What is France's new €450m defence fund, and can foreigners invest?

"BPI France (France's public investment bank) will launch a product. For €500 you can become an indirect shareholder in companies in the defence sector" France's finance minister, Éric Lombard, told French news outlet TF1 on Thursday.

Lombard added that "the American umbrella has become uncertain (...) the European Union must become adults in terms of their own defence."

"People will be able, by tranches of €500, to invest their money in the long term. I urge people to invest more in the war economy, in the long term, the returns are better than a savings account."

The aim is to help raise €450 million of the €5 billion needed by French defence companies to prepare the country to be more militarily self-sufficient.

Similar types of investments or 'war bonds' are common for countries involved in a conflict - raising money for defence from individuals while also providing low-risk investments for people who sign up.

What is it?

Full details of the product have not been released - but we know that it will be an investment package that can be accessed by individuals in the same way as other log-term savings or investment products like the Assurance Vie or the Plan d'épargne retrait.

The minimum investment will be €500, with a ceiling of "several thousand euros". Once invested, the funds cannot be withdrawn for at least five years.

Investment will be possible either directly via BPI France or through a financial vehicle, like the Assurance Vie, according to French business daily Les Echos.

It is expected that after launch through France's state investment bank BPI, the product will be rolled out to other French banks.

Although full details of the defence investment are yet to be released, other savings or investment packages are available to foreigners who are resident in France, although most packages require you to have a French bank account.

Americans in France should be aware that this could be considered a PFICs, which can lead to onerous reporting requirements with the IRS and steep penalties if reporting is not deemed sufficient. As such, they should consult a financial adviser before deciding to invest.

READ MORE: Ask the experts: What do Americans in France need to know about investments and pensions?

Meanwhile, the French Financial Markets Authority (Autorité des marchés financiers, AMF) announced that they would launch an accelerated procedure to approve defence-focused investment funds. 

This will allow other companies wishing to create new funds to invest in defence industry and tech to have their applications processed as a priority, Les Echos reported.

Is this a risky investment?

According to reporting by RTL, at the end of the 'lock-up period' you can recover your funds, plus whatever extra you've earned. 

Philippe Crevel, an economist and chairman of the Cercle de l'Epargne, told 20 Minutes that "the defence industry receives orders from the government, and generally it's the government who pays their bills. These government orders are going to increase. It's a promising and growing market, so the risk is relatively low."

On the other hand, Céline Boutbien, partner of the wealth management firm Ascalon Finances, was more cautious in her response to 20 Minutes.

She said: "By nature, BPI investments take the form of 'Risk Mutual Investment Funds' (Fonds Commun de Placement à Risques). Each product is given a specific risk level, on a scale of one to seven, set by the French financial markets authority. To understand the full risks with this new investment, we must wait for more information."

Crevel told 20 Minutes that, as it is a long-term investment "given the time frame, we can expect a return slightly above average, like around five percent over five to 10 years."

France's Livret A savings account had an interest rate of 2.4 percent, as of February 2025.

READ MORE: What is the Livret A savings account and should foreigners in France open one?