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- This topic has 25 replies, 7 voices, and was last updated 6 years, 9 months ago by tigre.
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In the Uk, I invested in property for more years than I care to remember, but here in France I do not think the investment opportunities are worth the risks, as returns are low and not too sure it is worthwhile, I invest in p2p platforms but opportunities for investments are falling, have a few Lloyd’s shares which whilst not losing money the returns are low, would like to hear how other’s invest their hard earned cash.
Anonymous19th June 2017 at 8:43 am #163430And I think it needs to be untouched for 8 years in the Assurance Vie to get any benefit doesn’t it PJ?
Whilst on this subject does anyone have any recommendations as far as banks are concerned? We’re with Banque Populaire Ouest and, as we’ll be releasing some capital when our house sale is finalised, we’re thinking of perhaps ensuring we have the best option of bank in which to put the money. We’re not particularly thinking of investment, we want instant access to it, although of course if we can put a little of it somewhere to earn us a bit more that would be good.
We’ve never been investers and have no idea of financial wheeling and dealing so any advice would be welcomed folks.
And I think it needs to be untouched for 8 years in the Assurance Vie to get any benefit doesn’t it PJ? Whilst on this subject does anyone have any recommendations as far as banks are concerned? We’re with Banque Populaire Ouest and, as we’ll be releasing some capital when our house sale is finalised, we’re thinking of perhaps ensuring we have the best option of bank in which to put the money. We’re not particularly thinking of investment, we want instant access to it, although of course if we can put a little of it somewhere to earn us a bit more that would be good. We’ve never been investers and have no idea of financial wheeling and dealing so any advice would be welcomed folks.
No, not quite like that fc. I take an income from my Ass Vies and only pay tax on the profits made. The 8 year thing is something else, go to a bank and ask for advice. I use the Legal & General France (Gresham) which has been excellent over the past 10 years or so. The policies/investment plans have changed over the years depending on the markets.
Anonymous24th June 2017 at 12:57 pm #166635The eight year point of Assurance Vie is very important to anyone taking out an AV
I hope this will help anyone in investing but to be basically honest, only risky, or semi risky, or even slightly risky investments at the moment will offer anything like a decent return…………………or loss! No one knows what precisely Macron will do but up until 2016 this was valid.The below article is taken from the website Experts for Expats.
It’s a long read so if you are not thinking of an investment, please be my guest to just move on.
For people living in France, assurance vie is one of the most important financial products they should consider. But what is Assurance Vie?
Saving tax and effective estate planning are on the main list of concerns of many expatriate residents of France.
The Napoleonic code dictating succession law to French residents can go against peoples actual wishes. To many deciding on whom you leave your estate to is a fundamental choice of life and so having succession laws dictated to them can seem a bizarre concept.
It is not always possible to give the perfect inheritance solution to every given estate as for example property can in particular be difficult to distribute as you would have hoped. Fortunately, there are some financial options available, particularly for private investments, that can go some way in helping to reduce future tax bills and in the distribution of your estates when you die.
Tax benefits of assurance vie
The first point to note is that funds remaining within an assurance vie grow free of French income and capital gains tax meaning that your funds are able to roll up without having concerns of paying these taxes on an annual basis. There is no limit on the amount that can be invested this way. Also any withdrawal from an assurance vie for example investment income on which to live is taxed in an effective and fair manner.The authorities will look at any withdrawal and decide how much of any withdrawal was return of the original capital you invested and how much was actual taxable growth again reducing future tax liabilities. If you were to simply leave the money in the bank, you would be taxed annually on any interest made whether you take it out of the bank as income or leave it there to grow.
Once the taxable element of your withdrawal has been decided over the first eight years of the plan there is a reducing rate of taxation applicable to this withdrawal at source. Years 1 to 4 are at a rate of 35%, years 4 to 8 at 15% and years 8 and beyond only 7.5%. In the early years it may well be your actual marginal rate of tax is lower than the withheld rate. However, it is possible to be paid gross and add the withdrawn amount into your tax return so you pay your natural rate. If the withheld rate of tax is lower than your marginal rate of tax then this is of great advantage to you paying a lower rate of tax on only part of any withdrawal.
As an added advantage, after year 8, €4600 can be withdrawn annually free of tax (€9200 for a married couple) and anything over this then subject to the above rules and taxes. Clearly this product therefore can become a very efficient way of generating high levels of investment income whilst keeping tax bills low.
Inheritance tax benefits of assurance vie
For inheritance, assurance vie offers some further substantial advantages. Effectively “assurance vie” is a life insurance product it is subject to a different set of rules than your normal estate. In theory assurance vie fall outside of your estate and can therefore be left directly to beneficiaries and not be tangled up in French legal process once you have gone. As it is subject to its own rules it also offers its own additional allowances. As long as the policy is established before your 70th birthday you can name as many beneficiaries as you want to the plan each receiving up to €152,000 tax free on death of the assured and anything over this amount only taxed at 20%.Frequently asked questions about assurance vie
Q. How do I avoid paying French tax on my investments?A. Investments in Assurance Vie grows free of tax, while the income you receive will be very tax efficient.
Q. Do I have access to my money?
A. If money is required it is possible to get access. However, as with any investment, this should be viewed a medium to long term plan.
Q. Do I have to invest in euros?
A. Assurance Vie is flexible which means that you can invest in euros, sterling or US dollars.
Q. Is the paperwork going to be in French as I need to be sure I know what I am agreeing to?
A. This will depend on the company you choose Assurance Vie from. It is possible to have the paperwork will be in English if you wish.
Q. I don’t want to take investment risk with my money?
A. Assurance Vie is a way of holding money not an investment style. Your portfolio will be held in accordance with how you want your money invested. This could range from capital value guaranteed to high risk funds. Before making your decision your financial adviser will conduct a risk assessment on your situation and make a recommendation, however it is still your choice and should be based on your views and needs.
Q. What happens when if I die with money invested in Assurance Vie?
A. You name who you want to get the funds when you go when setting up the plan or at a later date. Each named beneficiary will receive 152,000 euros tax free with anything over this amount only taxed at 20%. There is no inheritance tax in France between husband and wife or PACS couples.
Q. How did Assurance Vie come about, is it legal?
A. Assurance Vie is the solution the French have developed to the financial problems they face, and are the same financial problems you face as a French resident. It is a cornerstone of French financial Planning and the default investment option of a huge swathe of the French investment market for the tax and inheritance advantages it offers.
Typical examples of how assurance vie works
Take two examples:1. Mr Smith dies equally leaving €450,000 to three children in an assurance vie. Each would receive €152,500 free of tax and leaving their full circa €100,000 inheritance allowances to be offset against say their deceased Father’s property. If this money had simply been in the bank then the full amount would have fallen directly into their Father’s estate, used up all of the children’s inheritance allowances and seen a massively increased inheritance tax bill.
2. Mr Clark leaves €200,000 to his step child in an assurance vie plan as he has no children of his own. This would in simple terms see a 20% tax bill on €48,000 being €9,600 total. Imagine the situation where this money was in the bank and would be for the most part subject to a 60% inheritance tax charge as there is no blood line between the two parties giving a tax bill in the region of €120,000 and making the French tax man the biggest beneficiary!
A few final thoughts about assurance vie
In a nutshell, assurance vie offers French residents a tax efficient way of investing/withdrawing money with distinct inheritance tax advantages.What needs to be remembered is that an assurance vie is simply a special “wrapper”. It is not in itself an investment fund or style, it’s a blank piece of paper where an individual can establish a portfolio of investments within a tax favourable environment.
Investments made can range from low risk through to high risk depending on an individual’s attitude to risk and their long term expectations and needs for these funds are.
Plans can be held in Euros, Sterling or Dollars so a trade into Euros is not obligatory if you have for example Sterling funds and wish to remain in this currency. Further, many of these plans are also tax compliant should you move elsewhere within Europe as an example back to the UK later.
If you are an expat in France, assurance vie should be a key investment consideration if you are anticipating living there for the long term.
The return you to get on any type of savings account these days where you want the flexibility on withdrawing sums on a reasonably regular basis aren’t exactly brilliant, it seems that you need a good amount to invest for a long time to make anything. Best stuff it under the mattress Fruitcake.
Excellent summary from Sid, thanks for that.
I would add a few points relevant to my contracts.
It’s more practical (for tax reasons apparently) for beneficiaries of an Ass Vie if they have their own Ass Vie to transfer the money into.
The actual Ass Vie rate is currently very low. When I took out the contracts I was earning more than 5% p.a from each but the rate has diminished over the years to about 2% +. To increase interest I was advised to reinvest the Ass Vies. This started off with the setting up os SCPIs (Société Civile de Placement Immobilier). This is basically a portion of the investment (there are minimum amounts required in each Ass Vie before this can be done) being invested in the rental income of properties, typically in the big cities. The interests from such schemes are roughly double that of the standard Ass Vie.
The contracts have continued to evolve. I’m a low risk-taker so I go for a fairly secure investment though higher risk schemes bring higher interests. I changed certain aspects of my contracts again last year to maintain interest levels so as not to reduce my overall capital whilst still enjoying the income from the interests.
In my particular contracts the minimum interest which is payable is stated as 2%. I don’t know if this facility still exists.
The Credit Agricole, for example have a very competant English speaking service. You need good advice as it’s an important matter obviously.
Hope this helps a bit.
Anonymous24th June 2017 at 3:03 pm #166647Ours have been with C.A since 1997, never touched it and often felt like taking it out but as it does no harm to leave it, we just let it rest with C.A
Latest on the Ass Vie is yes, Macron is seeking to get more money off the big investors, (over €150,00 I believe) so we we are safe!!lol Not related to that though is below:The 2016 returns of the euro funds are published, the average yield, including all euro funds of the market (with the most moribund) is 1.80% gross. A decrease of nearly 50 basis points. No surprise.
You can determine your best contract for 2017 by comparing different criteria of your choice. The performance of the last year is probably not enough to determine the best contract. It is necessary to take account of the costs in instalments, but also of the history of the returns. Lastly, betting on the euro fund is not a guarantee of a well-paying investment. Investing in SCPIs is in vogue.
Past performance is not a guide to future performance as ever.
Mots banks will have a conseiller who can offer you their Ass Vie but often it is best to shop around using something like France Transactions (below)https://www.francetransactions.com/comparateurs/Meilleure-assurance-vie.html
Anonymous24th June 2017 at 7:30 pm #166740Thanks for all the info posted, especially your in depth psot Sid. I got a bit lost in it all but I unravelled enough to understand what is relevant to our own circumstances. We’ve just drawn out the last of the money we put into an Ass Vie some years back and have been whittling away at it over the years, I don’t think it would be a viable proposition for us now because, as I mentioned in my original post, we want instant access to it, I just wondered if one bank was any better than another for general banking and or having a savings account but it would appear that they’re all much of a muchness. The mattress looks a good bet tigre!
Anonymous24th June 2017 at 8:28 pm #166766Yes PJ thank you for that, but I did know, it’s how we’ve whittered away the lot we put in quite a few years ago!
Whatnow, may be UK property is still the way to go to make a good return, I don’t know if the double tax treaty between France and the UK will be affected with Brexit.
Fruitcake, I know you want to get your hands on savings when you want as if I’m correct after renovating your new house you want to do some travelling, hope that Aussie trip is now looking more realistic! Pete seems to have come up with some good info on the Assurance Vie accounts, shame the tax free UK ISA account interest isn’t tax free in France when declaring it on the French tax returns.
Anonymous25th June 2017 at 5:05 pm #167059Yes you’re absolutely correct tigre, that is exactly our intention. We sign the acte de vente for our house sale on 28th July so, as long as we’ve got the house fit enough for dog sitters by then, we could perhaps be off to Australia for Mr F’s 80th next year!
Anonymous25th June 2017 at 6:14 pm #167131Thanks tigre, we don’t have any problem about Australia when we get there, as we go to my nephew and family near Perth, they pick us up from the airport and take us everywhere so we’re very lucky. Last time I booked it all with Singapore airlines, including the stopover hotels in Singapore on the outward amd return journeys, booked our seats and Mr. F’s diabetic meals on the plane, were met at the airport and taken back, so it was all very easy. If you have any tips to add I’ll be pleased to hear them.
For UK property investment the model is undermined by the Tory government policies where investors are restricted in offsetting interest rates against income/profit. The only small business to suffer this kind of discrimination.
Investing in French property has the downside in the degree of tenant protections. However, this seems a model the UK is also moving to. That said the opportunity to acquire property at a lower overall cost and the level of returns in Euros offers opportunities here. As ever it is down to the purchase price and rentals value that can be achieved versus the voids.
The main problem with the UK or other Sterling denominated income sources is the £/€ exchange rate from 1.28 pre brexit to 1.13 now. My feeling is this will only get worse to the extent that I’m working on 1:1 by 2020
For those going to Australia beware – it is eye wateringly expensive. A coffee in UK that would cost £2.20 costs A$6.00 the service is also pretty mediocre. Used both Qatar and Emirates to Perth. As a trick book a specific meal type eg: fish/vegetarian on all flight legs – you get served first which helps mitigate jetlag. On Emirates the window seat on the A380 gives you more snuggle space than the B777 on Qatar. You will know there is talk of a LHR to Perth direct non stop flight with Qantas as ever with them the issue is price.
Anonymous26th June 2017 at 9:13 am #167426Yes I know the ‘booking a specific meal get served first’ to be true Dibbyspot as I was most put out when Mr. F. had his diabetic meal far in advance to mine and he didn’t help the situation by keep saying “Mmm this is really nice”!!! A good idea to book something specific for me too next time.
We’re prepared for the fact that the holiday will probably work out expensive, especially the insurance, as we both have medical history, but it’s a one off and a big treat to see my nephew and family, that is being made possible by the release of capital with the house sale.
All the advice is much appreciated.
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