The tax regime for life insurance depends on the date of subscription, but also on the outcome of the contract: surrender of the contract, annuity or death. Indeed, it is not the same right that applies depending on whether it is the holder of the contract who receives the fruits of his savings (in the event of redemption or annuity) or a beneficiary of the subscriber.
In the event of redemption, that is to say in the event of a capital exit by the subscriber from the contract, the latter will receive his capital plus income (interest or capital gains). We are in a system of taxation of financial products. Income is taxed (not the initial capital). But the tax system is different depending on the date of subscription of the contract.
For all contracts taken out before September 26, 1997, income (interest and capital gains) is exempt from tax until January 1, 1998. Taxation of income begins for interest received after this date.
For contracts taken out after September 26, 1997, the rate depends on the age of the contract:
– for contracts of less than 4 years, the choice is left between the integration of profits Life insurance in the taxable income and the flat-rate deduction in discharge at the rate of 35%;
– for income between 4 and 8 years, the choice is made between inclusion in taxable income and the flat rate deduction of 15%;
– for contracts of more than 8 years, the choice is to be made between the integration of profits in the taxable income after deduction of €4,600 (or €9,200 for a couple) and the flat-rate deduction at the rate of 7, 5% (this levy entitles you to a tax credit of the same amount that can be deducted from your taxes, within the limit of a basic tax base of €4,600 or €9,200 for a couple).
Annuity out
In this case, the contract subscriber receives an amount predefined in the contract each year. This annuity will be integrated into the taxable income, according to a fraction which varies according to the age of the annuitant at the time of the exit:
In the event of the death of the holder, the applicable tax regime depends on the date of subscription of the contract, the age of the subscriber and the amount of the sums received.
For contracts taken out since August 22, 2007, sums received in the context of the estate are exempt from taxes and social charges if the beneficiary is the surviving spouse (and under certain conditions for brothers or sisters).
For contracts taken out prior to this date or if the beneficiaries are not the spouse or brothers and sisters, the subscriber’s age must be taken into account.
– If the latter was under 70 when the contributions were paid, the beneficiaries of life insurance are exempt from tax up to €152,500, then taxed (flat-rate deduction of 20%). If there are several designated beneficiaries, each benefits from this exemption.
– If the insured was over 70 when the last contributions were made, the beneficiaries are exempt up to €30,500. Beyond that, inheritance rights apply.