Assurance vie

This is a popular kind of medium to long-term investment in France. On taking out gains there are options for tax and only the profit is assessed and not the part related to capital paid in. Social charges (usually 17.2%) are added. 

The rules formerly in place were as follows:

• Held less than four years – income tax as for ordinary income or at a fixed rate of 35% (option selected at time of taking out the money)

• Held for four to eight years – taxed according to the ordinary tax bands or at a fixed rate of 15%

• More than eight years – taxed after an allowance of €4,600 (€9,200 for a couple) according to ordinary income or at a fixed 7.5%.

These rules continue to apply to gains linked to sums paid into AV policies before September 27, 2017.

New rules apply to profits relating to money invested since then, however the allowance continues to apply and is renewed annually, combined for all profits from AVs held more than eight years.

Under the new rules the option of tax by the ordinary bands remains (if selected for all investment income) but for withdrawals before eight years the alternative is the 30% PFU ‘flat tax’ rate (this includes social charges).

For withdrawals after eight years a low 7.5% rate (plus charges) applies (or the ordinary bands) unless a person has paid €150,000 or more into the AVs that they hold, in which case ordinary PFU flat tax is applied to the part of the gains proportional to investments since September 27, 2017 above €150,000.

Your bank or other provider will calculate this but if you are weighing up options you may wish to take professional advice.

The official service public website also offers AV tax information specific to your situation.