Articles

Expat financial advice from the experts

Assurance Vie – everything you need to know

assurance vie

Take advantage of one of Europes most tax effective investment plans

Moving abroad holds many exciting opportunities and adventures. It becomes even better when you’re money can grow free of tax and your beneficiaries can benefit from favourable inheritance perks.

What is Assurance Vie?

Assurance Vie allows the policyholder to benefits from a tax-free income, favourable legal benefits and the ability to hold investments. The direct translation is ‘Life Insurance’ and that’s exactly what it is, however it comes with various benefits you wouldn’t find in a standard policy. 

Tax Benefits

So, what are these tax benefits? Primarily, all funds held in an Assurance Vie are free from Income and Capital Gains tax. Only withdrawals will be taxed and this taxation will not be imposed on your original investment; just the capital gain. The tax rates are equally beneficial and reduce in accordance with loyalty. The tax rates for Assurance Vie withdrawals are:

  • Years 1-4 = 35%
  • Years 4-8 = 15%

Update: The gain on amounts added after 27/9/17 is taxed at 12.8% for policies less than 8 years. Any gains from before this date will be taxed according to the above rates.

  • Years 8+ = 7.5%  (tax free up to €4600, or €9200 for couples).

Update: If the policy or policies have a capital value less than €150,000 the gain is taxed at 7.5%. If the capital value is more than €150,000 the proportion of the gain added after 27/9/17 will be taxed at 12.8%, the rest will continue to be taxed at 7.5%.

The tax-free allowance on Assurance Vie remains as above.

If you have more than one Assurance Vie policy the values will be added together in calculating the tax payable.

Whether less than eight years or more than eight years all policies are subject to Social Charges of 17.2% (up from 15.5%). 

Inheritance Benefits

Assurance Vie equally holds benefits upon passing. Once again, taxation does not apply to an Assurance Vie and, as such, beneficiaries of the policyholder can receive up to €152,500 without paying inheritance tax. Only 20% is payable on the remaining €700,000 and 31.2% thereafter.

Even once you’ve passed you can remain in control of your finances. The policyholder can set the age the beneficiaries can use the money freely and request that money left to the beneficiaries is invested in an Assurance Vie.

Investments

Taking out an Assurance Vie policy will see your premiums being invested in mutual funds and/or shares. And the best part, your money is accessible throughout the life of the bond. Therefore, whether you want a monthly allowance or to take out a lump sum for spending on a rainy day, Assurance Vie will accommodate for this.

How Can I Get An Assurance Vie?

You can easily find an Assurance Vie in most high street banks. However, these will likely give you a small range of funds to invest in, with a high charge, opaque charging structure and a manager who doesn’t truly care about the growth of your wealth.

However… using Harrison Brook for your Assurance Vie policy will give you access to thousands of market-leading funds at a low cost. With the added benefit of a fee-based adviser paying constant attention to your wealth, ensuring strong growth and maximum gains. Transparency being at the core of our business model means you’ll know and understand every cost involved so you’ll have peace of mind that your wealth is growing in real terms.

For advice and more information get in contact with Harrison Brook today.

All figures are accurate and up-to-date as per the time of publishing.

Leave a Reply

Your email address will not be published. Required fields are marked *

Leave a Reply

Your email address will not be published. Required fields are marked *