Taxation of life insurance policies when the beneficiary dies

If the beneficiary dies, the premiums under a life insurance policy may be subject:

• to death duties: premiums paid after 70 years of age and of more than €30,500 (policies taken out after 20 November 1991) are subject to death duties
  All policies for which the insured party is the same should be included in calculation of the €30,500 threshold

or

• to a 20% levy

The premiums not subject to death duties have a 20% levy applied on the share received by the beneficiary which totals more than €152,500 (allowance calculated per beneficiary, for all policies for which the insured party is the same).

The credit institution deducts this levy directly.

The surviving spouse or the deceased's partner under a PACS (civil union) are exempt from this 20% levy and from death duties when the death occurred subsequent to 22 August 2007.

The levy is also not owed when, on the date the policy is taken out, the policyholder is not resident of France for tax purposes.

Life insurance policies may be declared using partial inheritance declaration no. 2705-A which enables the credit institution to pay the funds out to the beneficiary.

Some international tax treaties may exempt life insurance policies held by non-residents from tax in France or set out certain special calculation methods.

Updated DINR ENR