Assurance vie: France's favourite investment — and its cleverest succession tool
Sooner or later, at a lunch or a dinner in France, someone will lean in and tell you that assurance vie is the elegant way the French quietly sidestep inheritance tax. They're half right — and the half they leave out is the half that matters. Assurance vie is genuinely one of the most useful things a British household in France can hold, both as a place to grow money and as a way to steer it to the people you choose when you die. But it isn't a loophole, it isn't magic, and for a Briton there's one catch that can turn it from clever to costly if you get the timing wrong. Here's the honest version.
The short version
- It's an investment wrapper, not life cover. Assurance vie is a tax-favoured envelope holding a capital-protected fund (fonds euros) or market investments (unités de compte). You can pay in and withdraw whenever you like.
- On death it passes outside your estate to the beneficiaries you name — sidestepping French succession rules, including forced heirship.
- Before age 70: €152,500 tax-free per beneficiary (article 990 I), then 20% up to €700,000 and 31.25% beyond. A spouse or PACS partner beneficiary pays nothing.
- After age 70: only €30,500, shared across all beneficiaries (article 757 B) — but all the investment growth is exempt. The big allowance rewards paying in while you're under 70.
- Its real power is the 60% trap. It's how an unmarried partner or stepchild can receive real money without the punitive 60% inheritance tax.
- The British catch: the UK doesn't recognise the wrapper. While you're still UK tax-resident it can be taxed harshly — it generally only shines once France is your tax home.
Assurance vie is the most French of financial products, and one of the first things a curious Briton hears about after moving over — usually described, with a knowing look, as the way "everyone" shelters their money. That reputation is earned: it holds well over a trillion euros of French savings and it turns up in almost every serious conversation about passing on wealth. But its name is a trap for English speakers. It is not "life insurance" in the British sense — nobody's betting on when you die — and it is not a savings account either. Think of it instead as a tax-privileged box you put investments into, with two special powers that grow more valuable the longer you own it: gentler tax on the growth, and a remarkable ability to pass money to whomever you name, largely outside the usual inheritance rules. Let's take those one at a time, calmly, and then get to the catch nobody at the lunch table mentions.
What an assurance vie actually is
Open one with a bank, an insurer or an online provider, and you're really opening a wrapper that can hold two kinds of money. The fonds en euros is the cautious heart of it: your capital is protected, it can't fall, and it earns a modest annual return. The unités de compte are the growth side: funds invested in shares, bonds or property, which can rise further but can also fall. Most people hold a blend, dialling the risk to suit their age and nerve. Crucially, your money isn't locked away — the "8-year" milestone you'll hear about is a tax threshold, not a prison sentence. You can withdraw whenever you want; it's simply that the tax on any growth gets kinder once the contract is eight years old.
During your lifetimeHow the growth is taxed while you hold it
You're only taxed on the growth you withdraw, never on your own capital coming back out. Before eight years, gains are taxed under the flat tax (prélèvement forfaitaire unique) of 30% — 12.8% income tax plus 17.2% social charges. After eight years two things improve: you get an annual allowance of €4,600 of gains tax-free (€9,200 for a couple), and the income-tax slice on gains from the first €150,000 of premiums drops from 12.8% to 7.5%. The 17.2% social charges apply throughout. In plain terms: leave it to mature, and a chunk of your growth each year comes out with little or no tax.
The clever part: passing it on
This is what the lunch-table chatter is really about. When you die, the money in an assurance vie does not fall into your estate to be divided up under French succession law. Instead it goes straight to the people you named in the contract's clause bénéficiaire — the beneficiary clause — and it does so largely outside the rules that otherwise reserve a share for your children and hammer anyone who isn't close family. That single feature is why it matters so much for the British households France treats most harshly. But the tax treatment splits sharply on one date: your 70th birthday.
The big allowancePremiums before 70 — €152,500 each, tax-free
Money paid in before your 70th birthday falls under article 990 I — the left-hand column above. The quiet power is in three words: per named beneficiary. The €152,500 isn't shared across your estate; each person you name gets their own, so naming three shelters over €450,000 between them. That's the headline everyone means when they call assurance vie a succession tool — and the reason advisers nudge you to fund the contract well before 70.
After 70Premiums after 70 — smaller, shared, but the growth is free
Premiums paid after 70 fall under article 757 B and are treated far less generously: there's a single €30,500 allowance shared across all your beneficiaries, and anything above it is folded back into your estate and taxed at the normal succession rate for each person's relationship to you. The consolation is real, though: all the investment growth on those post-70 premiums is entirely exempt. So it's still worth having after 70 — just don't expect the giant per-head allowance. Existing contracts keep their pre-70 premiums under the good regime; it's the timing of each payment that decides which rule applies.
The whole gameThe beneficiary clause — get this wrong and none of it works
Everything above hangs on one paragraph: the clause bénéficiaire, where you name who gets the money. A vague or outdated clause is the single commonest way assurance vie goes wrong — an ex-spouse left on it, a stepchild forgotten, or wording so loose the insurer defaults the money back into your estate (losing the whole advantage). It can be as specific as you like, split by percentages, and it can be changed while you live. This is the part most worth a professional eye, because it's where good intentions quietly fail.
Where it really earns its keep: the 60% trap
To see why assurance vie matters so much for British families, remember how brutally French succession tax treats people who aren't close blood relatives. An unmarried partner of thirty years, or a stepchild you never formally adopted, is taxed as a stranger: a token allowance and then 60% on the rest. Leave your home to a long-term partner you never married or PACS'd, and they can be forced to sell it simply to pay the tax on inheriting it. Assurance vie is the well-worn escape hatch: name that partner or stepchild as beneficiary, fund it before 70, and the money reaches them outside the estate — clear of the 60% wrecking ball. For the households France treats worst, it isn't a nicety; it's the difference between keeping the house and losing it.
The honest bit
Powerful, yes. A loophole, no.
Here's what the lunch-party version leaves out. Spouses and PACS partners already pay zero French inheritance tax, and each child already gets €100,000 tax-free — so for a conventional married-with-children family, the headline "avoid inheritance tax" saving is smaller than it sounds. Assurance vie is a mainstream, entirely legal, government-designed product that tens of millions of French people hold; it isn't a dodge and it won't make a large estate disappear. Its genuine power is narrower and more precise: getting money to the people France taxes hardest (unmarried partners, stepchildren), sheltering larger sums, and giving you real control over who receives what and when. Describe it as "tax avoidance" and you'll both oversell it and misunderstand it.
The catch nobody mentions: the UK doesn't see it your way
This is the part a Briton must not skip. Everything above is French tax treatment, and it applies cleanly once France is your tax home. But if you are still UK tax-resident — recently arrived, splitting your year, or not yet through the door — His Majesty's Revenue & Customs does not recognise the French wrapper's privileges at all. To the UK, an assurance vie is a foreign life-insurance bond, and depending on how it's invested it can be caught by the UK's "personal portfolio bond" rules, which apply an annual deemed charge whether or not you've taken anything out. In the worst case you'd be taxed in the UK on growth you never saw, with none of the French breaks to offset it. The practical rule of thumb: an assurance vie generally only makes sense once you are firmly French tax-resident, and the timing of when you open it and when you pay in deserves proper cross-border advice. Opened at the right moment it's excellent; opened a year too early it can be a slow, expensive mistake.
Not all assurance vie contracts are equal
Fees vary enormously — some legacy bank contracts quietly skim 3–4% a year, while lean online ones charge a fraction of that, and over decades that gap dwarfs any tax saving. The fund choice, the flexibility of the beneficiary clause and whether the provider is used to cross-border British clients all matter too. It's worth comparing before you commit, and worth having the beneficiary clause drafted properly rather than ticking a default box.
Get help choosing & setting it up →Pimpernel may earn a small commission if you use a partner we introduce — it never changes what we recommend.
Getting it right
None of this is a do-it-yourself job, and the interactions — French rules, UK rules, your age, your family, where you're resident — are exactly the sort of tangle where a good cross-border adviser or notaireA state-appointed legal officer who handles property sales and estates. earns their fee many times over. The good news is that the moves are well understood: establish French tax residence first, open the contract and fund it meaningfully before 70, write the beneficiary clause with care, and dovetail it with your French will and any Brussels IV election so the pieces pull together rather than against each other. Done in good time, while you're well and unhurried, it's one of the kindest and most effective things you can arrange for the people you'll leave behind.
Unsure whether — or when — assurance vie is right for you?
Your age, your beneficiaries and your tax residence change the answer completely, and the British timing catch is easy to get wrong. Pimpernel can map your situation and connect you with a cross-border adviser who knows both systems, so you open the right contract at the right moment — not a year too soon.
The money admin that quietly compounds
Assurance vie, a French will, a Brussels IV election, the before-70 window — none feels urgent until it suddenly is, and by then the easy moment has passed. Pimpernel Life keeps the money-and-succession jobs on your radar with the guides and the prompts to get them sorted while they're still simple.
- Succession & will prompts
- The tax & property wizards
- Cross-border adviser referrals
- Every Library guide, in depth
The bigger succession picture
Assurance vie is one tool among several. Our succession guide covers forced heirship, the Brussels IV election, the 2021 law change and the 60% trap in full — the ground this sits within.
Read: French wills & succession →See the numbers on your own estate
Our inheritance calculator shows the raw tax exposure by relationship — a useful reality check before you decide how much an assurance vie could shelter.
Try the inheritance calculator →Straight from the source
The French rules for assurance vie and succession are set out on service-public.fr and the tax side on impots.gouv.fr; the UK treatment of foreign bonds is in HMRC's policyholder taxation manual.
The figures, allowances and rules described here — the €152,500 and €30,500 allowances, the 20% / 31.25% and 7.5% / 30% rates, the 17.2% social charges and the eight-year and age-70 thresholds — are current for 2026 and drawn from official French sources, with the UK treatment drawn from HMRC guidance. Assurance vie and cross-border taxation are genuinely complex and depend entirely on your age, your beneficiaries, how a contract is invested and where you are tax-resident. Pimpernel are not financial advisers, notaires or tax advisers. This is general information, not financial, legal or tax advice — take qualified cross-border advice on your own situation before opening a contract or naming beneficiaries.