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Income tax - How is income from a life insurance contract taxed?
Verified 08 June 2023 - Legal and Administrative Information Directorate (Prime Minister)
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If you have a life insurance contract, you are taxed only if you make a buyback (whether full or partial). The gains you have made are taxed according to the length of time your contract is held. However, exemptions are provided for in certain cases.
Please note
earnings from a life insurance contract shall be subject to social security contributions (CSG, CRDS).
Contract signed since 26 September 1997
If you have a life insurance contract, you are taxed only if you make a redemption (whether total or partial).
Taxation varies according to the following:
- Date of payment of the premium
- Duration of the contract
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Premiums paid since September 27, 2017
Contract under 8 years
The interest on your life insurance contracts is taxed in 2 stages.
1. When they are paid, they shall be subject to flat-rate levy without discharge of 12.8% (unless you are applying for an exemption based on your reference tax income).
2. Interest is recorded on your tax return for taxation by one of the following means:
- Flat rate of 12.8%
- Progressive Income Tax Schedule if you choose this option when you file your tax return
Any excess is returned to you.
You can apply to be exempt from the flat-rate levy without discharge if your reference tax income of the penultimate year is less than €25,000 (€50,000 for a couple).
For revenues received in 2023, this is the 2021 benchmark tax revenue.
The application is to be sent to the financial institution that pays you the income no later than November 30 of the year preceding that of the payment (November 30, 2023 for an exemption in 2024).
In general, the institution will send you an honorary attestation form to return to the institution if you meet the conditions.
Contract over 8 years
The interest on your life insurance contracts is first taxed in 2 steps.
1. Earnings shall be subject, on payment thereof, to a flat-rate non-discharge levy of 7.5% (unless you are applying for an exemption based on your reference tax income).
2. You have to report these gains on your income tax return after deducting the abatement next:
- €4,600 for a single person
- €9,200 for a couple
Warning
The allowance is granted for all life insurance contracts held by the same taxpayer.
The interest is then taxed at the following flat rates:
- 7.5% for interest corresponding to premiums not exceeding €150,000
- 12.8% for interest on premiums in excess of €150,000
However, you may be required to progressive scale of income tax if you choose this option when you file your tax return
Any excess is returned to you.
Premiums paid before September 27, 2017
Contract under 8 years
The interest on your life insurance contracts is taxed in 2 stages.
1. When they are paid, they shall be subject to a flat-rate non-discharge levy of 12.8% (unless you are applying for an exemption based on your reference tax income).
2. Interest is recorded on your tax return for taxation by one of the following means:
- Progressive Income Tax Schedule
- Flat rate of 15% if you choose this option when you file your tax return
Contract over 8 years
The interest on your life insurance contracts is taxed in 2 stages.
1. When they are paid, they shall be subject to a flat-rate non-discharge levy of 12.8% (unless you are applying for an exemption based on your reference tax income).
2. Interest is recorded on your tax return for taxation by one of the following means:
- Progressive Income Tax Schedule
- Flat rate of 7.5% if you choose this option when you file your tax return
Recovered interest may be exempt from tax in certain cases.
It depends on the reason you're asking for the buyback.
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Dismissal
Interest on life insurance is exempt from income tax if the redemption is the result of dismissal.
The dismissal is retained if you are one of the following:
- Whoever signed the contract
- Spouse or partner of Civil partnerships: titleContent of the subscriber
Please note
the exemption shall not apply in the event of a breach of a contract.
Early retirement
Interest on life insurance is exempt from income tax if the redemption results from early retirement.
Early retirement is taken into account if you are one of the following:
- Whoever signed the contract
- Spouse or partner of Civil partnerships: titleContent of the subscriber
Disability
Interest on life insurance is exempt from income tax if the redemption results from the recognition of invalidity (2e or 3e category).
Disability is considered if you are one of the following:
- Whoever signed the contract
- Spouse or partner of Civil partnerships: titleContent of the subscriber
Judicial winding-up
Interest on life insurance is exempt from income tax if the redemption is the result of liquidation.
The liquidation is retained if you are one of the following:
- Whoever signed the contract
- Spouse or partner of Civil partnerships: titleContent of the subscriber
To make your tax return, you can view the following documents:
- Explanatory notes (in particular income from securities and transferable capital)
- Practical Income Tax Brochure
- Supporting documents submitted by paying institutions (IFU form)
If a pre-filled amount is inaccurate, you must correct or complete it.
Contract entered into before 26 September 1997
If you have a life insurance contract, you are taxed only if you make a redemption (whether total or partial).
Taxation varies according to the following:
- Contract Enrollment Date
- Date of payment of the premium
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Contract signed from 1 January 1983 to 25 September 1997
Interest on premiums paid before 1 January 1998
Interest received in 2022 is exempt from income tax, under certain conditions, only if it results from premiums paid before 1er January 1998.
Interest on premiums paid since 1 January 1998
Interest earned in 2022 is taxed at the rate of 7.5% if they result from premiums paid since 1er January 1998.
Interest is taxed after deduction of the abatement next:
- €4,600 for a single person
- €9,200 for a couple
The allowance is granted for all life insurance contracts held by the same taxpayer.
FYI
Interest on life insurance is exempt from income tax if the redemption results (for you or your married or former spouse) from one of the following reasons:
- Dismissal
- Retirement
- Disability
- Liquidation
Contract entered into before January 1, 1983
Interest on premiums paid before 10 October 2019
Interest earned in 2022 on contracts entered into before 1er January 1983 are exempt from income tax only if they result from premiums paid before October 10, 2019.
Interest from premiums paid since 10 October 2019
Interest earned in 2022 is taxed at the rate of 7.5% they result from premiums paid since 10 October 2019.
Interest is taxed after deduction of the abatement next:
- €4,600 for a single person
- €9,200 for a couple
The allowance is granted for all life insurance contracts held by the same taxpayer.
FYI
Interest on life insurance is exempt from income tax if the redemption results (for you or your married or former spouse) from one of the following reasons:
- Dismissal
- Retirement
- Disability
- Liquidation
To make your tax return, you can view the following documents:
- Explanatory notes (in particular income from securities and transferable capital)
- Practical Income Tax Brochure
- Supporting documents submitted by paying institutions (IFU form)
If a pre-filled amount is inaccurate, you must correct or complete it.
Who can help me?
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For general information
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To contact the local service managing your folder
Department in charge of taxes (treasury, tax department...)
- General Tax Code: Article 125-0-ATaxation of life insurance contracts
- Bofip-Taxes n°BOI-RPPM-RCM relating to the taxation of income from movable capital
- Taxes: access your Special Space
Online service
- 2023 Simulator: 2022 Income Tax
Simulator
- Income Tax Return (Paper)
Form
- 2023 Online Income Tax Return 2022
Online service
FAQ
- Life insuranceService-Public.fr
- Income tax: return and reportable incomeService-Public.fr
- Income tax: deductions, reductions and tax creditsService-Public.fr
- Social levies (CSG, CRDS...) on wealth incomeService-Public.fr
- Income Tax - Reporting Life AnnuitiesService-Public.fr
- Income Tax - Annual Income Tax ReturnService-Public.fr
- Income Tax - Savings and Investment IncomeService-Public.fr
- Income tax - capital gains on securitiesService-Public.fr
- Income from movable capitalMinistry of Finance
- Tax SiteMinistry of Finance
- 2023 Practice Brochure - 2022 Income Tax ReturnMinistry of Finance
- Income tax: information leafletsMinistry of Finance