You may be wondering what is an Assurance Vie? If you’re a British expat who has recently settled in France then you may find yourself wondering what the best options are for investing. Now that you’re no longer resident in the UK, you can’t use your ISA – so what is the next best thing? 

An Assurance Vie offers a flexible way of investing that mirrors the tax benefits of an ISA and much more. 

What is an Assurance Vie exactly? How does it work? 

An Assurance Vie is simply a tax-efficient French life insurance bond that can be used to hold multiple investments. These investments can then be tailored to fit your medium to long-term financial goals. 

It’s a brilliant way of growing your savings whilst living abroad that offers policyholders both lucrative capital growth and tax-efficiency. A key thing to consider is that it is designed for long-term investors. After an 8-year period the tax due on the investments is significantly reduced. 

What are the benefits of opening an Assurance Vie?

• Tax-free growth – leave your savings invested where they can grow without any gains needing to be declared until you start withdrawing
• Unlimited and guaranteed protection of your savings
• Available in multiple currencies so you can avoid volatile exchange rates
• No exit penalties
• Portability – if your plans change and you decide to move country then you can port your savings over to another provider
• Straightforward admin process with paperwork available in English or French

Who can open an Assurance Vie?

Anyone can open an Assurance Vie – it just depends on what your priorities are. You could walk into a French high street bank right now and open one. However, you would not be able to get any of your paperwork in English, and your investments would be restricted to funds offered by the bank. French banks also work on a commission-basis. This raises the issue of whether the investments being held are appropriate for you in the first place. And usually means very high fees. 

Opening an international Assurance Vie with Harrison Brook means you can avoid unnecessary hassle and have a policy that, ultimately, puts you in the driver’s seat. Being able to control your investments is key when planning for your future, and ensuring you can achieve your goals in retirement.

How is it taxed?

Since 2017 a 30% rate of tax is imposed on all withdrawals for contracts between 0 – 8 years. This is composed of 17.2% in social charges and 12.8% in income tax. Although it is entirely possible to make withdrawals before the 8-year point – it is only after this that an Assurance Vie becomes much more tax-efficient. The rate of income tax drops from 12.8% down to 7.5% – making for a total overall charge of 24.7%.

Furthermore, you have a tax-free allowance for withdrawals. A couple who have taken out an Assurance Vie can get €9,200 per year tax-free (€4,600 each) after the initial 8 year period – over ten years this can add up to €46,000 of tax-free income. You can also opt for the capital gain to be added to your income for the tax year instead and be taxed according to your marginal rate.

In terms of inheritance tax, Assurance Vie policyholders have access to significant benefits when wanting to pass down their wealth. Policies taken out before your 70th birthday mean you can pass up to €152,500 to each of your beneficiaries.

Summary

At Harrison Brook we are fee-based rather than commission-based, so you can be assured of honest and genuine advice that has your interests at heart. Our experienced team of advisers is made up of expats, so we know firsthand the hurdles that need to be overcome when settling in a new country. 

If you are interested in exploring opening an Assurance Vie then you can get in touch with us.