French Assurance Vie

[woolybanana]

Does anyone know anything about these? Are they a tax efficient means of raising income? How do they work taxwise? be grateful for input. Thanks in advance.

[Chiefluvvie]

Hi - I have one - brilliant!

Very tax efficient - that's why a huge number of French people invest in them. They do not have to be French based but must be based in an 'approved' EU country and currency.

Essentially (and simply!) you are only taxed on the growth element of any withdrawal (example below). The amount of tax liability also reduces the longer you keep the AV. You are not taxed on your capital per se - with the exception that the total value of the AV is assessable for Wealth Tax (ISF) purposes.

So if say you withdrew 10,000€ a year and your total fund had increased by say 4% over the same period - only 4% of your 10,000€ withdrawal i.e. 400€ is taxable for revenue and social charge purposes (investment income rates).

Naturally if your fund doesn't grow then no tax liability on any withdrawals - however, not really the position you want!! You at least want to achieve annual inflation rates as far as growth is concerned or you'll soon burn up the cash!

There are also some significant benefits regarding succession....a whole other issue!

Loads of info and advice available from qualified financial experts.

Chiefluvvie

[mint]

[quote user="Chiefluvvie"]Hi - I have one - brilliant! Very tax efficient - that's why a huge number of French people invest in them. They do not have to be French based but must be based in an 'approved' EU country and currency. Essentially (and simply!) you are only taxed on the growth element of any withdrawal (example below). The amount of tax liability also reduces the longer you keep the AV. You are not taxed on your capital per se - with the exception that the total value of the AV is assessable for Wealth Tax (ISF) purposes. So if say you withdrew 10,000€ a year and your total fund had increased by say 4% over the same period - only 4% of your 10,000€ withdrawal i.e. 400€ is taxable for revenue and social charge purposes (investment income rates). Naturally if your fund doesn't grow then no tax liability on any withdrawals - however, not really the position you want!! You at least want to achieve annual inflation rates as far as growth is concerned or you'll soon burn up the cash! There are also some significant benefits regarding succession....a whole other issue! Loads of info and advice available from qualified financial experts. Chiefluvvie[/quote]

Sounds like a very large catch there....so what are the implications for Wealth Tax and what is the percentage of Wealth Tax, etc?

Ridiculous to talk of Wealth Tax at the present time really especially as everyone I speak to, Brit as well as French, claim to be completely fauchée.

[Chiefluvvie]

Well sweet 17 - it's only a large catch if your worldwide assets are worth more than 1.3m€ - the new threshold for French Wealth Tax (ISF) from this year.

The value of an Assurance Vie, (and indeed any other savings / investments / accessible pension funds etc etc), is simply one of the things you need to add in to the calculation of your worldly worth for ISF purposes. As for the & rates of this tax - loads of info available on-line.

As you correctly state - it doesn't affect a huge amount of people so that's what makes AV investments so attractive!! Not quite so 'ridiculous'.......with over 175bn€ being invested by French residents alone.

Believe it or not, some people actually rely on investment income to get by.

Chiefluvvie

[mint]

Chiefluvvie, many thanks for the straightforward answer, easily understandable even by me!

[parsnips]

[quote user="woolybanana"]Does anyone know anything about these? Are they a tax efficient means of raising income? How do they work taxwise? be grateful for input. Thanks in advance.[/quote]

Hi,

If you search the forum under "assurance vie" you will find a great deal of detailed discussion of this subject.

[woolybanana]

Thanks guys for the info.