What taxation for life insurance?

One of the major advantages of life insurance lies in its attractive taxation, especially when one plans to invest their capital over the long term. Gains (interest on euro funds and capital gains on units of account) are subject to tax only at the time of withdrawals (redemptions).

Before 8 years: The earnings are subject either to income tax, or to the single flat tax (PFU or 'flat tax') of 30%, including 12.8% income tax and 17.2% social contributions.

After 8 years: Life insurance becomes particularly interesting. You benefit from an annual allowance of €4,600 for a single person and €9,200 for a couple on the earnings withdrawn. Beyond this allowance, the reduced PFU or progressive scale taxation applies, according to the choice of the subscriber.

Concrete example:

Paul, single, invested 50,000 € on a multisupport contract 10 years ago. His capital increased to 70,000 €, or 20,000 € in gains. He withdraws €10,000 this year. Thanks to the allowance of €4,600, he only pays taxes on €5,400, which significantly reduces the tax burden.

Details on partial and total withdrawals:

During a partial withdrawal, only the portion of the winnings corresponding to the amount withdrawn is taxable.

In case of a total redemption, the calculation is made on the totality of the accumulated gains.

Transmission and taxation:

Another advantage of life insurance is the advantageous taxation in case of succession. Sums paid before the age of 70 benefit from an allowance of €152,500 per beneficiary and earnings beyond that are taxed at 20% up to €700,000, then 31.25% beyond that.

Tip:

To optimize taxation, it may be interesting to schedule partial repurchases after 8 years, rather than waiting for an inheritance or withdrawing all at once. This allows you to take advantage of the annual allowance and avoid excessive taxation.