French Taxman treatment of maturing Endowment Policies.

[Chezstevens]

Hi,

We have 3 x 25 yr maturing endowment policies that are not required to settle a mortgage. They are substantial, to us, and I would be grateful for informed advice as to the treatment of the policies by the french tax system with the following scenarios:

1. Arrival in France after maturity.

2. Arrival in France up to 2 years before maturity.

Thank you in advance for information furnished.

[cs]

oh hec, just when I thought I'd covered everything ! I would also be interested in replies as we too have policies that pay out in May next year which will not be paying off our mortgage as we hope the sale of the property will do that (incidentally we are selling at the same price as we bought therefore no capital gains issue) and we did hope to be in France permanently early next year.

We thought we would look at investing the money in Yorshire Building Society's (not to be confused with the Yorkshire Bank) Off Shore account as the Yorkshire say that normal off shore accounts do not have the same protection if the bank or building society fails.  However, the Yorkshire Building Society has a guarantee in place that they will indemnify their off shore facility to the same level as their on shore members would expect.  See www.yorkshireguernsey.gg.

So am also interested in the answers to chezstevens questions.

Thanks in advance.

[hastobe]

The guarantee isn't worth anything!!  An ODT's main asset is the balance it is owed by its parent (the YBS in this case) if this is at risk then its because there are problems with the YBS in which case the YBS are hardly in a position to payout.  Effectively the YBS is acting as guarantor to itself.

Having said that I don't think the ODT's of onshore UK financial institutions are about to go down the plug hole - despite the best efforts of G Brown Esq.

Kathie

[Chezstevens]

I know it is difficult but could the thread stay on the topic. Obviously for offshore accts a new thread would be appropriate.

regards

Vern

[LesLauriers]

[quote user="Chezstevens"]Hi,

We have 3 x 25 yr maturing endowment policies that are not required to settle a mortgage. They are substantial, to us, and I would be grateful for informed advice as to the treatment of the policies by the french tax system with the following scenarios:

1. Arrival in France after maturity.

2. Arrival in France up to 2 years before maturity.

Thank you in advance for information furnished.[/quote]

Scenario 1. No liability to French Taxation.

Scenario 2. Policy taken out before 1st Jan 1983 - no liability for tax or social charges.

                    Policy taken out after 1st Jan 1983 is liable to tax and social charges, unless the proceeds are used to buy an annuity (which is then subject to tax and social charges) or the proceeds can be shown to be related to the retirement or redundancy of the policyholder.

As I understand it.

If there is a substantial amount at stake then I  would pay the £500 or so that it would cost for some up to date financial advice.

As a rule of thumb, tax free in UK, generally means taxable in France.

[Catalpa]

Advice to us from one of the French specialist financial advisors several years ago:

As a French tax-paying resident, you pay tax on the "profit" element. For eg:

Your endowment matures and pays you £50,000.

You paid in £45,000.

You pay tax and contributions on the £5,000.

I second LL's point: if large sums are involved, take up-to-date advice.

[Chezstevens]

VMT for the advice - looks like a chat to a tax adviser. I thought that the french taxman would like a nibble or bite out of the proceeds!!

regards

Vern

[aj_dr]

The information we were given was - No tax payable on Annual Bonuses if the Policy was taken out before 1983 as nobody can prove how much has been earnt prior to 1983 BUT there is a Tax liability on the Final Bonus (if you've lucky to get one!!)

aj