Assurance Vie

Assurance Vie

The basic premise of financial planning is similar wherever you are in the world, in that you need to concentrate on three main areas:

  • Savings and investment
  • Retirement planning
  • Estate planning

French Tax Legislation

The starting point for your financial planning in France should be French tax and investment legislation. It is only by applying solutions that have been tried and tested in accordance with French regulation that you can be sure that the desired result will be achieved. As a French resident, you should begin the assessment of your tax position on the basis that all of your worldwide assets and sources of income are eligible for taxation in France. The French system offers many incentives for investors in that there are numerous ways to mitigate tax exposure. These include the joint taxation of couples, various family allowances, along with exemptions, abatements and deductions for different types of income. In addition, tax planning techniques are used to reduce levels of capital gains, wealth tax and inheritance tax in France.

One of the most important aspects of living abroad is to understand which domestic products are appropriate in terms of financial planning. This section examines the three main taxes that impact expats in France as follows:

  1. Income tax
  2. Wealth tax
  3. Inheritance tax and succession planning
Wealth protection with Assurance Vie

Assurance Vie


It is necessary to take steps to protect your capital from such taxes. To this end, a number of banking and insurance products have been developed in order to help French residents structure their finances efficiently. For expats, the most effective of these is the Assurance Vie contract.

French life insurance products are structured as tax efficient savings vehicles for medium to long term investment. Regular and single premium investors living in France can benefit from capital gains and income tax concessions should they invest in an Assurance Vie policy.

View our video on Assurance Vie for wealth protection below:

1. Income tax and  the advantages of Assurance Vie Products

  • There is no limit on the amount that can be invested in an authorized Assurance Vie.
  • Investors benefit from favorable tax treatment
  • Withdrawals in the form of capital or regular income can be made with only the growth element of the withdrawal being liable to tax
  • There is a wide range of funds to choose from including the traditional asset classes of equity and bond funds, along with guaranteed protected capital funds.

Taxation on maturity / withdrawals / surrenders

The tax treatment of French life insurance products is as follows:

There is an annual tax free allowance for withdrawals from policies after an 8 year investment term. This currently amounts to €4,600 for a single person and €9,200 for a couple.

Tax payable on withdrawals may be deducted at source by the insurer before any payout, or alternatively declared as a gain in your annual income tax return.

If you opt for deduction at source, the following tax rates are levied on any gains:

  • Gains realized in 1 – 4 years 50.5% (35% income tax and 15.5% social tax).
  • Gains realized in 5 – 8 years 30.5% (15% income tax and 15.5% social tax).
  • Gains realized after 8 years – withdrawals are tax free if the ‘gain’ is no more than € 9200 per annum. Any additional ‘gain’ is taxed at a maximum rate of 7.5% (plus 15.5% social tax).

If you opt to declare your gains from your policy on your annual income tax return in France, you pay tax on them at your highest applicable rate. The social taxes are also levied.

2. The use of Assurance Vie products for wealth tax purposes

Resident of France are subject to wealth tax on their worldwide net assets. These assets include items such as cash, property owned by the household, as well as financial investments, cars, boats, jewellery, furniture and other valuables. Non residents are also liable for wealth tax, but only on the net value of assets physically situated in France, such as second homes. 

There are a number of ways to reduce the level of wealth tax in France. Various items such as unpaid taxes, outstanding bank loans and other debts can be deducted from the calculation. There are also allowances for value of their main residence. Assurance Vie contracts can also be used as a way of reducing potential wealth tax liability.

3. Inheritance tax and succession planning

It is possible to reduce the burden of Inheritance Tax in France through the use of Assurance Vie contracts.  The benefits of such  life assurance vehicles are not restricted to income tax or capital gains tax. Assurance Vie products can also be used as an estate planning tool in order to protect assets when living in France. French succession laws apply to the world wide assets held by anyone domiciled in France. The tax liability falls on the beneficiary and is applied to all the bequests and inherited rights of the estate of the deceased. Succession law specifically protects children from being disenfranchised from their inheritance. Since the surviving spouse is not regarded as a “protected heir”, estate planning can become an extremely challenging exercise for many expatriate residents. 

If you would like further information on Assurance Vie products please download our free guide.

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