Income tax

• Social security contributions
  With contracts in Euros, they are applied annualy when gains are attributed.
  For unit-linked policies, social security contributions are only deducted when withdrawals are made, when it is possible to calculate the actual capital gains.
  This means that not only do they not reduce the annual performance but that this non-deducted sum generates interest. Furthermore, in terms of inheritance, it is important to note that social security contributions are not taken from the capital paid to the beneficiary or beneficiaries.
  

  NB: a reform is currently being prepared that will enable contracts in euros (mono-segment) to be turned into multi-segment contracts. This may affect the calculation of social security contributions.
  

• Income tax
  The tax is relatively moderate because of the way the portion of taxable earnings is calculated.
  

  In the event of a buyback, only the portion of gains in the amount bought back is liable for income tax. This amount is either re-integrated in the calculation of income tax (taxed according to the policyholder’s incremental tax bracket) or taxed at source according to a scaled rate.
  The latter is:
  - 35% if the buyback occurs before the 4th year ;
  - 15% if the buyback occurs between the 4th and the 8th year,
  - 7.5% if the buyback occurs after the 8th year and when the annual amount bought back exceeds €9,200 for a couple paying tax jointly and €4,600 for an individual.
  

Inheritance

Under current legislation, two types of tax can be applied, either separately or together, depending on the age of the insured, for policies taken out to date :

• For policyholders aged under 70 when the policy was subscribed and when additional payments were made, each beneficiary named in the event of death can receive up to €152,500 tax free.

  Sums above this amount are taxed at 20% under current legislation. Note that this allowance of €152,500 applies to each beneficiary following the death of a single insured.
  Article 990 I of the French General Tax Code
  

• For premiums paid after the insured’s 70th birthday, only the fraction of premiums over €30,500 is liable to inheritance tax, depending on the relationship between the insured and the beneficiary in case of death. In this way, capital gains are exempt from inheritance tax.
  Article 757 B of the General Tax Code