Capitalisation contract

A capitalisation contract is a medium- or long-term savings product that is often overlooked but can be very attractive as part of a wealth management strategy. Similar in operation to life insurance, it is aimed at both individuals and legal entities and combines flexible management, tax advantages and optimised wealth transfer.

It is generally taken out for a term of 8 to 30 years (with the possibility of extension) with an insurance company and provides access to various investment vehicles: secure euro funds, unit-linked funds (UCITS, SCPIs, OPCIs, structured funds, etc.) and diversified funds.

✅ The advantages of a capitalisation contract

Economically and legally

• Secure your capital with euro funds offering capital guarantees.

• Total flexibility: partial surrenders and advances are possible without immediate taxation.

• Additional income: option of scheduled withdrawals or conversion into a life annuity.

• Easy transfer: the policy can be transferred during the policyholder's lifetime (full ownership or dismemberment) while retaining its seniority.

• Open to legal entities (companies, associations), unlike life insurance.

In terms of taxation

• No taxation during the capitalisation phase (nor on arbitrage transactions).

• Reduced taxation on gains:

• Flat tax rate of 12.8% in the event of surrender before 8 years.

• After 8 years: reduced rate of 7.5% after an annual allowance of €4,600 (single) or €9,200 (couple).

• Retention of seniority: in the event of a gift or inheritance, the beneficiary retains the tax seniority of the contract.

• Clearance of unrealised capital gains in the event of a gift, which optimises the transfer.

⚠️ The disadvantages you should be aware of

• Capital losses cannot be offset outside the contract.

• Social security contributions (17.2%) are deducted annually from euro-denominated funds.

• Transfers are subject to gift or inheritance tax (unlike life insurance, which benefits from a specific regime).

• In the event of a life annuity payout, part of the sums remain taxable.

• After eight years, a portion of the gains may be taxed at 12.8% if the total premiums paid exceed €150,000.

How does a capitalisation contract work? ⚙️

• No payment restrictions: no minimum or maximum amounts.

• A wide range of investment options: from the most secure (euro funds) to the most dynamic (SCPI, shares via unit-linked funds).

• Savings availability: partial or total redemptions possible at any time.

• Flexible management: free, profiled or discretionary.

• Adaptable term: often set between 8 and 30 years, with automatic renewal.

  In practice, the contract is a real Swiss Army knife for your assets: it allows you to capitalise with peace of mind, generate income on demand and prepare for an optimised transfer.

🧭 Strategies for use

1. Build up long-term capital: gradual investment with diversification of vehicles.

2. Generate additional income: scheduled redemptions or life annuity.

3. Optimise wealth transfer: donation of full ownership or dismemberment, with preservation of tax seniority.

4. Investing company cash: widely used by legal entities to put their cash surpluses to work with attractive tax treatment.

📌 Key points to remember

• Medium- and long-term savings product, similar to life insurance.

• Tax advantages, especially after 8 years.

• Very flexible: no ceiling, no payment constraints.

• Effective tool for inheritance (donation/disposal).

• Ideal for diversifying your assets, preparing for retirement or optimising cash flow.

  👉 The capitalisation contract is a discreet but powerful tool, perfectly suited to investors seeking to combine returns, flexibility and asset strategy.

  To download the full document: