
Being aware of Assurance Vie tax rates will help with your French tax planning. Sophisticated tax planning strategies are often seen as the preserve of the wealthy. However, anyone can benefit from simple and cost-effective planning opportunities by investing in an Assurance Vie contract.
Tax is payable on withdrawals from the investment growth element of an Assurance Vie policy. A recent change to the French tax code has simplified to simplify the system. There is a new ‘flat tax’ rate of 30% on withdrawals from existing policies of more than €150,000 per individual or €300,000 for a couple. The 30% tax rate consists of 12.8% tax plus 17.2% social charges. The new Assurance Vie tax rates also apply to newly established policies below the €150,000 threshold.
Assurance Vie tax allowance
After eight years of investment, there is an allowance on annual drawings of €4,600 per person or €9,200 per couple. Investors can withdraw this amount free of income tax; there will, however, be social charges.
Use of Assurance Vie contracts for tax planning

The two examples below show the effect of Assurance Vie tax rates on policies taken out after the introduction of the Loi de Finances 2018 on the 1st of January 2018.
Examples of taxation rates
Example 1
A couple invests €300,000 in an Assurance Vie. The investment grows by 5% over its first year. The couple would like to withdraw €30,000; the Assurance Vie taxation rates are as follows:
- Total growth: €15,000
- Tax at 30%: €4,500 (this includes tax plus social charges)
- Untaxed withdrawal: €15,000 (this portion is treated as a return of initial capital invested)
- Effective tax rate on income: €4,500/€30,000 x 100 = 15%
Tax planning opportunities make it possible to vary the amount of withdrawals depending on portfolio performance. There are advantages if you take less income from your Assurance Vie in a year of high growth, and more in a year of low growth.
Example 2
If the couple left the money invested for eight years before taking a withdrawal, the tax payable using the same assumptions as above would be:
- Total growth: €15,000
- Tax: €15,000 – €9,200 tax free allowance = €5,800 x 12.8% = €742.40
- Social charges: 17.2% x €15,000 = €2,580.00
- Untaxed withdrawal: €15,000 (this is treated as a return of initial capital invested)
- Effective tax rate on income: €2,580 + €742.40 = €3,322.40.
- €3,322.40/€30,000 = 11.07%
The tax treatment of investments held outside of an Assurance Vie vehicle is as follows:
- Either at their highest income tax rate on all gains dividends and interest credited to the portfolio each year, irrespective of whether they make withdrawals;
- Or at the new fixed 30% rate (12.8% tax plus 17.2% social charges).
Assurance Vie contracts are thus attractive in that they qualify for beneficial tax treatment.
The benefits of Assurance Vie policies in France
The French government encourage long-term saving and investment by offering Assurance Vie tax incentives to the public. Ultimately, this will lead to less strain on national tax systems as more people take responsibility for their affairs.
French Inheritance tax and Assurance Vie policies
A significant Assurance Vie tax benefit relates directly to French inheritance tax planning. In the event of death, there is an allowance of up to €152,500 per beneficiary free from inheritance tax. For example, where there are three beneficiaries, €457,500 can be passed on completely free of succession taxes. Distributions from Assurance Vie contracts above this amount are subject to 20% tax up to a threshold of €852,500. There is a top rate of 31.25% for any excess above this amount.
Assets held within an Assurance Vie
An Assurance Vie plan is an investment contract where policy-holders can create a personal portfolio from a wide range of available funds. The fund selection should reflect the risk profile and investment requirements of the client.
International Assurance Vie providers
International Assurance Vie Providers also issue French compliant contracts. Correspondence is generally in English. Policy-holders can request that the insurance company calculate and pay any tax due directly to the French tax authorities on their behalf. Taxation on withdrawals may be deducted at source by the insurer or declared as a ‘gain’ in your annual income tax return.
Always review and monitor your investments
As with all aspects of financial planning, you should make sure that your chosen investment product is appropriate for your circumstances. It is essential to understand which ‘pot’ of money is suitable for which purpose. In the above case example, an Assurance Vie investor might establish a policy to provide retirement income. As always, it is crucial to review and monitor your portfolio performance regularly and be up-to-date with any changes in Assurance Vie tax rates. An International contract has sufficient flexibility to allow you to change tack as and when circumstances dictate so you can benefit fully from the French Assurance Vie regime.