Tax and estate planning figure prominently in the list of priorities of many financially secure expatriate residents of France. The Napoleonic code which forms the base of succession law in France produces a fiscal inheritance environment which is totally alien to most of us. We cherish our right to leave our estate to whomsoever we please, and are not happy to discover that in France our choice is strictly regulated. Worse still, our spouses do not rank highly in the portio legitima in French law.

Real estate and capital are the two major concerns, and we should be relieved to learn that there are mechanisms available to us in both areas to help alleviate our worries. This article concentrates on the preservation and development of capital, and explains the huge benefits offered by the French life assurance product, Assurance Vie.

There are three major taxes that threaten the unprotected capital of even the moderately well-off expatriate in France. Income tax; wealth tax, and inheritance tax are all queuing up for a slice of our capital, and if we do not take steps to prevent it they can make serious inroads into our net worth. Ever resourceful in terms of personal finance, the French have over the decades evolved and streamlined a product that is capable of both protecting accumulated wealth and promoting its development for the future enjoyment of the investor’s heirs. Effectively an investment within a life assurance wrapper, this product has been so successful that today there are over €1.4 trillion invested in Assurance Vie policies. Over 22 million individuals or couples have either invested lump sums or save regularly using this instrument.

To understand the success of this product we need to look no further than the tax concessions that it offers. Neither French capital gains tax nor income tax applies whilst the funds remain inside the policy and no withdrawals are made.

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