Assurance Vie for Expats in France
If you are an expat in France then it is likely you have come across the concept of an Assurance Vie. They are available through various institutions and geared towards retirement for lump sum investments.
What is an Assurance Vie?
An Assurance Vie allows you to invest over the long term (8 years or more) to enable you to take the income or profits from the investment at a preferential rate in retirement. (approx 25%) The Assurance Vie is what the British would refer to as a Life Insurance Bond. The bond enables you to hold many different forms of investment within its structure depending on your specific requirements as well as multicurrency.
Key Factors / Benefits of an Assurance Vie for Expats in France
- Between years 4-8 of your policy, your total capital gains due on any growth are reduced to just 15%. After year 8 your total capital gains on any growth are subject to just 7.5% tax. This is compared to the normal capital gains (of up to 35%) and social charges (15.5%) applied to any normal portfolio growth (non Assurance VIE investments).
- After the 8 year period, you are entitled to €4,600 pa of tax-deductible income from your Assurance VIE each year.
- Over the course of 10 years retirement, this equates to €46,000 of tax free income.
- Additionally, after 8 years, in the event of your death you can pass €152,500 to each of your named beneficiaries free of French inheritance tax.
- The provider looks after tax reporting and withholding taxes
- The Assurance Vie would also benefit from gross roll-up which allows your capital to grow in fully tax-efficient manner and thus improve your long-term returns
- You can access your monies at any point during the initial 8 years with no exit penalties.
Who is Assurance Vies good for?
Due to the above mentioned benefits Assurance Vies are a great investment product for anyone looking to retire in France. They have been specifically created for the French market and there is no better product combining tax efficiency, potential for capital growth and death benefits regarding InheritanceTax.
Difference between Harrison Brook and other advisers
Whilst the concept of utilising an Assurance Vie for an expat in France is a no brainer, the type of product chosen and the advice you are to receive on your investments is not so clear cut. You can get an Assurance Vie from your bank, directly via an insurance company or through your financial adviser. The key area to be aware of is the charging structure of the provider. Most will work from a commission-based model, this means you will be charged between 1 – 1.5% per annum for an 8 year period which is paid either directly to the bank or the adviser. This naturally creates numerous problems. Firstly there is the obvious issue of conflict of interest, if I am being paid to recommend a product to you, this directly conflicts with whether it is the best product or not.
Secondly, any money paid out will need to be made back, resulting in high running costs and exit penalties. So if you suddenly decide you want your own money back it can cost up to 12% to access it. Lastly is the limited on panel fund range, in simple terms, if you are getting an Assurance Vie from a large bank, often they will only have their own fund range available. Not only may these payout commission as well and as such have to exit penalties but with everyone’s position and requirements unique to themselves, less choice is never a positive thing!
Harrison Brook work differently, born out of a desire for transparent, impartial fee-based advice, we pride ourselves on:
- No Commission – We will never take commission from a provider, fund or any other party. As such you will be charged a one off fully transparent fee and an ongoing management charge for managing your investments in line with your requirements. We work on a “hand by hand” ideology, with our fees directly related to the performance of your investment on an ongoing basis and there are never any exit penalties for accessing your monies at any time.
- Fully Independent – We are not “tied” to any company or provider and work on a fully independent basis. What this means for you is that we will search the market place for the best product that suits your specific needs. We do have 4 providers we only work with and find a “best fit”.
- French Specialists – Based in the South of France we are specialists in the French Investment Product market. We have extensive knowledge regarding both Assurance Vie providers and the best performing funds within the investment structure. Through our network, we are able to get preferential rates from both providers and funds and pass these savings directly over to you.
Get in touch
For further information on the best Assurance Vie for expats in France contact us today.