What Is An Assurance Vie In France?
LEARNING OBJECTIVES
We’re passionate about providing high quality, relevant and up-to-date financial information to Expats in France.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How an Assurance Vie works
The tax benefits in France
What are the alternatives
Key considerations when taking advice
This article is intended for British Expats in France.
If you're an expat residing in France, you may be familiar with the investment product, Assurance Vie.
You can open one with your local bank or use a specific expat solution.
Often, it is a combination of the two, with British expats opening a small one upon arrival and obtaining advice for a larger investment amount later on.
With so many providers to choose from, we thought it helpful to assess the important areas as well as the key benefits.
What Is An Assurance Vie?
An Assurance Vie is a French-compliant investment bond that offers significant French tax advantages. Policyholders can benefit from personalised investment choices, that are tailored to their circumstances.
The primary purpose is to offer financial protection and tax-efficient investment growth, for both the policyholder and their beneficiaries.
Key Benefits Of An Assurance Vie Investment
Whilst the benefits are well documented, we confirm the latest features below;
Tax Advantages:
Gross roll-up on growth continues until money is withdrawn.
From year 8, a reduction in Capital Gains Tax from 12.5% to 7.5%
Plus you can withdraw €4600 (€9200 per couple) free of income tax
Investment Flexibility:
You have the flexibility to choose from a variety of investment options, allowing your portfolio to be tailored to your risk tolerance and financial goals.
Estate Planning:
Leave €152,500 to each named beneficiary of choice free from French IHT. Note this is reduced to €30,500 if the policy is opened after age 70.
Long-Term Growth:
Designed for long-term investors, Assurance Vies aim to provide sustained growth over a period of 5 to 10 years or more.Financial Protection:
Combining life insurance coverage with an investment component, offers financial protection for you and your beneficiaries.
Best Assurance Vie In France For Expats
When deciding on the best Assurance Vie, the starting point should be you and your specific needs.
Questions to consider may include;
Is the money for investment in Pounds Sterling or another major currency other than Euros?
As a British expat in France, do you require investment portability on the chance you may return to the UK?
How important is investment choice?
Is 100% protection of your investment a non-negotiable?
Do you require the help of a financial adviser?
Does this makeup just one part of your overall retirement plan?
Do you have other assets such as pensions that need to be considered and managed?
Are you fluent in French and comfortable with signing investment agreements in French?
Answering the above can provide a good basis when assessing the Assurance Vie market.
Investing in France | French Assurance Vie
For a French resident, using an AV from a French bank may be suitable however there are some limitations to be mindful of. In particular, they are:
Limited access to investments that favour the bank's European-orientated and expensive investment funds.
Invest in Euros only, opening yourself up to the currency rate on the day you invest.
Lack of portability. With an Assurance Vie from a bank, there is no option to transfer to a UK-compliant solution in the event of relocating.
No protection of your investments over €100,000.
Paperwork available in French only.
Setup on a commission basis resulting in exit penalties and reduced performance.
For expats living in France, local French solutions tend to cater more for lower-value investments and regular contributions.
Investments For Expats In France
This naturally begs the question of what are the alternatives.
Numerous companies provide Assurance Vies for expats. When selecting the best one we would consider your specific situation. (including the answers to the above questions)
Thereafter, we would recommend the most suitable product available considering cost, fund range, reputation, safety and security, regulation, and servicing.
For most of our clients, we believe the Utmost Assurance Vie to be the best product. You can see a full review of the Utmost Assurance Vie here.
Additional Benefits Of An Expat Assurance Vie
Additional benefits provided by an expat assurance vie include:
Greater protection of your investments
Wider investment choice
Ability to invest, convert, and withdraw in GBP and multiple currencies.
Portability including product transfer in the event of relocating.
No exit penalties or restrictions on withdrawals.
Paperwork available in English.
Ongoing management from an English speaking European-regulated financial adviser.
Ability to set up the policy on a joint life first death or alternative based on your preference.
Expat Financial Advice
Just like the Assurance Vie market, there are many expat financial advisory firms available. The Wealth Genesis helps British expats throughout France with their retirement planning needs. We take a holistic approach to financial planning, ensuring your retirement provisions can meet your goals rather than focussing on a single investment.
We charge a flat fee to all our clients, regardless of their investment value. Our focus is on achieving positive client outcomes and building long-lasting relationships.
Our commitment to independence and zero commission ensures no conflicts of interest or sales pressure during the advisory process.
France has a reputation for imposing substantial taxes and social charges on earned income. As a French resident, utilising an Assurance Vie can be a valuable strategy to minimise your tax in France.
To discover how an Assurance Vie can form the foundation of your financial strategy, click the button below to get started.
FAQs
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We charge a flat fee of £3000 and an ongoing fee of 0.85%
Case Study
Richard and Jane retired to France last year.
They own their house outright in Bordeaux and have no other financial dependants as their kids have left university.
Richard's UK personal pension, held in an International SIPP, is more than sufficient for their income requirements.
He is due his full UK state pension in 4 years, with Jane due hers another 3 years later.
They recently sold their investment property in the UK and have £520,000 to invest for long-term capital growth with potential ad hoc withdrawals much further down the line.
They wanted to know how and where to invest their money. They also wanted ongoing investment advice and to ensure the safety and security of their investment. Additionally, they wanted the option to move back to the UK (although not planned) and to consider tax efficiency, including inheritance tax. Lastly, they wanted all documentation to be in English.
We recommended John invest £470,000 into an Assurance Vie, specifically the Utmost Assurance Vie. Within the AV we allocated the money to a bespoke portfolio of low-cost index-tracking funds geared towards capital growth. This included equities, bonds, and alternative investments.
We also recommended they allocate €34,950 across a Livret A and LDDS with Credit Agricole, their local bank. The remaining cash was to be kept as part of an emergency fund.
The costs were:
The Wealth Genesis Initial Advice Fee - £3000
Total Initial Fee - £3000 equal to 0.64%
The Wealth Genesis Ongoing Advice Fee: 0.85%
This includes quarterly reviews, fund re balances, and assistance with currency conversion and withdrawals.
Umost Assurance Vie - €600 and 0.5% per annum.
Total Ongoing cost - €600 + 1.19%
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Costs vary significantly from provider. The majority of Assurance Vie accounts will cost between 0.50% and 1% per annum.
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This depends on your specific requirements and preferences. For most expats in France, the Utmost APEX Assurance Vie is the most suitable.
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As an advisory firm, we believe we add significant value in selecting and managing the funds on your behalf.
You can self-select the fund range however we will need a disclaimer signed so we cannot be liable for the performance. Instructions would still need to come via us to the provider as part of our regulatory requirements. -
Yes, the ongoing fee is reduced to 0.5%.
