In summary…
Between a Luxembourg contract and a French contract, an expatriate compares three things: the protection of their funds if the insurer defaults, the tax due in their country of residence at the time of withdrawals, and the range of investment options. The insurer's country is not a determining factor for either French tax on withdrawals (for an insurer established in the European Union) or the levy under Article 990 I on the transferred capital: these points depend on the tax residence of the holder, the insured and the beneficiary.
Our position: a Luxembourg contract is justified by a specific need, never by a supposed tax advantage. It is chosen once the host country is known, and it requires an annual declaration of the contract, which is not the case with a French contract.
«"I'm leaving for Singapore in eight months. My life insurance is in France: should I leave it there or transfer it to Luxembourg?" We start with the country where you're going to live, not the insurer's country.
1. The security triangle protects access to your assets, not their value.
Three actors: the insurer, the custodian bank, the supervisory authority
In Luxembourg, the system of deposit agreements is called the "triangle of security": the assets representing your contracts are held by a depository bank, separate from the insurer, under the supervision of the Insurance Commission (CAA), the Luxembourg authority (minutes of the Finance Committee of the Chamber of Deputies, March 6, 2018).
If the insurer goes bankrupt, the creditors of a conventional life insurance contract have a first-ranking claim on the assets allocated, and the assets of the units of account are separated from those of the other commitments (2018 parliamentary report on draft law no. 7215).
This mechanism does not protect against a decline in the value of the underlying assets: for a unit-linked fund, the insurer guarantees the number of units, not their value. It organizes what happens if the’insurer It disappears, nothing more.
In France, insurers are regulated by the ACPR (French Prudential Control and Resolution Authority), and the life insurance guarantee fund provides compensation of up to €70,000 per insured person (€90,000 for certain annuities) in the event of the insolvency of an insurer authorized in France. This fund does not cover insurers from other European Economic Area countries operating in France under the freedom to provide services or through a branch.
For the technician. Luxembourg law of 7 December 2015 on the insurance sector: Article 118 establishes the general lien; groups of insurance claims backed by separate assets, with a first-ranking lien, are provided for by draft law no. 7215 (final numbering to be verified in the consolidated text). Directive 2009/138/EC (Solvency II). On the French side: Insurance Code, Articles L. 423-1 et seq. for the life insurance guarantee fund; ACPR, page "Guarantee funds competent in the event of insolvency of insurance undertakings".
Specifically. Request three written answers before signing: which authority oversees the insurer, which bank holds the assets and in which country, and what mechanism protects your rights and what its limitations are. Details: protection of savings in Luxembourg, role of the CAA, guarantee fund.
2. Taxation follows your residence, not the nationality of the insurer.
French tax resident: same tax brackets, but more formalities with a Luxembourg contract
If you are a French tax resident at the time of redemption, you are taxed on the gains from a contract taken out with a Luxembourg insurer under the same seniority conditions as a French contract: since Luxembourg is in the European Union, the annual allowance of €4,600 (€9,200 for a couple) after eight years applies, and it applies globally to both your French and foreign contracts. The rate depends on the contract's seniority and the amount of premiums paid: see Taxation of buybacks based on seniority. Social security contributions are added: for life insurance, the official pages for 2026 indicate 17.2 %, compared to 18.6 % for the general rate of investments; the rate applicable to a contract taken out abroad is confirmed with the tax authorities before calculating a redemption.
The difference is administrative. An insurer established outside of France does not withhold tax for you: you declare the gains yourself, and you must also file a tax return. the existence of the contract Every year. Forgetting is penalized, even without paying tax. See how to declare a contract opened abroad.
Non-resident: social security contributions are waived, the rest depends on the host country
A non-resident for tax purposes is not subject to social security contributions on their financial income, including life insurance: this is the only line item that is definitively eliminated. Income tax on withdrawals depends on the law of your country of residence and the tax treaty with France. A contract that is highly regulated in France may not benefit from any special treatment elsewhere: first, check each country individually. Examples: Portugal, Singapore.
For the technician. Article 125-0 A of the French General Tax Code (taxation of proceeds), Article 1649 AA (declaration of contracts taken out abroad). BOFiP, BOI-RPPM-RCM-20-10-20-50 (version of 20/12/2019 read, version of 30/06/2022 could not be read): proceeds from a contract taken out with an insurer established outside France are considered foreign securities (Article 120, 6°, of the French General Tax Code) and the allowance of €4,600 / €9,200 extends (Article 122, 2°) to insurers of the European Union and the European Economic Area linked to France by an administrative assistance agreement.
Case: Total redemption of a contract older than eight years
Situation. French tax resident, single. Contract of more than eight years, the gains of which are to be redeemed in full.
Issue. What are the tax costs, and does it change if the insurer is based in Luxembourg?
Strategy. The calculation follows the same steps for both contracts: gains = surrender value less premiums paid; annual allowance after eight years; tax rate according to seniority and premiums; social security contributions in addition.
Result. Whether the contract is French or Luxembourgish, the tax cost for a resident is calculated in the same way, except for the tax return. The same contract held by a non-resident is exempt from social security contributions; income tax remains to be determined according to the host country.
3. Fees and support: where the differences widen
The fees are listed line by line, not by country.
A contract incurs application, entry, management, and arbitration fees. No country imposes lower fees by nature. In France, institutions must publish their fees on their website in a standard table: request the same table for the Luxembourg contract, and the key information document for each type of product (documents to receive before signing, entry, management and arbitration fees).
Accessible resources: a concrete criterion for an expatriate
A French contract offers euro-denominated funds (guaranteed capital), unit-linked funds (risk of capital loss), and sometimes euro-growth funds. The available investment options within a Luxembourg contract, and their entry thresholds, must be reviewed on a contract-by-contract basis before making a choice: this is where the choice of Luxembourg is justified, or not. See eligible assets.
| Criteria | French contract | Luxembourg contract |
|---|---|---|
| Supervisory authority | ACPR | Insurance Commission (CAA) |
| Protection if the insurer defaults | Guarantee fund: €70,000 per insured person for an insurer approved in France | Deposit agreements, asset segregation, priority ranking; no guarantee of value |
| French tax on a resident | Article 125-0 A regime | Same seniority requirements and same discount (EU insurer) |
| Contract Declaration | No | Yes, annual declaration of the contract |
4. Inheritance: the beneficiary's residence is more important than the insurer's country of residence.
Bonuses paid before the age of 70 For the insured: a deduction of €152,500 per beneficiary, then 20% of the taxable portion up to €700,000 and 31.25% of the taxable portion beyond that (Article 990 I of the French General Tax Code). Premiums paid after 70 years : only the fraction which exceeds €30,500, all beneficiaries and contracts combined, falls within the basis of inheritance tax; the gains from these premiums are not taxed (article 757 B of the CGI).
The levy under Article 990 I is due if the insured was a tax resident of France at the time of death, or if the beneficiary was a resident of France for at least six of the ten years preceding the death. The insurer's country is not a determining factor. It remains to be seen what France still taxes, and what the heirs' country of residence will tax, potentially taking into account the application of a... inheritance agreement. There beneficiary clause is being written with these two countries in mind (990 I or 757 B).
For the technician. Article 990 I of the French General Tax Code (CGI) and BOFiP BOI-TCAS-AUT-60: the levy applies to sums paid by insurance companies established in France as well as those not, and it is payable by the beneficiary. Article 757 B: threshold of €30,500 shared among all contracts and beneficiaries; gains not taxed; its territoriality for a foreign contract is verified on a case-by-case basis.
Our position
Choose a policy based on the country where you will live and the coverage you need, then review the insurer's protection and fees. If your departure is uncertain, keeping a French policy remains easy to declare. If you need coverage not offered by the French policy, Luxembourg may be a suitable option; this should be verified on a policy-by-policy basis.
Frequently asked questions
Is a Luxembourg contract safer than a French contract?
It is protected in other ways, but no more so: a depositary bank and priority ranking in Luxembourg, a guarantee fund capped at €70,000 per insured person in France for an insurer authorized in France. None of these cover the decline in the value of the unit-linked funds.
Can I keep my French contract if I move abroad?
Yes. Social security contributions are no longer due; taxes depend on the host country. The payment conditions for a non-resident must be verified on a contract-by-contract basis: request the insurer's position in writing.
Do I need to declare a Luxembourg contract if I remain a French resident?
Yes, every year with your tax return, in addition to any gains from a redemption. Failure to declare is penalized even when no tax is owed.
Are you leaving or have you already left, and is your life insurance French or Luxembourgish?
The first interview establishes the host country and what needs to be declared.
Are you a notary, chartered accountant, lawyer, or fellow consultant? And you are following a family that is relocating abroad? We act as a co-contractor on the contracts and their declaration: the client remains yours.
Book an appointment
The initial consultation is to establish your exact situation and determine if there is anything that can be done—sometimes there is nothing, and we will say so as well. Thirty minutes, with no obligation.
Book an exchange with Balmont Conseil
Alexis Sagnier, financial and real estate investment advisor, insurance broker, AMF certified. ORIAS 13003497. Updated on 23/10/2026.
Official sources consulted
- Service-Public.fr — Social security contributions on investment income (fact sheet F2329)
- Service-Public.fr — Life insurance: how it works (fact sheet F15274)
- Service-Public.fr — Life insurance: subscription (fact sheet F15268)
- Economie.gouv.fr — What are the tax implications of life insurance?
- Economie.gouv.fr — Why take out a life insurance policy?
- BOFiP — BOI-RPPM-RCM-20-10-20-50 (version of 12/20/2019)
- BOFiP — BOI-TCAS-AUT-60 (withdrawal from article 990 I)
- ACPR — Guarantee funds responsible for handling insurance company failures
- EUR-Lex — Directive 2009/138/EC (Solvency II)
- Chamber of Deputies of Luxembourg — minutes of the Finance Committee meeting of 6 March 2018 (Bill No. 7215)
- Luxembourg Chamber of Deputies — Report of the Finance Committee on Bill No. 7215
