ENDOWMENT POLICY, WILL WE HAVE TO PAY TAX ON IT IN FRANCE WHEN IT MATURES, WHEN [IF] WE MOVE TO FRANCE?

[ebaynut]

Hi,

We wonder if someone can help with this,

We have a couple of endowment policies with Legal and general, which have five and seven years to run.

If we stay in the U.K, they are paid out to us without any further tax being payable on maturity, Legal and general like to call this a "tax free lump sum", but it is in fact a "tax paid lump sum", as with all endowment policies each year the company takes it fee's and the profits are taxed before being added to your fund.

So, at the end of the twenty five years tax has been paid to the U.K. government each year, and the sum we receive is what we have paid in, plus the profits after fees, life cover and taxes have been paid.

If we move to France will we have to pay any Taxes to the French government when my policies mature?

If we had taken a repayment mortgage, the amount owed on our house would be less now than if we had taken out an endowment policy, as of course we would have been paying off the capital as opposed to paying in to an endowment.

We don't really wish to cash in the policies so near to the end, and miss all the bonuses that are added at the end, so need to know how this will be treated in France.

As we were advised years ago, endowment was the best way by an independent F.A, [it sure was for him], we are reluctant to trust one again,

If anyone has any knowledge of this, your advice would be much appreciated.

Thanks,

Roger

[LesLauriers]

The proceeds of contracts issued before 1 January 1983 are entirely excempt from income tax and social contributions. Profit on contracts issued after this date are subject to income tax and social contributions unless the proceeds are used to purchase an annuity which is then subject to income tax and social charges.

[AnOther]

[quote user="ebaynut"]We don't really wish to cash in the policies so near to the end, and miss all the bonuses that are added at the end, so need to know how this will be treated in France.[/quote]I've read something about this either here or on another forum and I think the proceeds would be taxable under French law though don't take this as definitive.

If you haven't already done so then the first thing to ascertain is if that there will actually be a lump sum due !

From personal experience I know that L&G have not been star performers and if there is not going to be a significant bonus due then obviously the decision whether to surrender or not becomes an easier one.

Any projection they may give you is purely that and will mean nothing in 5 & 7 years time so to cut and run before moving may be the sensible course.

Remember too that you may get a better price for your policies by selling them rather than surrendering and there are several companies who will give you a valuation but you will need the L&G surrender values first.

[aj_dr]

I agree with Leslauriers but I thought that tax & social contributions were due on the final bonus.

aj