EXPAT INVESTMENT PLANNING

French Assurance Vie

A Tax-Efficient, Flexible Investment for Long-Term Wealth Planning

The Assurance Vie is one of the most practical financial tools available to UK expats living in France. Designed specifically for the French market, it offers a unique combination of tax efficiency, investment flexibility, and inheritance planning advantages.

Whether you're planning to retire in France, grow your wealth long-term, or reduce your exposure to French income taxes and social charges, the Assurance Vie provides a locally compliant, tax efficient solution. It also offers a way to shield assets from UK inheritance tax, making it especially valuable for British nationals with international ties.

What Is an Assurance Vie?

An Assurance Vie (AV) is a life insurance contract widely used in France, not only for protection but also as a long-term savings and investment vehicle. Despite being termed "life insurance," it functions more like a tax-advantaged investment account, allowing you to grow your wealth in a flexible, legally recognised structure.

You can invest in a wide range of underlying assets; from mutual funds and ETFs to socially responsible portfolios or cash equivalents, all within a single wrapper.

Benefits

  • Tax-Free Growth (Tax Deferral): Income and capital gains within the policy grow tax-free as long as no withdrawals are made. Regardless of how much growth or income is generated, there is no tax liability while funds remain invested within the policy.

  • Favourable Taxation on Withdrawals: When making a withdrawal, only the gain (growth portion) is subject to tax, not the entire amount. Example: If your portfolio has grown by 7% and you withdraw €25,000, only €1,750 (7% of €25,000) is taxable, meaning €23,250 is tax-free.

  • Marginal Rate Taxation: You can opt to have gains taxed at your marginal income tax rate instead of the flat-rate levy, which may be beneficial if your annual income is low.

  • Straightforward Tax Admin: The product will report to the French Impot and hold back any tax where required.

  • Additional Tax Allowance After 8 Years: Once the policy has been held for 8 years, you can withdraw up to €4,600 per year tax-free (or €9,200 per couple), even if part of the withdrawal includes taxable gains.

  • Estate Planning Benefits: Each named beneficiary can receive up to €152,500 free of French inheritance tax (reduced to €30,000 when opened after age 70), making the Assurance Vie a highly efficient tool for succession planning.

Who is an Assurance Vie For?

An Assurance Vie is ideal for French tax residents who plan to stay in France long term and want to grow and protect their wealth tax-efficiently. It’s an excellent tool for those planning for retirement, looking to reduce income tax and social charges, and seeking a smart way to manage inheritance tax both in France and the UK.

Choosing the Right Assurance Vie:

While Assurance Vie is a versatile solution, not all contracts are created equal, especially for expats. Some are offshore, others are domestic. Some offer English-language service and portability, while others don’t. It’s vital to choose a structure that matches your long-term objectives, currency needs, investment goals, and inheritance plans.

Key Takeaway

Overall, an assurance vie combines life insurance protection with investment opportunities, offering significant tax advantages related to inheritance tax, capital gains tax and income tax. This French Assurance vie is perfect for individuals seeking both protection and growth from their investments as French residents. 

At The Wealth Genesis, we pride ourselves on being fully independent, allowing us to advise on the entire market and select the most suitable and cost-effective assurance vie for expats at a flat fee.

FAQs

  • Tax-Deferred Growth
    All income and capital gains generated within an Assurance Vie grow free from tax as long as no withdrawals are made. No matter how much the investments appreciate, there is no tax liability while the funds remain within the policy.

    Favourable Tax Treatment on Withdrawals
    When you make a withdrawal, only the portion representing investment gains is subject to taxation—not the full amount.
    Example: If your investment grows by 7% and you withdraw €25,000, only €1,750 (7% of €25,000) is taxable. The remaining €23,250 is exempt from tax.

    Option to Use Marginal Income Tax Rate
    Instead of the standard flat-rate tax, you can choose to have gains taxed at your marginal income tax rate. This may be advantageous if your annual income is relatively low.

    Simplified Tax Administration
    The provider handles tax reporting directly to the French tax authorities (Impôt) and withholds any applicable taxes on your behalf, streamlining your compliance obligations.

    Extra Tax Allowance After 8 Years
    After holding the policy for 8 years, you benefit from an annual tax-free withdrawal allowance of up to €4,600 per individual, or €9,200 for a couple—even if a portion of the withdrawal includes taxable gains.

    Estate Planning Advantages
    An Assurance Vie is also an effective estate planning tool. Each named beneficiary can receive up to €152,500 free from French inheritance tax, providing a tax-efficient way to pass on wealth.

  • Non expat solutions have limitations such as;

    Limited Investment Choice
    French Assurance Vie policies typically offer access only to French or Eurozone-centric funds, often denominated in euros. This can mean higher fees and access to lower-performing or more restricted fund ranges compared to international solutions.

    Euro-Only Policy Options
    Policies must be opened in euros, with no option to be denominated in sterling. This means you're exposed to exchange rate risk from the outset, with no flexibility to convert to euros at a more favourable time should the pound strengthen in the future.

    Lack of Portability
    French Assurance Vie contracts are not portable. If you leave France, you cannot convert your policy into another jurisdiction’s compliant structure, such as an offshore bond. In contrast, international investment products offer greater flexibility, allowing transitions into other European or offshore-compliant structures depending on your future residency.

  • The main differences are gross roll-up of growth within the policy, estate planning benefits and reduced taxation on withdrawals. AVs have higher fees, although this is justified by the additional benefits.

  • Yes, although there is no benefit to doing so, and would result in additional costs and more difficulty implementing one simple investment strategy. You can name multiple beneficiaries, each receiving  €152,500 free of french IHT (if policy opened before age 70)

  • With an Assurance vie, tax is only applied when you make a withdrawal, either full or partial. For a full surrender, the taxable gain is calculated as: 

    Taxable Gain = Surrender Value – Total Premium Paid.

    For a partial surrender, the provider calculates the tax using the following formula:

    Taxable Gain = (Partial Surrender Value – (Total Premium Paid × Partial Surrender Value / Total Surrender Value))

    • Policies under 8 years: Gains are taxed at 30% (12.8% flat tax + 17.2% social security contributions).

    • Policies over 8 years: Gains are taxed at a reduced rate of 24.7% (7.5% flat tax + 17.2% social security contributions) on amounts up to €150,000.

    • A tax-free allowance applies after 8 years: €4,600 per individual or €9,200 per couple per year.

  • Yes, you can have as many beneficiaries as you wish. 

  • Our minimum investment value is £200k. Local banks do not have minimum investment requirements with expat solutions starting at £100k.

  • We start with a discovery call to understand your current situation, financial goals, and specific needs. Next, we perform an in-depth analysis of your existing assets and priorities.

    Based on this, we assess available products and recommend the most suitable solution. You’ll receive a personalized Wealth Report, detailing our recommendations, including the best Assurance Vie provider and a tailored investment strategy.

    Once you’re ready to move forward, we’ll manage all client onboarding paperwork and set up your new Assurance Vie. The provider will then give you login details, and you can proceed with transferring your investment.

  • An Assurance Vie is tax-efficient for French tax residents. However, if you move back to the UK, it would be more beneficial to transfer the policy into an offshore bond (known as a Personal Investment Bond in the UK), which offers additional tax advantages.

After all, it’s your wealth, not ours.