With profits bonds / life insurance

[Chrissie]

I have asked my question to our local tax office (who are stumped) and by email to [email protected] (who haven't replied).......

Last year I cashed in a couple of small "with profits" bonds which also had some sort of life insurance bit attached, where I declared named beneficiaries in the event of my death.  One bond was started in 1997, the other in 2002.  Both made small gains over the respective periods.

I think that these gains must be declared in France and will be subject to tax and to social charges, despite seeming very similar in form to Assurances Vies. 

Q1.  Are the gains actually taxable here?

Q2.  If so, on the tax forms, do I put the gains in the same place I put my Premium Bond winnings?

Q3.  Is there any way to spread these gains over the number of years involved (I am worried the lump of gains in the one year will push us just into the next tax bracket up and so will effectively be taxed at a marginally higher rate.)

All advice gratefully received.

Chrissie (81)

[carmelle]

The name of the ministry was changed .The email adress is now dgfip ( pour direction generale des finances publiques ) and not dgi . Perhaps the reason why you received any answer .

[email protected]

[Chrissie]

Thanks Carmelle - I'm emailing them this morning.

Chrissie (81)

[parsnips]

[quote user="Chrissie"]

I have asked my question to our local tax office (who are stumped) and by email to [email protected] (who haven't replied).......

Last year I cashed in a couple of small "with profits" bonds which also had some sort of life insurance bit attached, where I declared named beneficiaries in the event of my death.  One bond was started in 1997, the other in 2002.  Both made small gains over the respective periods.

I think that these gains must be declared in France and will be subject to tax and to social charges, despite seeming very similar in form to Assurances Vies. 

Q1.  Are the gains actually taxable here?

Q2.  If so, on the tax forms, do I put the gains in the same place I put my Premium Bond winnings?

Q3.  Is there any way to spread these gains over the number of years involved (I am worried the lump of gains in the one year will push us just into the next tax bracket up and so will effectively be taxed at a marginally higher rate.)

All advice gratefully received.

Chrissie (81)

[/quote]

Hi,

      As there was a life assurance element in the bonds, they should be treated the same as french life assurance.

The older bond is entitled to a tax-free allowance of 4600€ against the gain as it is more than 8 yrs old.(9200€ if you are a couple)any surplus is taxable at your normal rate, or you can opt for a rate of 7.5%

The other bond is taxable either at your normal rate ,or if you pay tax at more than 15% you can opt for it to be taxed at that rate.

On the 2042 declare the taxable part of the gains of the older bond Page 3 box CH if you opt for your normal rate or DH if you opt for 7.5%

Your other bond's gains should be declared box TR for your normal rate EE for the 15% fixed rate.

There is a system for easing the tax on certain exceptional receipts called the "quotient" to which you may be entitled but this is very complex and at the discretion of the tax office , so you should discuss it with them.

[Chrissie]

Hi Parsnips,

Thanks for that reply. I have emailed the infotax people again using the dgfip address - still no reply......  

If I don't hear, I will use your info re the tax-free allowances and tax rate options.  Do you know if the taxable gains will also be subject to contributions sociales?

Chrissie (81)

[parsnips]

[quote user="Chrissie"]

Hi Parsnips,

Thanks for that reply. I have emailed the infotax people again using the dgfip address - still no reply......  

If I don't hear, I will use your info re the tax-free allowances and tax rate options.  Do you know if the taxable gains will also be subject to contributions sociales?

Chrissie (81)

[/quote]

Hi,

     Yes, afraid so.

[Chrissie]

I finally received an answer from [email protected] re With Profits bonds

Unfortunately they don't agree that these equate to Assurances Vies, and so ask that the total gains for each bond be entered in box 2TR.  Sigh.  It's so often the case that things are expensive when you're honest!  Never mind, I suppose I'll have a clear conscience.

Chrissie (81)

[parsnips]

[quote user="Chrissie"]

I finally received an answer from [email protected] re With Profits bonds

Unfortunately they don't agree that these equate to Assurances Vies, and so ask that the total gains for each bond be entered in box 2TR.  Sigh.  It's so often the case that things are expensive when you're honest!  Never mind, I suppose I'll have a clear conscience.

Chrissie (81)

[/quote]

Hi,

    First point--they got it wrong--TR is for french  and overseas territory revenues      Second point--it doesn't matter, because it will be assessed the same as if put -correctly - at the boxes I told you.     Third point-- be sure to enter only the GAINS ,do not show the total withdrawal anywhere on the forms.

[Bluebells]

I made a total profit of £6500 (9100 euros) at the time after 19 years. So do I put nothing on the Form as I have not used up the allowance or do I put it in and they take the allowance into account ?????

[parsnips]

[quote user="Bluebells"]I made a total profit of £6500 (9100 euros) at the time after 19 years. So do I put nothing on the Form as I have not used up the allowance or do I put it in and they take the allowance into account ?????[/quote]

Hi,

      Provided you have a mention in your policy document of "life assurance (or insurance)", then I would not put anything on the declaration, except to mention at form 2042 page 4 sec8 box TT-- " voir papier libre"-- and enclose a paper with the name of the company , and the policy number, the date the policy started and the fact that you have closed the policy.

   (  You should have been declaring details of this policy every year since becoming resident. ) They may then ask you for details of the amount, but should ,as you say ,give you the benefit of the allowance.You may be asked why you never gave details,as above,before--but a plea of failure to understand the form should be accepted.

       As it is very unlikely that they will have any knowledge of this policy (unless you tell them) you may choose to follow your first suggestion, but you should be aware that there is a potentially stiff penalty for deliberately failing to disclose--as opposed to a genuine misunderstanding.

[Bluebells]

it was an endowment policy with life assurance built in !!

[parsnips]

[quote user="Bluebells"]it was an endowment policy with life assurance built in !![/quote]

Hi,

    The finance "expert" on the "Connexion" newspaper has, I seem to remember, published an answer to someone in your situation ,saying (I think)that if you have it paid into a UK bank you don't need to declare it here. I repeat this without endorsing it, it's for you to decide, I have tried to find the item on their website without success , --you may like to phone or email them.  

[Bluebells]

Thanks for the advice

[Ron Avery]

"The finance "expert" on the "Connexion" newspaper has, I seem to remember, published an answer to someone in your situation ,saying (I think) that if you have it paid into a UK bank you don't need to declare it here.""

Despite the fact that French tax law says that if you are resident in France you have to declare your world wide income.[:-))] No doubt this is the same expert who gave people dodgy advice about how to declare their UK taxed pensions and totally confused not only them but himself.  Is this bloke cheap, on some sort of medication or just deranged?

[LesLauriers]

Parsnips

The 1999 Finance Law requires all French residents to declare any investment into or withdrawal from a foreign life assurance contract.

Only contracts entered into before 1st Jan 1983 are excempt from income tax and social charges.

Withholding tax and abatements only apply to French contracts or foeign insurance companies with permanent establishments in France (French life assurance contracts).

The EU were unhappy about this and tried to change things around 2001/2 to no avail. 

If you are aware of an update to this situation could you please point us in the direction of the information.

Many thanks.

Ron

I have to agree the man in the connection is not to be trusted on this one!!   Surprise surprise !

[milkeybar kid]

[:$] Edited post.OOp's. Least said soonest mended. 

 

[David]

[quote user="LesLauriers"]Parsnips

The 1999 Finance Law requires all French residents to declare any investment into or withdrawal from a foreign life assurance contract.

Only contracts entered into before 1st Jan 1983 are excempt from income tax and social charges.

Withholding tax and abatements only apply to French contracts or foeign insurance companies with permanent establishments in France (French life assurance contracts).

The EU were unhappy about this and tried to change things around 2001/2 to no avail. 


If you are aware of an update to this situation could you please point us in the direction of the information.

Many thanks.

Ron

I have to agree the man in the connection is not to be trusted on this one!!   Surprise surprise !
[/quote]

 

Sorry to ressurect such an old post, but I cannot find anything more recent.

Do I understand correctly that UK endowment assurance policies with profits entered into before 1st January 1983, and which are "Qualifying" life assurance policies according to UK Tax, in that is there is no UK income tax liability, are also exempt from all French taxes?

Many thanks,

David

[parsnips]

Hi,

    Here is the position on the taxation of life assurance gains as reported in this years "Le Particulier" guide;

  Contracts made before 1/1/1983...................................Not taxable but subject to CSG

         "          "   from 1/1/1983 to 26/9/1997...................revenue from premiums paid in before 1/1/1998   ..........not taxable.

        "           "              "                       "       ...................revenue from premiums paid in after 1/1/1998................taxable at your marginal rate or, on optio nby "prelevement liberatoire"of 7.5%.

.

Contracts made after 26/9/1997 .....................................revenue taxable at your marginal rate or, on option, at the "prelevement liberatoire" of 7.5% for policies over 8 years old, 15% for policies between 4 and 8 years old, and 35% for policies under 4 years old.

All gains are subject to CSG.

[David]

Many thanks parsnips for your very helpful reply, and sorry for my delayed response but I preferred to give you the full story.

We had some friends visiting who were very keen to come to France.  After some discussions it became apparent that they had not considered fully the financial implications.

They did not believe me that the French tax authorities could be so unreasonable, so I wrote the post to which you replied.  Thanks to your post they will now delay any move to France until their assurances mature.  Thus France will lose our friends other tax revenues until they decide to come over, if they in fact do so now.

What a shame that assurances which have taken more than 40 years of payments and maturity in UK, and which comply fully with UK tax law so that they mature without UK tax liability, then become liable to French CSG, and that the French demand the CSG on the full amount rather than just the gains made while being a French resident.

Many thanks again,

David

[parsnips]

Hi,

      I've just noticed that I omitted to mention on my last post that there is a tax-free allowance on the declared gains of €4 600(single ) and €9 200(married). This does not affect the CSG.