EXPAT INVESTMENT PLANNINGThe French Assurance Vie
What Is Assurance Vie?
An assurance vie is a French investment account that combines life insurance coverage with potential investment returns. Popular among expats, this product offers significant tax advantages, especially after the investment has been held for 8 years. French assurance vie is designed to offer both financial protection and long-term growth to the policyholder and their beneficiaries.
Who Is It For?
The assurance vie is ideal for French residents who are planning to stay in France for a long time (8 years or more).
It’s designed for those looking to grow and protect their wealth in a highly tax-efficient way. Given France’s high taxes and social charges on earned income, the French assurance vie is an excellent tool for reducing local taxes and lowering your marginal tax rate as a resident.
KEY FEATURESInvestment and Insurance:
An Assurance Vie policy combines elements of both investment and life insurance. It allows you to invest a portion of your premiums in various financial products, such as stocks, bonds, mutual funds, or savings accounts, while also providing life insurance coverage.
Tax advantages:
One of the main benefits of an assurance Vie is its favourable tax treatment.The growth and income generated within the policy are tax-deferred. This means that you don't have to pay taxes on the earnings as long as they remain within the policy.
Additionally, after 8 years €4,600 can be withdrawn per annum tax free per policyholder (€9,200 per couple).
For withdrawals taken from the Assurance over the tax free amount (or in absence of the tax-free amount), the following tax rates apply:
7.5% investment tax (if the Policy is in force for eight years or more) + 17.2% Social Contributions Tax)
12.8% investment tax (if the Policy is in force for less than eight years) plus 17.2% Social Contributions Tax.
Flexibility:
Assurance Vie policies offer flexibility in terms of investment options and withdrawals. You can choose from a range of investment funds to suit your risk tolerance and financial goals. Additionally, you can partially or fully withdraw funds from the policy at any time, although there may be surrender charges or tax implications depending on the specific terms of the policy.
Estate Planning:
The Assurance Vie can be used as a tool for estate planning and efficient wealth transfer to your loved ones. Subject to the policy being opened before age 70, €152,500 can be passed to your named beneficiary of choice, free of French succession tax.
LIMITATIONSMinimum investment level of £100,000
Typically more expensive than Global Investment Accounts
Commissions can be charged by advisers
Fund range can be limited when using French Banks
French residents only
Our Verdict
Overall, an assurance vie combines life insurance protection with investment opportunities, offering significant tax advantages related to inheritance tax, capital gains tax and income tax. This French Assurance vie is perfect for individuals seeking both protection and growth from their investments as French residents.
At The Wealth Genesis, we pride ourselves on being fully independent, allowing us to advise on the entire market and select the most suitable and cost-effective assurance vie for expats at a flat fee.
