2006

The Taxation of the life assurance

For the succession, the taxation of the life insurance is of an interest as of the subscription. For the most been worth, it interesting as of 4 years and is optimized at the end of 8 years.

- Exemption of the more : until 4600€ a year for a person alone and even 9200€ for a couple forwarded to a common imposition. Moreover, these more been worth are forwarded to taking away reduced of 7.5% (Net except , , social samples and additional contribution to the social sample which is implemented to the total appreciation), as of the moment when you preserve your minimum contract 8 years

Exemption of the death taxes: them premium accounts are versed before the seventieth (70ème) birthday of the Assured one: in these circumstances, the death benefit poured with (X) Profit (S) indicated (S) with the contract is forwarded to a contractual tax of 20 % on the party of the death benefit exceeding 492 580 euros. This abatement of 155 205 euros is applicable by Bénéficiaire (S) but appreciates all confused contracts (Item 990-I of the General Tax Code).

them premium accounts are versed after the seventy (70) years of the Assured one: on this assumption, transfer taxes by death will be discharged by (S the) Profit one (S) indicated (S) with the contract, according to the existing degree of kinship between (S the) Profit one (S) and the Policy-holder, to the amount of the fraction of premium accounts poured after the seventy (70) years of the Policy-holder exceeding 47 203 euros. This abatement of 32 570 euros is an overall abatement and appreciates whatever the number of Recipient (S) designated (S) with the contract (Article 757 B of the General Tax Code).

Taxation of the purchases

less than 4 years: With the choice:

 Legal tender contractual taking away of 35 %*
 Income tax: integration in the assessed income.

between 4 and 8 years: With the choice:

 Legal tender contractual taking away of 15 %*
 Income tax: integration in the assessed income.

more than 8 years: With the choice:

 Legal tender contractual taking away of 7,5 %* giving right an abatement within the limit of 4.600 € (or 9. 200 € for a couple)
 Income tax: integration in the assessed income after abatement of 4.600 € (or 9. 200 € for a married couple forwarded to common imposition)

---

Always advantageous taxation:

- Exemption of the more : until 4600€ a year for a person alone and even 9200€ for a couple forwarded to a common imposition. Moreover, these more been worth are forwarded to taking away reduced of 7.5% (Net except , , social samples and additional contribution to the social sample which is implemented to the total appreciation), as of the moment when you preserve your minimum contract 8 years

 Exemption of the death duties the premium accounts are versed before the seventieth (70ème) birthday of the Assured one: in these circumstances, the death benefit poured with (X) Profit (S) indicated (S) with the contract is forwarded to a contractual tax of 20 % on the party of the death benefit exceeding 492 580 euros. This abatement of 155 205 euros is applicable by Bénéficiaire (S) but appreciates all confused contracts (Item 990-I of the General Tax Code).

 the premium accounts are versed after the seventy (70) years of the Assured one: on this assumption, transfer taxes by death will be discharged by (S the) Profit one (S) indicated (S) with the contract, according to the existing degree of kinship between (S the) Profit one (S) and the Policy-holder, to the amount of the fraction of premium accounts poured after the seventy (70) years of the Policy-holder exceeding 47 203 euros. This abatement of 32 570 euros is an overall abatement and appreciates whatever the number of Recipient (S) designated (S) with the contract (Article 757 B of the General Tax Code).

Availability of your saving: you constantly can (thus before the 8 years) and without contractual penalties to withdraw all or started from your saving, i.e. to carry out a partial or total purchase.

You can thus withdraw your saving before 8 years by carrying out partial purchases without “to close your contract”, without losing your benefit acquired on the amounts which remain invested, and without contractual financial penalties. The taxation is implemented only to the appreciations understood in the amount that you buy up (at rates indicated Ci below), and not on the overall amount of the withdrawal or the divestments.

There exists another solution if you have a specific and temporary need for liquidities which is to require an advance (a loan which is authorized to you), which avoids having to withdraw sums of your contract (and to pay the possible imposition on the appreciations understood in the withdrawn amount

---

On your contract, you remain free to withdraw your saving when you wish it, entirely or partly. The contract therefore will not be closed… as long as you will leave the minimum amount fixed by the insurer. However, you can be penalized in the event of too fast withdrawal, or even be taxed on interest or appreciations which you will charge: be vigilant!

Indeed, certain contracts - increasingly rare - provide for however penalties in the event of withdrawal during the 4 or the first 8 years. But, even if the insurer does not take any penalty, the tax department, can claim its share to him. When you made a withdrawal (a “purchase” for the insurers), you indeed recover part of your capital but also interest or the appreciations which it possibly carried. These gains can be chargeable, in a way different according to the seniority from your contract.

Withdrawals on a contract opened before January 1st, 1983

They are completely exonerated from income tax, even if you made new payments today.

The withdrawals on a contract of more than 8 years subscribes between on January 1st, 1983 and on September 25th, 1997

All the gains which correspond to payments carried out before January 1st, 3999 1 remain tax-free.

On the other hand, the gains released by the payments carried out since January 1st, 1998 are forwarded to the income tax or a levy at source of 7,5%, after an abatement of 4.600 € a year for a single person and 9.200 € for a married couple (2).

Is it penalizing to make new payments on this old contract? That depends on their amount.
 The insurance companies keep the memory of the sums paid before and after January 1st, 1998 and can calculate their respective interests or appreciations. No the risk “to mix” the two tax regimes, and to find to you imposed without reason. Blow, to pour on a contract of more than 8 years seems attractive, since, in the event of withdrawal, the taxation will be softer than on an new agreement.

The disadvantage?
 When you made a withdrawal, you withdraw at the same time sums placed before 1998 and others invested after, in proportion to their relative importance on the whole in the contract. Impossible to recover “only” oldest, those tax-free.

Consequence: if you made today very important payments on an old contract, your withdrawals will be thereafter made up at the same time of interests tax-free and chargeable interests. And, beyond the abatements, you will have to discharge the tax.

“If you are likely to find you in this situation, it is to better open another contract to invest the new saving, in order to preserve the old one to make nontaxable withdrawals”

If you subscribed your contract since September 26th, 1997

If you wait until it is 8 years old to make withdrawals, the gains carried out since January 1st, 1998 will be forwarded, as you prefer, to the income tax or a levy at source of 7,5% after an annual abatement (2) of 4.600 € if you are unmarried, the double if you are married. It will thus be enough not to withdraw more than 4.600 or 9.200 € of interests or appreciations taxable not to pay the tax a year.

If you made withdrawals on a contract which has less than 8 years

The interests or appreciations withdrawn are forwarded, with your choice, either with the income tax, or with a contractual taking away of 35%, if the contract has less than 4 years, or 15%, if it has between 4 and 8 years.

Social samples (, …) are to be regulated in supplement, at least since they were founded. Their actual rate is of 10% on the whole. They are punctured each year on a contract in euros. On the supports, they are required only during a withdrawal; consequently, on these contracts, the capital forwarded in the event of death escapes from it.

 (1) In some limiting for the payments carried out between on September 26th and on December 31st, 1997.
 (2) For the whole of the held contracts.

---

GLOSSARY

Additional amount

It is a payment carried out by your employer on your Savings plan undertaken . The amount of this aid depends on its generosity but also on the sums placed by your care on the . This gift can go up to three times the payments which you carried out, with the proviso of not exceeding 2.287 euros a year 11 610 francs). If you buy shares of your own society, the roof passes to 3.430 euros 86 620 francs). To note that the additional amount cannot depend on the appreciation which concerns your employer your work.

Assets allocation

The finance professionals use this expression to explain you (like every month the Income does it) which one should not put all its eggs in the same pack. To allocate its capital, it is thus to distribute its saving between various placements in order to reduce the risks and to obtain a regular average profitability in time. Within the framework of the management of a stock exchange wallet, the assets allocation indicates the distribution of the saving between the liquidities, the obligations and the shares. Within the compartment made up exclusively of shares, the money can be affected by geographical area and line of business.

Tax credit

It is a tax credit. To profit from it, it is necessary to be shareholder of a French firm which distributes dividends. The amount tax credit it corresponds then to half of the paid dividend on your account. In practice, you state the dividend increased tax credit it and, then, the administration deduces this last from the amount of your income tax. This mechanism was installed to avoid a double taxation of the dividends, already taxed with the bond with the tax on the earning with society. If you manage your wallet within the framework of a Savings plan in shares, tax credit is versed for it on your account and you do not deduct anything of your income tax.

Recipient

Nominate the person who will cash the capital of your life policy, after your death. It can be a question of your spouse, a child, or any other person who are particularly expensive to you. So that this saving does not remain in the cases of the insurer after your death, you can be tried to inform the recipient of the gift that you intend to him. But, in this case, will know that if it accepts it by advance while being made known near the insurer, you will not be able to change recipient never again, nor to carry out withdrawals, even partial, without its authorization. This is why, there is preferable to remain discrete on your intentions and to designate your recipient by will written in the notary. You will be thus with the shelter of the bad surprise.

Capitalization

The retreat by capitalization is a formula of individual saving where each one accumulates money in its corner with a view the constitution of a capital. This saving can be placed on various supports, of which the life assurance. The retreat by capitalization is defined as opposed to the retreat by distribution, system in which the contributions of paid and the free lances are used to pay the boarding houses poured with the current pensioners.

Deducted expenses

The life assurance is a powerful placement. However, of the companies still market products very penalizing for your saving. These contracts told “to deducted expenses” take, with the subscription, the expenses on all the payments to come. Thus, the contributions of the first, and sometimes even as the second year, serve to pay the Commissions of the insurer and the salesman. And capitalization begins only the second, even the third year. Concretely, the deducted expenses reduce the output of your saving. And if you want to recover your capital before term, you are likely to perceive a sum lower than that of your payments. Before signing your contract, thus redouble vigilance. The deduction at source meets especially in the contracts with one duration periodic payments of at least ten years and which are dedicated to the retreat.

Liquidity

It is the possibility of recovering its money. Thus, the Booklet has, the #9B392C Booklet and the CODEVI is among the most liquid placements of the market, because you can constantly carry out withdrawals without any penalty. On the other hand, if you hold shares of or shares of society not - dimensioned and that you wish to sell them quickly, you are undoubtedly obliged to accept a strong rebate compared to their actual value. These products are thus not very liquid. By extension, the liquidity of a quoted on the stock exchange share corresponds to the daily volume of transactions, i.e. with the number of bonds which change hands during a meeting of Stock Exchange. The more liquid one share is and the more you can be reactive. Indeed, if the volume of exchanges is important, it is easy to buy (or to sell) with a limiting exchange rate which you fixed and for the desired quantity. Contrary, the liquid bonds not very can see their suspended quotation several hours by Euronext, the organizer of the Parisian market. It is what arrives when the number of the purchasers and the salesmen is very unbalanced.

Mandate of management

Legal term which indicates the contract that you sign when you entrust the management of a rental housing or a stock exchange wallet to a professional. More or less regulated according to the trades, these contracts are in the beginning many litigations. To avoid the problems, the role of the professional, his Commission and the nature of the management which you wish must be clearly defined. Within the framework of the management of a wallet of transferable securities, specify what you understand by a careful management, balanced or dynamic. If these conditions are met, the mandate of management will avoid you managing yourself your money and will make you profit from the expertise of a professional, which, a priori, must enable you to obtain a higher profitability

Levy at source

It is a directly versed deduction at source with the tax authority by the financial institution which holds your placement. The rate of this taking away is identical for all the taxpayers. Concretely, for the incomes of certain placements (super-booklets, accounts in the long term, obligations…), you have the choice between a levy at source to 25 % or the income tax. Knowing that, in this last case, you will be also forwarded to a social sample of 10 %. The choice between these two options depends on your level of imposition. The higher it is and the more you may find it beneficial to choose the levy at source. If you choose this optional tax regime, you must indicate it to your banker.

Renunciation

After having subscribed a life policy, you have one thirty days period during which you can reconsider your decision. If it is the case, you will recover the entirety of the versed sums. During this “time of renunciation”, the insurer has the choice between placing your saving in monetary SICAV or investing it directly on the stockmarkets, by adhering to the option of management which you determined with him. The companies which directly invest the collected funds assume the risk of retractation of the subscriber. If the stockmarkets fall, for example of 10 %, before the thirty days expiry, the insurer takes this loss as his responsibility in the event of renunciation of the saver.

Usufruct

At the time of a succession, it happens that there is a stripping of property. This operation consists in separating two rights which are normally joined together: usufruct, i.e. the right of use of a good (for a housing, to live it or rent it to receive rents), and the naked-property, which are a future right to the freehold with the death of the usufructuary. The stripping of property is also a technique of desfiscalisation. While giving, for example, the naked-property of your dwelling to your child, you can continue to live on your premise while reducing the rights to pay. The saving in tax varies according to the age of the giver. If you have between 50 and 60 years, the chargeable basis of a good forwarded in naked-property is equal to its actual value minus 30 %. And, with the death of the usufructuary, the bare owner recovers the full ownership of property without paying taxes.

Volatility

It is an risk indicator of a quoted on the stock exchange bond or a SICAV. The larger volatility of a share is, the more it is speculative. In technical term, volatility is the amplitude of the variation of an exchange rate for a given period. The statisticians speak about variance or standard deviation. As example, the average volatility of the SICAV French shares was slightly higher than 22 % in 2000, with considerable differences between the funds, since the least risky displayed a volatility lower than 5 %, against more than 40 % for riskiest. What does not want to say that the latter are less good. They are addressed simply to a category of savers who agree to take risks in the hope to carry out more important gains.

Net assets value

Indicate the price on the one hand SICAV or CPF. This price integrates the management expense, but it does not understand the deposit charges on the payments nor the removal costs. To determine the sum to spend at the time of the subscription of shares of SICAV, you must take account of the deposit charges, often negotiable, ranging between 0,5 and 5 % of the net assets value. When you wish to resell your shares, you will have to deduce from the amount of your saving the removal costs, fortunately increasingly rare. The lower the potential of gain of the funds is and the more you must attach importance to the expenses. To pay 3 or 4% at the entry of a SICAV shares is more acceptable than 3 or 4% at the entry of a monetary SICAV.