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Assurance Vie – An Attractive Investment Vehicle For French Residents

If you live in Neighbouring France and plan to live long term and even potentially retire there, then you may wish to include an Assurance Vie as an intergal part of your financial planning.  This is due the considerable tax advantages in France for residents, as well as being useful for estate planning purposes.

So what is an Assurance Vie?

An Assurance Vie is an investment product in France that has exceptional tax advantages. It is one of the most popular investment solutions available for people in France wanting to put money aside in a tax efficient manner.

It enables the policy holder to accumulate wealth throughout their working life and invest it in a wide variety of assets such as stocks, mutual funds and ETF’s.  If you are investing your capital then it is extremely important that you mitigate any taxes that may impede your growth and future income.  Whilst investments are not subject to a capital gains tax in France, they are liable for both income tax and social charges which total 30% (tax element 12.8% and social charges 17.2%).

When saving over a long time period for example for your retirement or your children’s education, this 30% on growth will significantly impact your portfolios value.  The use of an Assurance Vie enables your investment to grow free of income taxes and social charges.

Benefits of an Assurance Vie include:

  • After holding the Assurance Vie for 8+ years, income tax on the gains withdrawn reduces from 12.8% to 7.5% – social charges are still due at 17.2%. This reduced tax rate is in relation to contributions that do not exceed €150,000.
  • After 8 years, you are able to access €4,600 (€9,200 per couple) of the gains within your Assurance Vie tax free each year.
  • Your provider takes care of tax reporting and withholding taxes.
  • Benefit from gross roll up.  This means your investment is able to grow free of taxation and you can maximise your growth and future income.

Estate Planning and Forced Heirship

An Assurance Vie is also an extremely useful tool to use when thinking about your legacy and estate planning.  It enables you to leave up to ¢152,000 to your elected beneficiaries  free of French inheritance tax.  You can also choose your heirs rather than have forced heirship rules take effect.

One key point with estate planning is you must open your policy before the age of 70 for the above benefit to apply.  Policies opened after the age of 70 have this benefit significantly reduced.

Is an Assurance Vie Right For Me?

In order to establish if an Assurance Vie is the right solution for you and your family, we highly recommend that you speak with a financial advisor who understands these solutions along with other solutions that might be beneficial for an expatriate.

To speak with one of our trained advisors simply complete the below form and we will contact you as soon as we are able.

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