Assurance-vie: tax-exempt redemption after dismissal, disability, or bankruptcy

Assurance-vie gains are exempt from income tax if the contract's termination results from one of four events: dismissal, early retirement, disability classified as category 2 or 3, or bankruptcy. The redemption must take place before the end of the year following the event, therefore no later than December 31st of the following year. A negotiated termination agreement or the end of a fixed-term contract does not grant this exemption.

This page deals with the income tax exemption of a French assurance-vie contract. It does not cover:

• the supporting documents to be submitted to the insurer; ;
• the way in which the withholding tax is treated when the exemption applies; ;
• the declaration of these winnings, and its boxes; ;
• the case where the event occurred before the contract was signed; ;
• the situation of a non-resident; ;
• the definition of "early retirement", which the texts read do not provide.

What the exemption covers: income tax

Upon redemption, only the gains are taxed. If the contract is terminated following one of the specified events, these gains are exempt from income tax. The BOFiP (French Official Tax Bulletin) specifies that the exemption applies "regardless of the duration of the bond or contract." This applies to both new and old contracts.

Social security contributions (CSG, CRDS) are a separate issue, which this page does not address. Official sources vary in their wording regarding their treatment after a tax-exempt redemption, particularly in cases of disability. It is essential to verify this information with the source before making a redemption.

The four events

The BOFiP (Official Bulletin of Public Finances) adds a condition for dismissal: the person must not have found a new job "before the end of the period for which they claim the exemption." This condition is discussed on a case-by-case basis; it is not included in the information sheet on service-public.gouv.fr.

Who should be affected by the event?

The event may affect the spouse or civil partner. The official sources consulted do not use the same word to designate the person primarily concerned:

• Form F22414 refers to the person who took out the contract, or their spouse or civil partner; ;
• economie.gouv.fr states: "The event must concern the beneficiary of the products or their spouse or civil partner."«

The BOFiP (Official Bulletin of Public Finances) uses, depending on the event, "contract holder" or "beneficiary of the products." The page does not specify which term is correct. The identity of the beneficiary in your contract must be verified before any redemption.

The deadline: December 31st of the following year

The redemption or settlement must take place "before the end of the year following" the event. The exact date of the event within the year does not change the deadline: it is December 31 of the following year.

The example from service-public.gouv.fr: a person dismissed on May 5, 2026 must buy back or terminate their contract no later than December 31, 2027. The BOFiP gives the consequence: if the contract is terminated after December 31 of the year following that of the dismissal, "the exemption cannot apply".

An event in December and an event in January therefore do not provide the same amount of time to redeem the assets. A dismissal occurring in January 2026 leaves nearly two years to recoup the investment. A dismissal occurring in December 2026 leaves just over a year.

This does not entitle one to the exemption.

• The negotiated termination agreement. Service-public.gouv.fr: the exemption does not apply in the case of a negotiated termination. The BOFiP (Official Bulletin of Public Finances) states that the employee cannot benefit from it "in the event of a partial or total buyout".
• The end of a fixed-term contract. Same source, same exclusion.
• The revocation of a corporate mandate. The BOFiP (French Official Tax Bulletin) states that the end of a fixed-term contract or the revocation of a corporate mandate "does not constitute a dismissal." For a company director, the classification of the end of their duties is important: it should be verified before any acquisition.

The manager and self-employment

For the cessation of self-employment, the event covered is judicial liquidation: the BOFiP (Official Bulletin of Public Finances) refers to the cessation of self-employment by the contract holder following a judicial liquidation order, and that of their spouse or civil partner. Cessation of activity without a judicial liquidation order is not included in the list of four events. The other events on the list have their own conditions, described above.

What the exemption replaces

For premiums paid since September 27, 2017, here is the standard income tax treatment of gains from a redemption:

The 7.5% % rate depends on the total amount of premiums not refunded as capital paid across all contracts, up to a threshold of €150,000. Premiums paid before this date are subject to a different tax regime. These rules are explained on their dedicated page: see the taxation of a redemption based on seniority.

Numerical example (fictitious profile)

Situation. Marc, 52, was laid off on June 12, 2026 (this was not a negotiated termination). He is registered as a job seeker and has not found employment before the end of the period for which he is claiming the exemption. He holds a assurance-vie policy taken out on March 14, 2022, with all premiums paid after September 27, 2017. A full surrender would yield €18,000 in gains. He is not opting for the standard withdrawal scale. He is considering two dates: October 15, 2027, or February 10, 2028.

Issue. The contract is less than 8 years old in both cases. The date of redemption determines whether the exemption is possible.

Strategy. Calculate the deadline, then the income tax due according to the date, at the rate of 12.8 % of the flat-rate levy.

Result. The dismissal takes place in 2026: the deadline is December 31, 2027.

Less than four months between the two dates is enough to lose the exemption. This table does not include social security contributions, which are discussed above. It compares the tax due, not the withholding tax collected: how this withholding tax is processed when the exemption applies is not addressed here. This profile is hypothetical. The assumptions simplify the situation. The figures illustrate the calculation and do not predict your final result.

What changes depending on your situation

• The exact nature of the event : dismissal, negotiated termination, end of fixed-term contract and revocation of a corporate mandate do not have the same effect.
• The date of the event : it sets the deadline as December 31st.
• The person concerned : subscriber, beneficiary of the products, spouse or civil partner.
• Your status as a job seeker, for a dismissal.
• The length of your contract and the date of your bonuses, which determine the tax that would apply without the exemption.
• The other contracts that you hold, which share the annual allowance.

The rule depends on your situation. No results are guaranteed.