France Life Insurance Tax Guide
the French taxation of life insurance (assurance-vie). The guide covers: the taxation of withdrawals (rachats) — the life insurance contract is one of the most tax-efficient investment vehicles in France; the tax treatment depends on the age of the contract: (a) withdrawals from a contract less than 8 years old: the gains portion is subject to the PFU at 30% (12.8% income tax + 17.2% social charges) or the progressive rate at the taxpayer's option; (b) withdrawals from a contract more than 8 years old: the gains are taxed at a reduced rate of 24% (7.5% income tax for premiums up to €150,000, plus 17.2% social charges = 24.5% total) — for premiums above €150,000, the gains are taxed at 30% (12.8% + 17.2%); the annual allowance (the "abattement annuel" of €4,600 for a single person, €9,200 for a couple) on the gains portion of withdrawals from contracts older than 8 years; the allowance applies per taxpayer per year; the inheritance tax treatment (transmission) — the life insurance death benefits (the "capitaux décès") are subject to a specific regime that is more favourable than the standard inheritance tax: (a) premiums paid before the age of 70: each beneficiary receives €152,500 exempt from inheritance tax; the excess is taxed at 20% (up to €700,000) and 31.25% (above €700,000); the allowance is per beneficiary (not per deceased person); (b) premiums paid after age 70: the total premiums paid after age 70 (not the death benefit, but the amount of the premiums paid) are included in the estate and subject to the standard inheritance tax (the "droits de succession") after a €30,500 allowance for all beneficiaries; the type of contracts — (a) the "contrat en euros" (the euro-denominated contract) — the capital is guaranteed, the interest is credited annually, the tax is on the interest portion, (b) the "contrat en unités de compte (UC)" — the capital is invested in securities (shares, bonds, funds, ETFs) and is not guaranteed; the tax is on the capital gain at the time of withdrawal; the social charges — the gains on life insurance are subject to social charges (prélèvements sociaux) at 17.2% (CSG 9.2% + CRDS 0.5% + prélèvement social 4% + contribution additionnelle 1.5% + prélèvement de solidarité 0.3% + other); the social charges are levied annually on the accrued interest for the euro-denominated contracts (the "prélèvement social annuel sur les contrats en euros") and at the time of withdrawal for the UC contracts; the tax optimisation – the « loi Pacte » (2019) — the 2019 reform simplified life insurance: (a) the euro-denominated contracts and the UC contracts can be in the same policy, (b) the transfer from one insurer to another without losing the tax benefits (the "transfert entrant" — the new contract retains the tax age and the premium history), (c) the "bonification" for contracts older than 8 years — the enhanced allowance and the reduced rate.
Assurance-vie is the cornerstone of French personal financial planning, offering significant tax advantages for long-term savings and inheritance planning. All amounts in Euros (EUR). For related reading, see our Investment Income Tax Guide → and Inheritance and Gift Tax Guide →.
Withdrawal Tax — After 8 Years
- Reduced rate: After 8 years, the gains on withdrawals are taxed at 24% (7.5% income tax + 17.2% social charges) for the portion of premiums up to €150,000. Above €150,000, the gains are taxed at 30% (12.8% + 17.2%). The annual allowance of €4,600/€9,200 reduces the taxable gains portion. The allowance applies to the gains portion (not the capital).
Inheritance Tax — Before Age 70
- €152,500 per beneficiary: If the insured person dies before age 70, each beneficiary receives €152,500 of death benefits free of inheritance tax. The excess is taxed at 20% up to €700,000 and 31.25% above. This exemption is per beneficiary per deceased person. There is no limit on the number of beneficiaries. The spouse or PACS partner is fully exempt from inheritance tax on the life insurance death benefits (as for all inheritance).
For the social charges on life insurance, see our Social Charges Guide →. For the inheritance planning using life insurance, see our Inheritance and Gift Tax Guide →.