Tax-efficient investment in France – the benefits of assurance-vie

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Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Assurance-vie policies offer tax and estate planning advantages. Many expatriates find them valuable for providing tax-efficient income while  protecting their wealth for their loved ones.

When you look at the headline rates of tax in France, you can understand why many people consider France to be an expensive country to live in, tax-wise.  What they often do not realise, however, is that they may be able to take advantage of compliant opportunities to protect their assets from various French taxes – so much so they may even end up paying less tax in France than in countries like the UK.  With the right structures in place, you could significantly lower your tax bill.

What was tax efficient in the UK is generally not tax efficient in France.  For example, ISAs and Premium Bonds are taxable in France.

One very useful arrangement for lowering French tax on your investment income is the assurance-vie.  This specialised form of life assurance allows you to hold a wide range of investment assets and is highly tax efficient for residents of France, especially if you hold your policy for over eight years.

Both French nationals and expatriates find assurance-vie to be very valuable for providing tax-efficient income (particularly useful in retirement) while also protecting their wealth for their loved ones.

French tax benefits of assurance-vie

  1. Income and gains can roll up tax-free within the policy
  2. Withdrawals are taxed very favourably
  3. Substantial allowance from year 9
  4. Succession tax savings for your heirs
  5. Wide range of investment options
  6. Consolidation of investments in one policy
  7. Estate planning benefits


1) Income and gains

If you do not take any withdrawals, there is no income or capital gains tax to pay, regardless of how much the capital has grown or how much interest has been earned within the policy.

2) How withdrawals are taxed

When you take withdrawals, they are taxed very favourably.  Only the growth element is taxed, rather than the whole withdrawal.  For example, if the whole portfolio of assets within your assurance-vie has grown by 7%, and you are taking a withdrawal of €25,000, you only pay tax on approximately €1,750 and around €23,250 is tax free!

For new policies set up after 27 September 2017, the tax rate on withdrawals is 30% (the standard tax rate on investment income).  This includes both 12.8% income tax and 17.2% social charges.  The income tax rate is lowered to 7.5% for income from contracts which are more than eight years old and relate to contributions not exceeding €150,000. You can also elect to pay the scale rates of income tax instead, which can work out cheaper even with social charges.

Note that the 30% fixed rate only applies if your policy is approved for French tax purposes. If you have a non-EU assurance-vie you will pay the scale rates of income tax plus 17.2% social charges, regardless of your premium.  Policies from companies in the Isle of Man, Channel Islands – and now also the UK – are therefore at a disadvantage.

3) Annual €4,600 tax-free allowance

Once you have owned your policy for over eight years, your first €4,600 –  €9,200 for a married couple – of growth withdrawn every year can be tax-free. This doesn’t apply to social charges but is still a very favourable tax break.

4) Reducing succession tax

An assurance-vie could also help lower your succession tax liability.

In particular, considerable tax savings can be made if the policy was established with lives assured under age 70.  Each individual beneficiary will receive a €152,500 exemption, after which they pay a flat tax rate of 20% (when the taxable part of the assurance-vie is under €700,000) and 31.25% on any excess over €700,000.

If you are over 70 when you set up your policy, your heirs are still better off with your assurance-vie as, although they pay the usual succession tax rates, they receive a €30,500 allowance.

5-7) Other assurance-vie benefits

Depending on your policy, you can usually hold a wide range of investment options without your assurance-vie, with flexible currency options.

You can bring many different investments together under one roof making it easier to manage, and combine your tax and investment planning in one exercise.

Purchases and sales within the policy are normally transacted at little or no cost, so you can change your investments as your circumstances change without incurring extra costs.

Investments within an assurance-vie can also be easier to distribute to your nominated heirs on your death, making their life easier.

It is important to note that there are different types of assurance-vie policies available, and you need to make sure you choose the one that will provide the advantages you are looking for.  Tax rules and rates in France also change frequently so your adviser needs to be up-to-date on the latest regulations in France and what actually works for British expatriates living here.

Finally, your tax and investment planning should be based around your situation, objectives and estate plans, so it is essential to take personalised advice.


Blevins Franks has decades of experience supporting UK nationals moving to and living in France with specialist tax planning, as well as pensions, estate planning and investment management services.

Contact a locally-based adviser

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.