The Assurance Vie For British Expats Explained
LEARNING OBJECTIVES
We’re passionate about providing free, high quality and up-to-date information to Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
What is an Assurance Vie
What tax benefits they can offer
Key things to look out for when choosing a provider
How much an Assurance Vie should cost
Important security considerations for Assurance Vie investors
The Expat Assurance Vie
The Expat Assurance Vie, a popular life insurance product in France, is more than just an insurance policy. It's a financial tool that offers significant tax benefits and flexibility.
Whether you're an expat living in France or a native resident, understanding the advantages of Assurance Vie can potentially save you a considerable amount of tax in France, as well as growing your funds for your future lifestyle.
Tax Efficient Investing in France
Assurance Vie stands out for its remarkable tax efficiency. The longer you hold your policy, the more tax benefits you accrue. After eight years, for instance, you could enjoy reduced taxation on capital gains and a tax-free allowance of up to €4,600 for individuals and €9,200 for couples annually. This means you can withdraw this amount from your policy every year without paying any income tax.
For withdrawals over this amount, policyholders can access funds with favourable income tax rules applied to their accounts.
See our Assurance Vie page for the full tax breakdown.
When we talk about Assurance Vie products, remember that there isn't a one-size-fits-all solution. Providers offer various tax-efficient products designed to fit diverse investment profiles and financial goals.
These range from low risk accounts, which may protect the value of your capital and provide steady growth, to adventurous funds that offer potentially higher returns but come with greater risk.
French Tax Legislation Rules
The French government and legislature recognises the value of Assurance Vie policies as savings instruments and thus imposes friendly taxation rules.
Due to this favourable legislation, even high-income individuals can leverage Assurance Vie policies to enjoy significant tax savings over the long-term, providing French residence is retained.
Reducing Inheritance Tax
Another feature of the Assurance Vie is how it assists in reducing inheritance tax. With careful planning, your beneficiaries can receive your Assurance Vie policy proceeds without having to worry about hefty inheritance taxes.
This makes Assurance Vie not only an excellent tool for wealth accumulation but also for efficient wealth transfers to your loved ones.
As an expat in France, understanding the Assurance Vie and its tax benefits can make a significant difference to your financial planning abroad.
How to Choose the Right Assurance Vie Provider
With so many Assurance Vie providers out there, finding the right one for you can be overwhelming.
Here are some important factors to consider when selecting an Assurance Vie provider:
Reputation: A provider with a solid track record is often a reliable choice.
Cost: High costs are a guaranteed drag on performance. Make sure you do your due-diligence on both the expat financial adviser and the Assurance Vie provider.
Product Range: Look for providers that offer a wide variety of tax-efficient products and an unrestricted investment selection.
Customer Service: Exceptional customer service can make a big difference when you have questions or need assistance. Remember, if you ever want to withdraw funds you will need to liaise with the customer service or admin team of the institution. Make sure to choose a provider who’s service is friendly and prompt.
The Benefits of International Products
Some Assurance Vie providers offer international products specifically designed for expats in France. These products take into account the unique needs of people living abroad and may offer advantages that local policies cannot.
For example, these Assurance Vie products will be written in the English language for ease of understanding.
They will also offer more global investment options, as opposed to exclusively French options, which are heavily skewed towards French financial markets and fund ranges.
How to Identify Reliable Assurance Vie Providers
When researching potential Assurance Vie providers, it's important to verify their credentials. Make sure they are registered with the correct regulatory bodies.
Remember, choosing an Assurance Vie provider is not just about immediate tax benefits but also long-term financial security and planning for your future.
So be sure to take your time, do thorough research, and find a provider who you will be happy to work with over the long-term.
The Benefits of Assurance Vie for Long-Term Investment and Wealth Protection
Long-Term Investment
Assurance Vie is a financial strategy that offers significant tax benefits for expats in France. It's not just another investment tool; it's a versatile instrument that can help protect your wealth over the long term. Here's why:
Flexibility: Assurance Vie allows you to adjust your investment according to your personal circumstances. You have the freedom to choose how much you want to contribute and when you want to withdraw. The accounts can be re-balanced and investments altered depending on your situation and changes in objectives.
Tax advantages: One of the key advantages of Assurance Vie is its tax-efficient nature. Your tax liability on the investment growth is lowered after holding for 8 years. This can be a major advantage, especially when it comes to estate planning. The accounts also feature gross-roll up, meaning no tax is paid on annual growth within the account.
Wealth Protection
Aside from being a great long-term investment option, Assurance Vie also offers protection for your hard-earned money. Here's how:
Resilience: Assurance Vie policies should be designed to withstand economic fluctuations and unexpected life events. They provide a safety net through a diverse range of tax-efficient investments. These include bonds, equities, property and commodities. Be sure to speak to your financial adviser regarding the asset allocation and risk of your account.
Stability: Whether it's market downturns or unforeseen personal crises, an Assurance Vie policy can serve as a sturdy shield, helping you weather financial storms with more confidence. All Assurance Vie providers have to undergo strict tests and regulatory requirements, which help to ensure your investments are protected as much as possible.
Succession Planning & Greater Control Over Inheritance
Assurance Vie is not just an insurance policy, but also a way to pass on your wealth to your loved ones. One of its key advantages is that it allows you to choose who inherits your assets, without being bound by the usual French succession laws. This gives you more control over where your money goes after you're gone.
For full details of the tax treatment and wealth tax associated with these accounts, visit our ‘Help Me Invest, France’ page.
Multi-Faceted Wealth Management
Another great feature of Assurance Vie is the option to use a French-compliant Life Insurance Bond within the tax wrapper.
With this type of bond, you can hold different types of investments all in one place, and it's recognised under French law. It's like having a versatile tool that can handle multiple tasks. Be sure to seek financial advice on this matter so that your account remains compliant with French tax legislation.
Expat Financial Advice | Our Verdict
The Assurance Vie is an excellent financial planning tool for expats in France. It offers several advantages that can help you secure your finances both now and in the future. To summarise, here are some of the key benefits:
Tax Efficiency: One of the main advantages of Assurance Vie is its tax efficiency. By investing in this financial instrument, you can enjoy tax advantages that can help you save money in the long run.
Wealth Protection: Another benefit of Assurance Vie is its ability to protect your wealth. With this investment vehicle, you can safeguard your assets and ensure that they grow over time.
Succession Planning: Assurance Vie also offers advantages when it comes to succession planning. By choosing the right Assurance Vie provider, you can take advantage of preferential rates for inheritance purposes, making it easier to pass on your wealth to your loved ones.
It's important to note that every expat's situation is unique. So, it's crucial to find an Assurance Vie provider that suits your specific needs and goals. To make the best decision, consider seeking advice from an independent adviser who can guide you through the complexities of the French financial system with confidence.
Unlike other Expat Financial Advice companies, The Wealth Genesis operates a flat-fee charging structure. This means zero commissions, lock-ins or exit penalties for all our investment solutions.
As an independent and regulated adviser, our only priority is providing our clients with unbiased, bespoke advice.
To schedule an initial consultation with our team, please complete our contact form.
FAQs
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Anyone who anticipates living in France for 8 years or longer should consider an Assurance Vie.
The Assurance Vie is a long-term investment account, so this should be factored into any planning. -
This depends on the provider, as well as the financial adviser setting up the account.
Most Assurance Vie providers will charge between 0.50-1% per annum, depending on the size of the investment.
At The Wealth Genesis, we charge all our clients the same flat-fee, regardless of the value of the investment. -
For long-term investors, the AV is the best account available, given the tax-benefits associated.
For more short-term investors, better accounts may be available that are geared towards greater liquidity and ease of access. -
There are dozens of AV providers on the market, mostly offered by French banks.
At The Wealth Genesis, we consider our client’s position and goals before making any formal recommendation.
However, typically we recommend the AV offering from Utmost International. This account is low-cost and open architecture, meaning the investment choice is whole of market. Utmost is also regulated throughout Europe, as well as having a high credit rating.
Always be sure to seek professional advice before deciding who to proceed with.
