Wealth Planning and Life Assurance via Approved Luxembourg schemes
Benefits Summary for French Tax Residents
French resident holders of an approved Luxembourg life assurance policy enjoy particular benefits when planning their wealth.
French resident clients are entitled to a range of benefits when using a Luxembourg International Assurance life assurance policy, including:
- Deferred tax on capitalised income over the policy lifetime.
- In case of withdrawal or surrender, income taxation at the usual progressive tax rate or specific tax rate (Prélèvement forfaitaire libératoire – “PFL”). Election for the PFL at the discretion of the policyholder.
- Capitalised income excluded from the income basis for the wealth tax ceiling calculation.
- Death capital outside the estate of the policyholder.
- Freedom to appoint and change beneficiaries who are not legal heirs at any time, and freedom to determine the amounts available to each beneficiary.
- Regulatory protection of the assets underlying the policy (“Triangle of security”).
- Flexibility and diversification of the assets underlying the policy (CAA rules).
- Possibility to manage multiple currencies.
- Possibility to consolidate one’s wealth by including quoted or unquoted assets into the policy.
- Possibility to pledge the policy as collateral.
- Possibility to appoint and change the custodian bank, as well as the investment manager.
- Protection of the life assurance policy from a third party seizure (tax liability excluded).
- Portability of the life insurance policy under certain conditions.
- Net wealth tax exemption for 5 years following a return to France under certain conditions.
- Simplification of tax reporting.
In order to ensure full recognition as a compliant life assurance policy and for clients to enjoy the benefits provided, a number of conditions should always be met, including:
- No self-management by the policyholder of the assets underlying the policy.
- Life cover component.
- The policyholder must declare the life assurance policy to the French Tax Authorities.