, and the brackets for 2026 run 19 % on the first 6,000 euros, 21 % from 6,000 to 50,000, 23 % from 50,000 to 200,000, 27 % to 300,000 and 30 % above that, the top rate having risen from 28 % to 30 % with effect from the 2025 tax year. Italy applies a substitute tax of 26 % to deposit interest but only 12.5 % to government securities and postal savings, which makes the closest Italian analogue of the French exempt passbook a tax preference for lending to the state rather than a product ceiling. Portugal likewise withholds on interest at a rate set in its own income tax code. The structural lesson is the same everywhere: compare after the withholding that actually applies to you, and compare against inflation measured in your own country, which in July 2026 ranged from 2.4 % in France to 3.8 % in Spain on Eurostat's flash estimate. A rate that is comfortably positive in real terms in one member state is negative in another on the same day.

The verdict, and the three things that would change it

For money you might need within a year or two, the exempt passbooks win outright and the decision is not close: same-day access, no tax, no contract, no market risk, and a rate set by formula rather than by a marketing department. Fill the LEP first if you qualify, since it is the only product in this comparison with a positive real return in July 2026, then the Livret A and the LDDS. For money you are confident you will not need for eight years or more, an established euro fund inside a life-assurance contract is the better of the two taxable options at 2026 rates, because it nets 2.153 % against 1.393 % on a term deposit at the market average, and because the eight-year regime then reduces the income tax on withdrawals further. The fixed-term deposit finishes last on every criterion in the table except one: it is the only one whose rate is contractually guaranteed for a stated period, which is a real feature if you are matching a known future expense to a known date.

Three developments would change that ranking, and all three are observable rather than speculative. If French inflation falls below 1.7 %, the Livret A stops losing purchasing power and the whole comparison becomes far less urgent. If a bank offers a term deposit above 2.478 % gross — the level at which the 31.4 % flat tax still leaves more than a tax-free 1.7 % — the deposit beats the passbook for money you can genuinely lock away, and promotional rates at that level do appear. And if the Livret A rate falls at the next revision on 1 February 2027, which the formula will decide from inflation and short-term euro rates over the preceding half-year, every number above moves at once. Whichever way it goes, the discipline that matters is scoring the options on the same four rows: rate, tax, net, real. Most published comparisons stop after the first.

Frequently asked questions

How can a deposit paying more than the Livret A leave me with less?

Because one of the two is taxed and the other is not. A deposit at 2.03 % gross keeps 68.6 % of that after the 2026 flat rate of 31.4 %, which is 1.393 %; the Livret A keeps all of its 1.7 % because interest on it is exempt from both income tax and social contributions. The threshold is easy to remember and worth carrying around: divide the passbook rate by 0.686 and you get the gross rate a taxed product must beat, so 1.7 % becomes 2.478 %. Anything below that, however good it looks in the window, leaves you with less.

Did the tax on savings really change in 2026?

Yes, and quietly. The financing act for social security for 2026, loi n° 2025-1403 of 30 December 2025, raised the CSG on capital and investment income from 9.2 % to 10.6 %, taking the whole block of social contributions from 17.2 % to 18.6 % and the familiar 30 % flat tax to 31.4 %. Article L136-8 of the code de la sécurité sociale in its current version carries both the new 10.6 % rate and a paragraph IV that keeps 9.2 % for a closed list, including rental income, life-assurance and capitalisation contracts, and certain regulated products. Everything already exempt — Livret A, LDDS, LEP — is untouched, because an exemption is not a rate.

Is the euro fund's 2.6 % guaranteed?

No, and the distinction is the most important one in this article. That figure is what the French market credited on average for the calendar year 2025, published after the fact; it is not a rate anyone was promised at the start of the year and it is not a rate anyone is promised for 2026. What a euro fund does guarantee is the capital, in the sense that the amount credited cannot subsequently be taken away — the ratchet effect — subject to the insurer's own solvency and to the contract's fees. Dispersion across contracts is very wide, so the only number that describes your own position is the one on your own annual statement, and the fees deducted from it are in your own contract's terms.

If everything loses money in real terms, should I take more risk?

That is a different question, and the honest answer is that it depends on the horizon, not on the current real return. The products compared here are the right tools for money with a short or unknown horizon: they are liquid, capital-certain in nominal terms and require no timing. A small negative real return is the price of that certainty, and paying it deliberately for an emergency fund is not a mistake. Where a negative real return does argue for something else is money with a long horizon and no call on it, which is precisely the money that should not be sitting in a passbook in the first place — but the alternatives carry the possibility of losing capital in nominal terms, which none of the four here does, and that is a genuinely different kind of risk rather than a bigger amount of the same one.

Is it worth opening a life-assurance contract now just to start the eight-year clock?

The clock runs from the date the contract is opened, not from the date each payment is made, so opening one early with a small sum does start it. Whether that is worth doing depends on two things the practice usually ignores. First, the eight-year advantage is worth 5.3 points of income tax on the gain — 7.5 % instead of 12.8 % — plus an annual allowance of 4,600 euros for one person, which on small sums is worth very little in absolute terms. Second, a contract has running costs, and a dormant contract with entry or management fees can quietly cost more than the future tax it saves. Read the fee schedule before opening, and prefer a contract with no entry charge if the only purpose today is to start a clock.