Assurance Vie | A Guide For Expats In France
We provide bespoke financial advice to British expats in France.
This article considers the French Assurance Vie and how it can be used to reduce your tax in France.
France has long been a favoured destination for UK expats and retirees seeking a fresh start abroad. With its rich culture and history, beautiful landscapes and world-class food and wine, this country can be a fantastic choice to relocate to.
However, adjusting to life in a new country will bring a lot of change and some challenges. Your financial planning will be one of your most important considerations, especially when it comes to managing your investments.
Thankfully, the French Assurance Vie is an ideal solution for expat investors. Offering both financial growth and life insurance protection for the policy holder and their beneficiaries, it is a popular choice for UK expats in France.
The Wealth Genesis - Financial Advice For British Expats In France
Expat Investments In France
The Assurance Vie is a life insurance bond which is fully tax-compliant in France. It allows french residents to hold multiple investments inside a tax-efficient ‘wrapper’ and offers a variety of investment opportunities, enabling you to build a portfolio aligned with your individual circumstances and goals.
This financial product is ideal for those looking to grow their wealth over time, particularly expats who plan to stay in France for at least eight years.
After this period, the tax due on any gains significantly reduces to approximately 25% on withdrawals. This makes the Assurance Vie an excellent choice for anyone considering relocating or retiring in France, offering tax efficiency, capital growth potential and inheritance tax benefits.
Is The Assurance Vie Right For You?
Some key Assurance Vie benefits include:
Combination of Investment and Insurance
The Assurance Vie blends investment and life insurance, allowing you to allocate your premiums into a variety of financial products while also benefiting from life insurance coverage.
Tax-Free Growth
Any investment income held within the policy will benefit from gross roll-up, meaning it grows in a tax-free environment while invested. You won’t have to pay income tax or capital gains tax on earnings as long as they remain inside the policy.
Lower Tax Rates
If you hold your money in the policy for over eight years, your income tax on withdrawn gains reduces from 12.8% to 7.5%, (though French social charges of 17.2% will still apply.)
Security
The Assurance Vie is a secure investment scheme regulated by the French Insurance Code and the Autorité de Contrôle Prudentiel et de Resolution (ACPR). It also allows you to hold funds in multiple currencies, mitigating currency risk, which can eat away at your capital over time. Additionally, your funds will be protected against exit penalties in the first eight years.
Ongoing Support and Administration
If you take out an Assurance Vie policy, you will receive continuous support from your provider, who will also manage tax reports and withholding taxes on your behalf.
Learn more about the Assurance Vie here
Estate Planning Advantages
One major draw of the Assurance Vie is that it can be a powerful tool for estate planning, offering significant benefits for expats who wish to pass down their wealth to loved ones in the event of their death.
Policyholders can bypass the strict French forced heirship rules, and name beneficiaries freely.
If you set up a policy before turning 70, you can pass up to €152,500 to each elected beneficiary completely tax free. Amounts above this threshold will be subject to a reduced tax rate of 20% for up to €700,000 of the estate, which is considerably lower than standard succession tax rates.
Independent Financial Advice For French Residents
The Wealth Genesis is fully independent and regulated, meaning we are not tied to or affiliated with any financial institutions, products or providers. This is especially important when choosing an Assurance Vie policy, as there are many options available on the French market.
When it comes to your investments and retirement planning, working with a trusted independent financial adviser is crucial. Our independence allows us to assess the entire market and recommend a policy which is truly suited to your unique circumstances, free from conflicts of interest. We operate on a zero-commission, flat-fee basis, ensuring complete transparency.
Our trusted advisers are based in France, with expert knowledge of the Assurance Vie market, as well as a deep understanding of expat financial needs.
If you’re considering the Assurance Vie, book a free discovery call with us using the diary below to see how we can help.
Assurance Vie FAQs
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Yes you can, however be mindful of the costs.
French banks charge commissions and will be restricted to in-house fund choices, which can be very expensive.
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All investments within the AV account can grow free of taxation, i.e. gross roll-up.
Proceeds are taxed at preferential rates after the holding period, as well as allowing for an annual ‘tax-free allowance’.
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From a tax-perspective, unfortunately not.
However, if you are investing for a shorter period (less than 5 years), it will be worth considering a more fluid, portable option such as an offshore investment account. -
There are 2 layers of fees to consider. These are the adviser fees and the product fees.
Adviser fees can range from 1% to 5%. Product fees will depend on how much you invest, but typically range between 0.50% and 0.20%.
At The Wealth Genesis, we charge the same one off flat-fee to all our clients - £3,000.
