We talk to Jennie Poate, an International Financial Advisor at abc-eu.com about the Assurance Vie…
Well, literally translated it means Life Insurance. However, it actually is quite different from the life insurance policy you might be used to in say the UK. An Assurance Vie is essentially a life insurance wrapper that holds investments. It’s available to French tax residents, including foreign nationals living in France. And as well as offering inheritance advantages, it’s one of the most versatile and efficient tax structures in France.
Key points of an Assurance Vie (AV)
Tax
Investments held within the wrapper are not subject to capital gains tax or income tax while the funds stay inside the policy and no withdrawals are made. You can withdraw capital tax-free. Only the growth element of any withdrawal is subject to tax. You must declare the growth every year you on your annual tax form, but no tax is paid unless you make a withdrawal. Even then the tax is only paid on the ‘growth’ part. And, after 8 years, there is an income-tax-free allowance of €4,600 per person (Social Tax is still payable). You can hold an AV in joint names, meaning an allowance of €9,200 per couple (tax is paid by couples in France).
Inheritance
Assets within an Assurance Vie may be dispersed as you wish on death, and there are tax advantages for beneficiaries. If you open the AV before you reach 70, beneficiaries of an AV have an (extra) allowance of up to €152,500 each before tax. Compared to €1594 which is the normal allowance for non-relatives (this also includes unmarried partners in France). Although if you open the AV after you’re 70, the allowance drops to €30,500 per person.
Currency savings
International AV versions can hold different currencies. This is useful if the foreign exchange rate isn’t favourable, and you have assets in different currencies.
Savings and tax
If you are resident in France but hold Peps or Isas in the UK and – you will have to declare & pay tax on their growth annually. You can transfer the cash/holdings to your AV and not pay tax (until a withdrawal).
This is a simple view of how an Assurance Vie works. But for many people this is an excellent investment vehicle for tax savings and for inheritance planning.
If you’d like to find out more or have questions about how to maximise your investments, contact Jennie for an obligation free consultation at: jennie@abc-eu.com
This communication is for informational purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
ABC-EU are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL). ABC-EU is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. ABC-EU is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101
