EXPAT INVESTMENT PLANNINGThe French Assurance Vie
What is an Assurance Vie?
An Assurance Vie is a French investment account that provides both life insurance coverage and potential investment return. The product offers considerable tax benefits to policyholders, the majority of which are applied after the investment is held for 8 years. It is designed to provide financial protection and investment growth to the policyholder and their beneficiaries.
Who is it for?
The Assurance Vie is a product available to French residents who intend to stay in France for the long term (8 years plus). It’s specifically for those who want to grow and protect their wealth in the most tax efficient manner.
France is known for its high taxes and social charges on earned income, so the Assurance Vie is a great tool to reduce local taxes as a French resident and bring down your marginal tax rate.
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Additionally, after 8 years €4,600 can be withdrawn per annum tax free per policyholder (€9,200 per couple).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 and investment opportunities with significant tax advantages relating to inheritance tax, capital gains tax and income tax. This French investment account works brilliantly for individuals seeking both protection and growth from their investment as a French resident.
At The Wealth Genesis, we are fully independent and can advise on the whole market, selecting the most appropriate and lowest cost Assurance Vie at a flat-fee for our clients.
