HELPLINE: 
Expats holding French assurance vie policies should consider shifting their assets before looming government tax hikes take effect, warns finance expert Daniel Butcher
Significant tax increases on assurance vie policies could arise if the government’s latest proposals are approved. Michel Barnier – the new prime minister and former Brexit negotiator for the EU – is grappling with numerous economic challenges and will present the draft Finance Bill to parliament this October, with the new laws in force by 1 January 2025.
A pressing target is the fairer distribution of tax burdens which has put assurance vie’s favorable tax treatment under scrutiny. “The new proposals aim to introduce a higher rate of taxation on large policies,” said Daniel Butcher, founder of DTB Wealth Management. “They are likely to affect those with more than €150,000 in assets.”
Inheritance taxation is also in the firing line as the government seeks to raise revenue. “Assurance vie offers tax advantages in estate planning, particularly for amounts under certain thresholds, but the government is considering reducing these,” said Daniel.
Additionally, holders of older assurance vie contracts, who have enjoyed reduced tax liabilities, should watch for potential adjustments. “A tax overhaul could level the field between old and new policies, slashing benefits for older contracts,” he added.
For expats wanting to safeguard their income, transferring assurance vie assets to Luxembourg could offer unlimited capital protection because of the security triangle between the bank, insurance company and regulator, the CAA.
In France, policies only cover up to €70,000 in the event of the custodian’s bankruptcy. “Luxembourg assurance vie also avoids Loi Sapin 2, a French law which, if applied, could restrict investors’ capital withdrawals,” said Daniel. “It was originally designed to safeguard the French banking system in the event of a force majeure.”
If you have questions about the future of your assurance vie investment, DTB Wealth Management can provide expert advice on your best options. Contact the team today for a free introductory consultation to optimize your financial situation and wealth goals.
