Changes this year are partly due to the introduction of a new 'flat tax', officially known as prélèvement forfaitaire unique (PFU). For more on this see page 7 of the guide.
The correct declaration of gains made through an assurance vie is now date-specific.
Gains from French policies may already have been inserted in your form, even so you should check they are declared correctly. You may also wish to refer to any documentation on declaration of these gains that has been supplied by your bank or other AV provider.
DECLARING FRENCH ASSURANCE VIE GAINS
Where you invested in the AV before September 27, 2017, the following applies.
For French assurance vie contracts, there are two ways the profit element can be taxed: by adding the gain to your gross income or by opting for fixed forfait rates which are used for AVs (known in full as the prélèvement forfaitaire libératoire) - however these fixed forfait rates have to be requested at the time of taking the gain.
If forfait tax has been taken off before you received the gain you do still need to declare the gain but only for it to be taken into account and not for it to be taxed twice.
French assurance vie gains are declared in section 2, 2042.
- If the forfait rate is applicable use box 2DH if the AV policy is over eight years old, or 2XX if the policy is under eight years old.
- If instead the ordinary income tax bands should apply, use box 2CH if the policy is over eight years old or 2YY if it is less than eight years old.
Note that an allowance (reduction of the taxable gain) is applied by the tax office to gains from policies more than eight years old. You do not need to calculate this yourself, the tax autorities will do it.
If you invested sums of money in the AV after September 27, 2017
In the specific case that you invested money into an AV after September 27, 2017 and took money out of the policy in 2018 there are special rules relating to declaring the part of your profit that is proportional to these later investments.
This profit is usually subject to the new flat tax (however the old 7.5% forfait rate is still applied for AVs which are more than eight years old, unless certain rules for those with more than €150,000 invested in AVs apply).
Alternatively the ordinary income tax bands may apply if you take up the option to have all of your investment income subject to the bands (this choice is made by selecting box 2OP).
Documentation from your bank or other provider should clarify what amounts should be declared where, however:
- If the policy is more than eight years old the gains go in 2VV (or in 2WW for sums to which the rule on investments over €150,000 applies).
- If the policy is less than eight years old the gains go in 2ZZ.
DECLARING UK OR OTHER FOREIGN LIFE ASSURANCE / INVESTMENT BOND GAINS
These should be declared, net of any tax already paid, in the 2047, line 260 under Produits et gains des bons et contrats de capitalisation et assurance vie.
They should also be inserted in section 2, 2042.
For profits related to money invested before September 27, 2017:
- For gains from contracts from the EU (also Iceland, Liechtenstein or Norway): Insert as appropriate in box 2CH for contracts more than eight years old (or in box 2DH if you opted to have tax taken off at the forfait rate when the money was paid out).
- For EU gains less than eight years old and other foreign gains insert in: 2YY (or in 2XX for EU gains already subject to forfait tax).
For profits related to money invested after September 27, 2017:
- For EU gains from AV policies more than eight years old, insert in 2VV (or in 2WW where the rule on investments over €150,000 is applicable)
- For EU gains from AV policies less than eight years old, and other foreign gains, insert in 2ZZ
- Note the possibility of selecting box 2OP for all section 2, 2042 income to be subject to the ordinary income tax bands (if selected the choice also applies to gains declared in section 3, 2042, ie. capital gains from shares).
Please note the points in this article are for general information, however declaring assurance vie and other investment bond gains can be a complex area, especially in the case of gains from overseas, so if in doubt you may wish to take regulated professional advice.
With thanks to Robert Kent of Kentingtons for his input into this article.
