New French Legislation for Assurance Vie Policies

Written by on February 25, 2017 in Financial, Insurance, Tax

The Assurance Vie is the most popular long term savings product in France. It offers a choice of investment funds, tax and inheritance advantages.

There are two types, those offered in France by French companies and normally only in Euros and those ore recently offshore in places such as Luxembourg and Dublin. The latter more often than not offer a choice of currency and a wider range of investment.

Fonds en Euros

There is one fund that traditionally has been popular in the past being based on deposit rate and bond yields. This is known as the ‘fonds en euros’ or ‘guaranteed fund in some cases. Currently it is also the only fund where CSG or ‘social charges’ are taken at source. However, as we are all aware, interest and bond yields have over the past few years reduced to almost zero. Indeed we had heady days of 5% in 2007 and more recently rates have been less than 2% and expected to fall further.

In the past a guaranteed rate would be declared at the beginning of the year and a bonus paid at the end of the year depending upon performance. However more and more fund managers have been placing funds into government bonds in order to meet their obligations. Some companies have actually withdrawn the guaranteed minimum rate so in the future these funds could produce a negative return. Companies have actually been using their reserves to prop up the funds and maintain stability.

Changes to Fonds en Euros 2017

However there has been further news: There are new reporting requirements on life assurers from the beginning of 2017. Now they will be obliged to provide to the state details of all policies with values above €7,500. This is allegedly for anti-money laundering purposes.

Insurers have been urged to lower the returns on these funds. As they haven’t gone far enough, the government have passed an amendment to Article 21A of the “SAPIN “law 2”. This has passed almost unnoticed in the media. It was presented just before the summer holidays in 2016. The ‘Constitutional Council’ will decide shortly whether this comes into effect.

The assumption is that it will be approved. The ‘Financial Stability Board’ will have the power to suspend, delay or limit temporarily for all or part of the portfolio the ability to make withdrawals or switch funds. Certainly the ‘fond en euros’ will come under the spotlight in this area. This maybe to ensure the financial stability of insurers going forward and most Assurance Vie providers offer a guarantee under European legislation for the first €70,000 of any Assurance Vie policy.

What to Do??

Certainly for our clients we have been systematically moving their funds out of the ‘fonds en euros’ and finding a similarly risk weighted fund. Certainly taking funds out of an Assurance Vie may create a tax charge.

Companies who offer ‘Assurance Vie’ policies outside of France don’t appear to be affected by this new French legislation. They also have multi currency options and a much broader choice of funds as well as an ability to alter tax jurisdictions with most European countries rather than having to close the investment. This type of policy still remains an attractive investment with huge tax and inheritance advantages.

To find out how you can reduce your tax bill contact jennie@bgwealthmanagement.netwww.bgwealth.eu

The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.

Tags: ,

Related Articles

Three reasons to seek financial advice when you’re an expat in France

Whether you’re already in France or you’re considering a move to France, it’s natural to have worries and fears about your financial future. Research shows that you’re likely to gain peace of mind and to be significantly better off if you get professional advice about your long-term future financial goals and requirements. A study by […]

Continue Reading

When it comes to income tax in France good planning is essential

Talk of income tax in France is something that can cause the jitters. But if you’re thinking about buying a second home in France, or making a complete move, the advantages from a tax perspective may represent great value. Jennie Poate, Head of Operations, France for Beacon Global Wealth Management explains… Income tax in France There […]

Continue Reading

I’m an expat in France with a UK pension so where do I pay tax?

When it comes to paying tax, for UK expats in France, it can sometimes seem like a complicated process with rules for this and that. We answer some of the most common questions that UK expats ask when it comes to tax in France. Question: I moved to France last year. I have a teacher’s pension […]

Continue Reading

How to limit your inheritance liabilities in France by gifting

When it comes to managing your finances in France, knowing what the rules are is essential.  From tax to pensions, savings and investments and more, we look at the most common questions asked by expats. The process of gifting in France Question: I want to make a gift of cash of £20,000 to my son […]

Continue Reading

How to handle the annual tax return requirements in France

The annual tax return needs to be completed by May in France. Financial expert Jennie Poate explains how to complete the paperwork and what’s required, leaving you to enjoy the good life in France. Basic tax returns for expats in France Many British expats who are resident in France will have some income derived from […]

Continue Reading

Subscribe

If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS Feed

Comments are closed.

Top